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For starters, Amazon provided a marketplace platform for third parties to sell goods. They then gathered data on which items sold the best, created their own li

For starters, Amazon provided a marketplace platform for third parties to sell goods. They then gathered data on which items sold the best, created their own line of products based off this data, and crushed their customers-turned-competitors using their massive advantage in economies of scale.

nck4222 8y ago
FWIW, while I agree this a problem, large box retailers (Whole Foods before the Amazon acquisition, Walmart, etc) are well known for doing this as well. So if that's the line you draw, it extends further than just tech giants.
- sct202 8y ago
  It's a little bit different though, because Amazon has 2 streams of how they get products: Amazon can buy branded from vendor and control price and selection, or those same vendors could list directly on Amazon (as FBA) and the vendor controls price and selection. Pop sockets got in a fight recently with Amazon, because they wanted to stay FBA in order to have better control of selection and pricing, but Amazon was trying to force them into a more traditional vendor role.
  - jhall1468 8y ago
    Right, and Walmart only allows products in its store under their terms which is far more restrictive, so I'm failing to understand how this model is worse for competition than Walmart's. And what happened with PopSockets didn't quite work that way. They were already a vendor on Amazon, and they wanted to remove themselves as a direct vendor and designate a single reseller as their "approved" FBA on Amazon. So they wanted to change the terms of the agreement, Amazon said no, and that was that.
- giarc 8y ago
  Perhaps grocery stores have done well to keep their brands on lower shelves and not end cap their own stuff. Amazon brands will often appear first in the list of results, which would be akin to putting Great Value products front and centre on all Walmart shelves.
  - vonmoltke 8y ago
    CVS and Walgreens put their branded products right next to the name brands they are copying. They even color the packaging the same.
    - iamnubsrs 8y ago
      But Amazon just fullfils orders on most of the products while collecting data , where as brick and mortar stores resell the competitions products
      - elamje 8y ago
        Don’t brick and mortar stores collect inventory and trend data too? Amazon isn’t the first one to do this, they just put the data closer to the center of their business so it’s more public that they collect data.
        giarc 8y ago
        Until recently, brick and mortar really just knew what people tend to buy together. They can't tell, like Amazon, than a single customer buys XYZ over their lifetime. Brick and mortar now employee ways to aggregate using credit card numbers across stores.
        elamje 8y ago
        Yes, and what is the problem with Amazon just employing better tools to do the same?
        iamnubsrs 8y ago
        Yes and collecting data is a lot more expensive and less detailed for brick and mortar stores Also Amazon is less likely to have an issue with respect to stock since they do not buy most of the stock they just store it, where as brick and mortar stores invest in their inventory which gives them an higher incentive to promote them. And this also gives them an incentive to have disfounted sales on slow moving products that are either of slightly lower quality to a comparable product or it is a new Unknown brand resulting in a win for the customer. In case of Amazon if a new Unknown product is not selling it is all up to the seller to manipulate the algorithm to move up the seller ranking( we already see all the way sellers manipulate reviews and change products to have a high number of reviews) this is a big loss for the customer. And if the seller puts in all the effort and succeeds Amazon can just copy the product and say MY PRODUCT NOW, and show an Amazon basics product for the exact same price as the buyer and bump him Lower than its own product.
travisoneill1 8y ago
You are allowed to crush your competitors with economy of scale provided that you don't do it by selling at a loss. That's actually the entire point of economy of scale. The reference in the article is to passing a law against this so clearly what Amazon did is legal now. Furthermore, we don't need a law for this as this type of thing is well handled by a non-compete clause, which I am surprised wasn't in the seller's agreements with Amazon.
- bhl 8y ago
  The larger issue is that Amazon does not treat each product equally. When you search for an item, they don’t necessarily even show you the “best item” — most bought or highest reviews. Products which buy advertisements or Amazon’s own brands are bubbled up: its not an even playing field in this sense.
adrr 8y ago
If they were the largest retail seller, that would be anti-competitive. Amazon does less than half the revenue of Walmart. Amazon and Costco are the same size.
briffle 8y ago
So I guess all those store brand groceries are anti-competitive behaviors?
ApolloFortyNine 8y ago
Looking at the vast majority of Amazon Basics goods, I just don't see how they would have needed to use marketplace data to come up with what products to sell. Batteries, clothes (lots of clothes), backpacks, these are all products that are cheap to produce and where brand loyalty plays a large role. People generally trust the name Amazon. It's not rocket science to realize people want cheap clothes and batteries.
- basch 8y ago
  its a little more than just Basics, but youre right its a ton of clothing. https://www.amazon.com/b?ie=UTF8&node=17602470011 https://www.amazon.com/b?ie=UTF8&node=17602470011 https://www.recode.net/2018/4/7/17208804/amazon-private-label-brands-list https://www.recode.net/2018/4/7/17208804/amazon-private-labe...
nerfhammer 8y ago
Literally every moderately big retailer does this. Though many of them choose brand that are not as obviously connected with the house. Like half the stuff at Walmart is actually a house brand.

nck4222 8y ago

FWIW, while I agree this a problem, large box retailers (Whole Foods before the Amazon acquisition, Walmart, etc) are well known for doing this as well. So if that's the line you draw, it extends further than just tech giants.

sct202 8y ago
It's a little bit different though, because Amazon has 2 streams of how they get products: Amazon can buy branded from vendor and control price and selection, or those same vendors could list directly on Amazon (as FBA) and the vendor controls price and selection. Pop sockets got in a fight recently with Amazon, because they wanted to stay FBA in order to have better control of selection and pricing, but Amazon was trying to force them into a more traditional vendor role.
- jhall1468 8y ago
  Right, and Walmart only allows products in its store under their terms which is far more restrictive, so I'm failing to understand how this model is worse for competition than Walmart's. And what happened with PopSockets didn't quite work that way. They were already a vendor on Amazon, and they wanted to remove themselves as a direct vendor and designate a single reseller as their "approved" FBA on Amazon. So they wanted to change the terms of the agreement, Amazon said no, and that was that.
giarc 8y ago
Perhaps grocery stores have done well to keep their brands on lower shelves and not end cap their own stuff. Amazon brands will often appear first in the list of results, which would be akin to putting Great Value products front and centre on all Walmart shelves.
- vonmoltke 8y ago
  CVS and Walgreens put their branded products right next to the name brands they are copying. They even color the packaging the same.
  - iamnubsrs 8y ago
    But Amazon just fullfils orders on most of the products while collecting data , where as brick and mortar stores resell the competitions products
    - elamje 8y ago
      Don’t brick and mortar stores collect inventory and trend data too? Amazon isn’t the first one to do this, they just put the data closer to the center of their business so it’s more public that they collect data.
      - giarc 8y ago
        Until recently, brick and mortar really just knew what people tend to buy together. They can't tell, like Amazon, than a single customer buys XYZ over their lifetime. Brick and mortar now employee ways to aggregate using credit card numbers across stores.
        elamje 8y ago
        Yes, and what is the problem with Amazon just employing better tools to do the same?
      - iamnubsrs 8y ago
        Yes and collecting data is a lot more expensive and less detailed for brick and mortar stores Also Amazon is less likely to have an issue with respect to stock since they do not buy most of the stock they just store it, where as brick and mortar stores invest in their inventory which gives them an higher incentive to promote them. And this also gives them an incentive to have disfounted sales on slow moving products that are either of slightly lower quality to a comparable product or it is a new Unknown brand resulting in a win for the customer. In case of Amazon if a new Unknown product is not selling it is all up to the seller to manipulate the algorithm to move up the seller ranking( we already see all the way sellers manipulate reviews and change products to have a high number of reviews) this is a big loss for the customer. And if the seller puts in all the effort and succeeds Amazon can just copy the product and say MY PRODUCT NOW, and show an Amazon basics product for the exact same price as the buyer and bump him Lower than its own product.

travisoneill1 8y ago

You are allowed to crush your competitors with economy of scale provided that you don't do it by selling at a loss. That's actually the entire point of economy of scale. The reference in the article is to passing a law against this so clearly what Amazon did is legal now. Furthermore, we don't need a law for this as this type of thing is well handled by a non-compete clause, which I am surprised wasn't in the seller's agreements with Amazon.

bhl 8y ago
The larger issue is that Amazon does not treat each product equally. When you search for an item, they don’t necessarily even show you the “best item” — most bought or highest reviews. Products which buy advertisements or Amazon’s own brands are bubbled up: its not an even playing field in this sense.

adrr 8y ago

If they were the largest retail seller, that would be anti-competitive. Amazon does less than half the revenue of Walmart. Amazon and Costco are the same size.

briffle 8y ago

So I guess all those store brand groceries are anti-competitive behaviors?

ApolloFortyNine 8y ago

Looking at the vast majority of Amazon Basics goods, I just don't see how they would have needed to use marketplace data to come up with what products to sell. Batteries, clothes (lots of clothes), backpacks, these are all products that are cheap to produce and where brand loyalty plays a large role. People generally trust the name Amazon. It's not rocket science to realize people want cheap clothes and batteries.

basch 8y ago
its a little more than just Basics, but youre right its a ton of clothing. https://www.amazon.com/b?ie=UTF8&node=17602470011 https://www.amazon.com/b?ie=UTF8&node=17602470011 https://www.recode.net/2018/4/7/17208804/amazon-private-label-brands-list https://www.recode.net/2018/4/7/17208804/amazon-private-labe...

nerfhammer 8y ago

Literally every moderately big retailer does this. Though many of them choose brand that are not as obviously connected with the house. Like half the stuff at Walmart is actually a house brand.