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Imagine AWS being a seperate business from Amazon. Zero personnel in common, no shared office spaces, selling services to each other on a commercial basis with
by jaggederest 8y ago
Imagine AWS being a seperate business from Amazon. Zero personnel in common, no shared office spaces, selling services to each other on a commercial basis with SLAs and pricing negotiations the same way they do to external customers.
Similarly, imagine APS - amazon parcel service, an abstraction layer on package delivery through Fedex UPS USPS courier etc, spun out as a separate endeavor and selling services to all comers the same way they do to internal amazon.
And Amazon Logistics, warehousing and fulfillment, sold the same way. Amazon-product-sales is just another client who pays the same price as anyone else.
Ditto Amazon product sales vs amazon the website. The website continues much as they are now, organized around selling things to people and doing the recommendations / marketing / discovery bit and taking a cut from everyone. The product sales business becomes a separate stockkeeping and inventory buying company. As you say, Amazon-the-product-sales-business could operate just as easily through catalogs or phone orders or late night infomercials.
I'm sure there's at least another half dozen parts of amazon that would be industry leaders in some sub-industry instead of part of the degenerate conglomerate as they are now. It's interesting to think about the places you could draw those lines.
- wongarsu 8y agoMany of them could be huge players in their fields, but building a service you can offer to others is a lot more work than building a robust service you can use yourself. I don't quite see the advantage in preventing any vertical integration. It just looks like a way to increase overhead and make everything more expensive in the process.
- petra 8y agoI think Amazon already builds its services as something they can easily serve to others.
- baq 8y agoif amazon can profitably undercut everyone for long enough, it becomes a monopoly, at which point it can be either forcefully split to rescue whatever's left of the market or become a tightly regulated utility; before any of that happens, they'll make a killing when they raise prices. if you care about the market, you don't want to let this happen.
- natalyarostova 8y agoWhat exactly are the barriers to entry that would then prevent another site from starting up and offering strictly lower prices?
- jnordwick 8y agoBezos. There are very few of him is the biggest barrier to entry. He has just run Amazon extremely well.
- wongarsu 8y agoAmazon-the-Marketplace isn't really undercutting anymore in my experience. When I compare prices they usually aren't the cheapest option, instead being more in the upper middle of price options. Amazon is currently competing on convienience. Having a one-stop-shop where I can get anything at a somewhat reasonable price with reliable fast shipping is huge. When they enter other fields they do undercut, but the two big, established brands (amazon.com and AWS) don't. >they'll make a killing when they raise prices. if you care about the market, you don't want to let this happen. That only really applies if it's hard for competition to come back. But I doubt there are large barriers of entry unless Amazon makes most other packet carriers go out of business.
- Eridrus 8y agoThe question isn't "what splits could you make", but "what concrete benefits and downsides are there from making the splits". Splitting AWS off basically has no impact since they are already run as pretty separate entities and AWS already sells to external customers. Your example of Amazon Logistics also already exists, it is called Fulfillment By Amazon. Amazon the website also lists plenty of things from other merchants, so again, is already provides services to other players. Maybe there is some subsidization going on here that forcing Amazon to ensure everyone is treated equally and doing proper accounting would expose, but everything we know about Amazon is that they already do this internally, which isn't surprising since every business unit in every large company needs to show how they benefit the company and "charging" internal customers the external price is an easy way to show value. As far as I can tell, the only piece of this that isn't available to external parties is the data on consumer habits.... but people have been complaining about fast followers long before Amazon, and you can usually make a good estimate about the market just by looking at the volume of reviews. I mean, there are cases, e.g. Diapers.com where Amazon has clearly abused its market power, but that seems like a thing we could handle directly with laws declaring that large companies cannot sell products below cost, with proper accounting for all of the fulfilment/etc services they use.
- pseudalopex 8y agoWhat's the external price for a full-width ad at the top of Amazon.com? Can Google pay them to drop Fire TV like they did Chromecast? Can Anker pay them to block third-party sales like they do for AmazonBasics?
- jnordwick 8y agoI thought the Diapers.com problem was that Amazon just had a lower cost and could drive it even lower, not that they were selling below cost. Beside, there after plenty of instances in which companies sell below cost in a single to drive sales in another. Eg loss leaders.