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> I'm not sure that it can control prices Amazon very often competes directly with sellers on the Marketplace, and often undercuts them on price. There are pr

by Alupis 7y ago

> I'm not sure that it can control prices Amazon very often competes directly with sellers on the Marketplace, and often undercuts them on price. There are products they sell below the purchase cost, sometimes below manufacturing cost. You can't compete with that unless you have piles of money to burn. They sell at a loss until they shake everyone loose from a product, then dominate all sales of that products on the Marketplace, raising prices to profitability when they feel like it. Don't forget they get all product sales information and statistics from every seller on the Marketplace - basically all the market research necessary to pick only "winner" products to sell. Then, when they feel like it, they require sellers to produce original invoices proving purchase of the items. These invoices conveniently contain all necessary information for Amazon to start buying the items directly themselves so that they can sell the item at a loss until you can't compete anymore, leaving Amazon as the sole source for the product. Wanna be part of Vendor Central - selling directly to Amazon? They dictate the pricing and strong-arm you into selling exclusively to them in many cases. There is no negotiation - there is no adjusting pricing based on quantity ordered. And as much as people might want to think Amazon just buys enough quantity to get what they want - they don't. They just tell you what it will be. > or exclude competition to that extent? They can ban you from their Marketplace (the largest consumer Marketplace in the world) at will, with little to zero recourse on your part, via an opaque "Seller Performance" team that only responds to email, sometimes, and provides vague responses to what policies you might have broken. That is, if you somehow get the eye of the Seller Performance team upon you. The reasons they go after certain sellers and leave others alone are as mysterious as the team behind the decisions.

toasterlovin 7y ago
> Amazon very often competes directly with sellers on the Marketplace, and often undercuts them on price. If Amazon can actually compete with you in a given product niche, then you're not bringing any value to the table (since they own the customer relationship, the fulfillment, the logistics, etc.), so why do you deserve to make money? There are a gazillion product categories on Amazon. There's no way they can bring products to market in all of them. They focus their attention on markets where brand differentiation isn't very important. Usually those markets are that way because what consumers care about is price, convenience, and surpassing some minimum level of quality. Those are the spaces where Amazon puts forward their own product. And if your livelihood is tied to being a relatively generic brand in a product category where consumers really only care about convenience and price, then you need to find a different way to make it in the world.
- Alupis 7y ago
  Being on Amazon's Marketplace (the largest in the world), every sale gives Amazon all the statistics needed to pick only guaranteed profitable products. The sellers actually pay Amazon for the privilege of providing Amazon with these market tests! Then Amazon requires the seller to produce invoices showing purchase of the items, usually with some sort of vague threat of suspending your account if they can't "verify the authenticity" of your products. The invoice, of course, has everything needed for Amazon to start sourcing the product themselves - and now they know your cost. So they proceed to purchase the product, sell it at a loss until you can't hang anymore, and now Amazon is the sole source for the product. It's brilliant, actually. But it's definitely Anti-Competitive. Just like the "dumb pipes" argument with Net Neutrality - If you wanna run a Marketplace, you shouldn't be allowed to "compete" in the very same Marketplace. You should not be allowed to collect and then abuse all the data the Marketplace produces.
  - toasterlovin 7y ago
    > Being on Amazon's Marketplace (the largest in the world), every sale gives Amazon all the statistics needed to pick only guaranteed profitable products. No, it does not. They are missing the most important piece of information: Cost of Goods Sold. They also don't know where you sourced the product. Or which features are important to customers and which are not. > Then Amazon requires the seller to produce invoices showing purchase of the items, usually with some sort of vague threat of suspending your account if they can't "verify the authenticity" of your products. This is only for trademarked products where the trademark owner has registered with Amazon. And the purpose is to protect consumers: by requiring proof that a product has been sourced from an authorize reseller, rather than some factory making knock offs or somebody buying stolen goods. > So they proceed to purchase the product, sell it at a loss until you can't hang anymore, and now Amazon is the sole source for the product. The only sellers this alleged strategy would harm are sellers who are selling a trademarked brand for which they are not authorized. But why should those sellers even be on Amazon? And how would this be any different than Amazon buying these products directly from the manufacturer and being the only seller on their website? In other words, they don't need to do what you're alleging. They are free to just claim certain products as 1st party only. Separately: I sell speaker wire on Amazon. I compete against their Amazon Basics brand. I have a viable business that is growing. Because I know more about this market and its weird little crevices than Amazon ever will.
disposition2 7y ago
Are the actions of Amazon any different from what Walmart has done in the past? Just about all you describe, Walmart has been doing for 20+ years (probably closer to 30)
- Alupis 7y ago
  Yes and no. Until recently, Walmart hasn't had a Marketplace - so while Walmart has (and does) exploit their vendors with pricing and what-not, they haven't been able to wield that club against their competition directly like Amazon does. People have also been saying Walmart is quite anti-competitive for years for what that's worth too.
  - perl4ever 7y ago
    "Until recently, Walmart hasn't had a Marketplace" No? When exactly did they start selling large numbers of items on their website that aren't in stores?
    - Alupis 7y ago
      "Marketplace" refers to 3rd parties selling on the platform. Until recently, Walmart.com was exclusively products sold by Walmart - now they let 3rd parties list and sell products too (just like Amazon).
      - scarface74 7y ago
        Third parties have been selling at physical Walmart stores beside store brands for decades. The same with every drug chain.
      - jldugger 7y ago
        Are you familiar with a planogram? Walmart the physical location is a platform, with paid placement for premium locations on a shelf. Same goes for virtually all national retailers. Hell, Frito even has their own employees stock the shelves, which is why the chip aisle tends to look immaculate compared to the rest of the store.
mikeash 7y ago
So don’t sell on Amazon. There are tons of other options. Amazon is merely the largest, not the only.
- Alupis 7y ago
  Is that really still an option the bigger Amazon gets? At what point is it a defacto monopoly? A huge share of people shop exclusively on Amazon, particularly when compared to 10 years ago. There's no sign it'll stop growing any time soon. Choosing not to, or being prohibited from selling on Amazon effectively blocks you out of a significant share of ecommerce sales. There's no way around that.
  - mikeash 7y ago
    It takes more than “a significant share.” Being excluded from Walmart blocks you from a significant share of retail sales but they’re not a monopoly. If the argument is that Amazon might become a monopoly in coming years, I can totally see that. But I don’t see how it is one now.
    - shard972 7y ago
      nice dodge, how about answering the question, how do you define a monopolly?
  - bko 7y ago
    Considering that e-commerce sales only make up about 12% of retail sales in the US, I think Amazon and e-commerce would have to get a lot bigger. > The first quarter 2019 e-commerce estimate increased 12.4 percent (±1.1%) from the first quarter of 2018 while total retail sales increased 2.7 percent (±0.4%) in the same period. E-commerce sales in the first quarter of 2019 accounted for 10.2 percent of total sales I don't think e-commerce is the right market. Most companies selling widgets just want to get their goods in consumer's hands. They don't really care how. Amazon makes it easy and does a lot of the work but sets the terms. Otherwise they'd be going after that 87.6% that's not done through e-commerce. [0] https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf https://www.census.gov/retail/mrts/www/data/pdf/ec_current.p...
joe_the_user 7y ago
Monopolies are usually defined in terms of sellers controlling the prices of the goods they sell, rather than the buyer forcing the seller to change price. Perhaps there's another definition for this situation.
- URSpider94 7y ago
  There is. It’s called a monopsony, a market where there is only one buyer.
mk89 7y ago
>The reasons they go after certain sellers and leave others alone are as mysterious as the team behind the decisions. Is there any report from sellers that were banned just because? I mean, authentic sellers, not fake etc. Edit: still googling, but it seems in many cases there is a ToS violation, like multiple accounts, or shady practices. One seller got kicked because "we grew up too quickly and we were unable to deliver in time". I am really wondering which sellers got kicked despite being respectful of the rules. All of them, including the user experience, because I think that's main reason amazon kicks you out - if I can get scammed or my items don't ever make it on time, why would I even bother using their service, instead of buying elsewhere?
Dylan16807 7y ago
> They sell at a loss until they shake everyone loose from a product, then dominate all sales of that products on the Marketplace, raising prices to profitability when they feel like it. This has actually happened? Can you point me to examples with price charts?
- catmanjan 7y ago
  If he could amazon would be getting a spanking in court right now, I wouldn't be surprised if it were true, but as for evidence...
- skinnymuch 7y ago
  They famously did their whole competition with Diapers.com and their parent company. That wasn’t an Amazon marketplace competitor though. But it was pretty ruthless of Amazon.
  - Dylan16807 7y ago
    But what was the lowest price, and how much did they raise it from that point? If I look at this article[1], they have a screenshot of size 4 pampers for 22 cents each, in 2010. In 2019 dollars that's 26 cents. The current amazon brand is 23 cents each, and the same pampers are 26 cents. It doesn't seem like they've abused any dominance here. It's very possible they could do it in the future, but that's not the same thing. [1] https://www.businessinsider.com/amazon-diapers-price-war-2010-11 https://www.businessinsider.com/amazon-diapers-price-war-201...

by Alupis 7y ago

toasterlovin 7y ago

> Amazon very often competes directly with sellers on the Marketplace, and often undercuts them on price. If Amazon can actually compete with you in a given product niche, then you're not bringing any value to the table (since they own the customer relationship, the fulfillment, the logistics, etc.), so why do you deserve to make money? There are a gazillion product categories on Amazon. There's no way they can bring products to market in all of them. They focus their attention on markets where brand differentiation isn't very important. Usually those markets are that way because what consumers care about is price, convenience, and surpassing some minimum level of quality. Those are the spaces where Amazon puts forward their own product. And if your livelihood is tied to being a relatively generic brand in a product category where consumers really only care about convenience and price, then you need to find a different way to make it in the world.

Alupis 7y ago
Being on Amazon's Marketplace (the largest in the world), every sale gives Amazon all the statistics needed to pick only guaranteed profitable products. The sellers actually pay Amazon for the privilege of providing Amazon with these market tests! Then Amazon requires the seller to produce invoices showing purchase of the items, usually with some sort of vague threat of suspending your account if they can't "verify the authenticity" of your products. The invoice, of course, has everything needed for Amazon to start sourcing the product themselves - and now they know your cost. So they proceed to purchase the product, sell it at a loss until you can't hang anymore, and now Amazon is the sole source for the product. It's brilliant, actually. But it's definitely Anti-Competitive. Just like the "dumb pipes" argument with Net Neutrality - If you wanna run a Marketplace, you shouldn't be allowed to "compete" in the very same Marketplace. You should not be allowed to collect and then abuse all the data the Marketplace produces.
- toasterlovin 7y ago
  > Being on Amazon's Marketplace (the largest in the world), every sale gives Amazon all the statistics needed to pick only guaranteed profitable products. No, it does not. They are missing the most important piece of information: Cost of Goods Sold. They also don't know where you sourced the product. Or which features are important to customers and which are not. > Then Amazon requires the seller to produce invoices showing purchase of the items, usually with some sort of vague threat of suspending your account if they can't "verify the authenticity" of your products. This is only for trademarked products where the trademark owner has registered with Amazon. And the purpose is to protect consumers: by requiring proof that a product has been sourced from an authorize reseller, rather than some factory making knock offs or somebody buying stolen goods. > So they proceed to purchase the product, sell it at a loss until you can't hang anymore, and now Amazon is the sole source for the product. The only sellers this alleged strategy would harm are sellers who are selling a trademarked brand for which they are not authorized. But why should those sellers even be on Amazon? And how would this be any different than Amazon buying these products directly from the manufacturer and being the only seller on their website? In other words, they don't need to do what you're alleging. They are free to just claim certain products as 1st party only. Separately: I sell speaker wire on Amazon. I compete against their Amazon Basics brand. I have a viable business that is growing. Because I know more about this market and its weird little crevices than Amazon ever will.

disposition2 7y ago

Are the actions of Amazon any different from what Walmart has done in the past? Just about all you describe, Walmart has been doing for 20+ years (probably closer to 30)

Alupis 7y ago
Yes and no. Until recently, Walmart hasn't had a Marketplace - so while Walmart has (and does) exploit their vendors with pricing and what-not, they haven't been able to wield that club against their competition directly like Amazon does. People have also been saying Walmart is quite anti-competitive for years for what that's worth too.
- perl4ever 7y ago
  "Until recently, Walmart hasn't had a Marketplace" No? When exactly did they start selling large numbers of items on their website that aren't in stores?
  - Alupis 7y ago
    "Marketplace" refers to 3rd parties selling on the platform. Until recently, Walmart.com was exclusively products sold by Walmart - now they let 3rd parties list and sell products too (just like Amazon).
    - scarface74 7y ago
      Third parties have been selling at physical Walmart stores beside store brands for decades. The same with every drug chain.
    - jldugger 7y ago
      Are you familiar with a planogram? Walmart the physical location is a platform, with paid placement for premium locations on a shelf. Same goes for virtually all national retailers. Hell, Frito even has their own employees stock the shelves, which is why the chip aisle tends to look immaculate compared to the rest of the store.

mikeash 7y ago

So don’t sell on Amazon. There are tons of other options. Amazon is merely the largest, not the only.

Alupis 7y ago
Is that really still an option the bigger Amazon gets? At what point is it a defacto monopoly? A huge share of people shop exclusively on Amazon, particularly when compared to 10 years ago. There's no sign it'll stop growing any time soon. Choosing not to, or being prohibited from selling on Amazon effectively blocks you out of a significant share of ecommerce sales. There's no way around that.
- mikeash 7y ago
  It takes more than “a significant share.” Being excluded from Walmart blocks you from a significant share of retail sales but they’re not a monopoly. If the argument is that Amazon might become a monopoly in coming years, I can totally see that. But I don’t see how it is one now.
  - shard972 7y ago
    nice dodge, how about answering the question, how do you define a monopolly?
- bko 7y ago
  Considering that e-commerce sales only make up about 12% of retail sales in the US, I think Amazon and e-commerce would have to get a lot bigger. > The first quarter 2019 e-commerce estimate increased 12.4 percent (±1.1%) from the first quarter of 2018 while total retail sales increased 2.7 percent (±0.4%) in the same period. E-commerce sales in the first quarter of 2019 accounted for 10.2 percent of total sales I don't think e-commerce is the right market. Most companies selling widgets just want to get their goods in consumer's hands. They don't really care how. Amazon makes it easy and does a lot of the work but sets the terms. Otherwise they'd be going after that 87.6% that's not done through e-commerce. [0] https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf https://www.census.gov/retail/mrts/www/data/pdf/ec_current.p...

joe_the_user 7y ago

Monopolies are usually defined in terms of sellers controlling the prices of the goods they sell, rather than the buyer forcing the seller to change price. Perhaps there's another definition for this situation.

URSpider94 7y ago
There is. It’s called a monopsony, a market where there is only one buyer.

mk89 7y ago

>The reasons they go after certain sellers and leave others alone are as mysterious as the team behind the decisions. Is there any report from sellers that were banned just because? I mean, authentic sellers, not fake etc. Edit: still googling, but it seems in many cases there is a ToS violation, like multiple accounts, or shady practices. One seller got kicked because "we grew up too quickly and we were unable to deliver in time". I am really wondering which sellers got kicked despite being respectful of the rules. All of them, including the user experience, because I think that's main reason amazon kicks you out - if I can get scammed or my items don't ever make it on time, why would I even bother using their service, instead of buying elsewhere?

Dylan16807 7y ago

> They sell at a loss until they shake everyone loose from a product, then dominate all sales of that products on the Marketplace, raising prices to profitability when they feel like it. This has actually happened? Can you point me to examples with price charts?

catmanjan 7y ago
If he could amazon would be getting a spanking in court right now, I wouldn't be surprised if it were true, but as for evidence...
skinnymuch 7y ago
They famously did their whole competition with Diapers.com and their parent company. That wasn’t an Amazon marketplace competitor though. But it was pretty ruthless of Amazon.
- Dylan16807 7y ago
  But what was the lowest price, and how much did they raise it from that point? If I look at this article[1], they have a screenshot of size 4 pampers for 22 cents each, in 2010. In 2019 dollars that's 26 cents. The current amazon brand is 23 cents each, and the same pampers are 26 cents. It doesn't seem like they've abused any dominance here. It's very possible they could do it in the future, but that's not the same thing. [1] https://www.businessinsider.com/amazon-diapers-price-war-2010-11 https://www.businessinsider.com/amazon-diapers-price-war-201...