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I run a consulting company for Amazon suppliers. We have roughly 2-dozen Amazon suppliers and our first-hand experience is that Amazon is absolutely stifling co

I run a consulting company for Amazon suppliers. We have roughly 2-dozen Amazon suppliers and our first-hand experience is that Amazon is absolutely stifling competition/business to the detriment of customer. The biggest problem is `agreements that restrain trade` is a monopoly practice that happens across the board. They're a black box AND have tiny support systems for their marketplace. One recent example. A client was on track to be selling $X-million this year of some appliances. Our client was forced to to stop selling because of trump tariffs. Amazon won't accept a "higher price" from our little company that only sells $Xm/year. I guarantee they're talking everyday to the teams at frigidaire/honeywell/GE/etc. If their systems would transparent this wouldn't be a problem but their algorithms have blackbox variables for the big brands.

social_quotient 7y ago
For better coloring which tariff specifically?
- blairanderson 7y ago
  https://ustr.gov/sites/default/files/enforcement/301Investigations/Tariff%20List-09.17.18.pdf https://ustr.gov/sites/default/files/enforcement/301Investig... This was first implemented at 10% then pushed to 25% a few months later
scarface74 7y ago
People have been complaining about basically the same thing with respect to Walmart for decades.
- dylan604 7y ago
  Exactly this. I've worked for a company where Walmart was the largest retailer for their product (DVDs). They were constantly being beat up to lower their wholesale prices while also demanding a separate SKU with edited content. Amazon is no different in this case (except not demanding edited content). Whenever I asked about this, they said you still had to provide product for sale wherever the customers were. The large retailers all want you to believe that you can make up for the lower price in vast quantities their store front provides.
  - Findeton 7y ago
    Yeah, there's nothing inherently bad about monopolies. The problem only arises when monopolies are forced into people by the government. Instead, people choose Amazon on their own.
    - alexgmcm 7y ago
      But Telecoms and the old Robber Barons had monopolies without government forcing people. I mean there are areas where peoples only choice of ISP is Comcast and equally the Government wasn't forcing people to buy Standard Oil. Any monopoly is bad because it allows them to ignore consumers as there is no competition.
      - ernst_klim 7y ago
        > But Telecoms and the old Robber Barons had monopolies without government forcing people. Telecoms were totally built by govs. Back in the days govs were obsessed with controlling the means of communication, so all the related biz was due to the monopoly right. > AT&T established a network of subsidiaries in the United States and Canada that held a government-authorized phone service monopoly, formalized with the Kingsbury Commitment, throughout most of the twentieth century. > With $18.8 million spent in 2013, Comcast has the seventh largest lobbying budget of any individual company or organization in the United States.[62] Comcast employs multiple former U.S. Congressmen as lobbyists. Sure, nothing to do with the government. Go ahead, try to bypass FCC and establish a new telecom company. It's literally pushed by the gov, as in any heavily regulated domain with patents and other monopoly rights. As for robber barons, that's mostly an antitrust myth to scare people > After 1900 it did not try to force competitors out of business by underpricing them.[37] The federal Commissioner of Corporations studied Standard's operations from the period of 1904 to 1906[38] and concluded that "beyond question ... the dominant position of the Standard Oil Co. in the refining industry was due to unfair practices—to abuse of the control of pipe-lines, to railroad discriminations, and to unfair methods of competition in the sale of the refined petroleum products".[39] Due to competition from other firms, their market share had gradually eroded to 70 percent by 1906 which was the year when the antitrust case was filed against Standard, and down to 64 percent by 1911 when Standard was ordered broken up[40] and at least 147 refining companies were competing with Standard including Gulf, Texaco, and Shell.
- weddpros 7y ago
  and the same goes abroad, in Europe and everywhere else
- NeonVice 7y ago
  This can benefit the consumer at the expense of the supplier. The lower Walmart can lower the price, the lower Walmart can offer the product.
  - scarface74 7y ago
    Isn’t that basically Adam Smith Capitalism 101 that any commodity good’s profit tends toward $0?
    - dodobirdlord 7y ago
      More or less. In a competitive system profit margins should trend downward. They won't necessarily reach 0 in the limit, because at some point you'll reach the point where everyone has something better to do with their resources than move into your market and undercut you (and you have no better prospect by undercutting anyone else). A profit margin of 0 is a stable equilibrium, but equilibria can also be reached when everyone's profit margin is sufficiently low that the fixed costs of starting a competitive business are larger than cumulative expected profits over a long time horizon.
      - TheOtherHobbes 7y ago
        This factoid has failed so many times it's astonishing it keeps being repeated. Any competitive system tends towards monopoly/oligoply. Market mechanisms encourage monopoly/cartel price/payment fixing that benefits shareholders/owners through strong-arming of downstream businesses, and - depending on the market - of customers. There is no "moving into the market", because as soon as a market consolidates around one or $very_small_number of players, cost of entry and market capture make competition impossible. So competition ends. This is where we are now with tech. It's basically impossible for anyone new to compete with Amazon, Google, Facebook, etc. It's also where we are with established players in other sectors such as Airbus. The only two things that can break the logjam are government action to split up monopolists, and the invention of a new market space with a viably low cost of entry.
        7y ago
- cylinder 7y ago
  That doesn't invalidate the point
laughinghan 7y ago
What does "Amazon won't accept" mean? Doesn't Amazon just show the lowest price of all its current suppliers, and if the current lowest-priced supplier runs out, it shows the next lowest price? (No fan of Amazon here, just trying to understand what you're saying.)
- lotyrin 7y ago
  I imagine this is a supplier (as in B2B, Amazon is negociating prices for buying bulk stock from them to sell on Amazon as Amazon), not a marketplace seller.
- hobofan 7y ago
  For marketplace sellers, yes that's the rough gist. There are however many more factors: seller rating, shipping speed, whether the fulfillment is done by Amazon, and a few hidden ones. Source: Have built price optimization software for Amazon Marketplace sellers in the past
joe_the_user 7y ago
That sounds pretty terrible but I'm not sure if it relates to Amazon being a monopoly in the usual sense. Ford motor company is huge and may have, for all I know, abusive practices towards it's suppliers. But Ford is certainly in the oligopoly, not monopoly category. Ford could be absolutely the only game in town for a given small or medium sized company but this doesn't mean Ford controls markets on the supplier end, which I believe is the measure of monopoly control. See: https://en.wikipedia.org/wiki/Monopoly https://en.wikipedia.org/wiki/Monopoly
- riffraff 7y ago
  isn't that monopsony? I think the situation for Amazon is different that for Ford, but I'd agree it seems `single buyer` rather than `single provider`
jyu 7y ago
This situation sounds overblown. If you look at Amazon guidance, $X-million / year means you don't hit the threshold to get an Amazon rep. If you're over $10 million / year you do get a rep. Either increase sales to get a rep or stop being a vendor.
5trokerac3 7y ago
> A client was on track to be selling $X-million this year of some appliances. Our client was forced to to stop selling because of trump tariffs. Amazon won't accept a "higher price" from our little company that only sells $Xm/year. A devil's advocate view: perhaps the supplier was buying low cost appliances from China, built in factories with who knows what labor standards or whether the work was compulsory, made almost certainly to a lower quality than appliances made in North America, taking advantage of China's currency and trade manipulation to mark up the price and make a larger profit than if they had distributed appliances made in a western nation with labor and wage standards. Now the U.S. is putting the same tariffs on Chinese imports that they put on U.S. imports to their country and the supplier is having difficulty getting Amazon to bear the cost of the supplier's desire to keep the same margin.
- sutterbomb 7y ago
  The devil usually knows a thing or two about what they speak of.
  - thfuran 7y ago
    Are you trying to agree or to say that the parent commenter doesn't know what they're talking about? Or maybe to make some kind of religious statement?
- ggg3 7y ago
  the devil's advocate's advocate would say that even if that was the case, a private organization being the world police of manufacturers' margin doesn't feel right.
- calimac 7y ago
  There goes another hypothetical... BEWARE anytime a rebuttal post started with “perhaps”.
- digitaltrees 7y ago
  Why is amazon setting the price rather than letting the supplier and the market?

social_quotient 7y ago

For better coloring which tariff specifically?

blairanderson 7y ago
https://ustr.gov/sites/default/files/enforcement/301Investigations/Tariff%20List-09.17.18.pdf https://ustr.gov/sites/default/files/enforcement/301Investig... This was first implemented at 10% then pushed to 25% a few months later

scarface74 7y ago

People have been complaining about basically the same thing with respect to Walmart for decades.

dylan604 7y ago
Exactly this. I've worked for a company where Walmart was the largest retailer for their product (DVDs). They were constantly being beat up to lower their wholesale prices while also demanding a separate SKU with edited content. Amazon is no different in this case (except not demanding edited content). Whenever I asked about this, they said you still had to provide product for sale wherever the customers were. The large retailers all want you to believe that you can make up for the lower price in vast quantities their store front provides.
- Findeton 7y ago
  Yeah, there's nothing inherently bad about monopolies. The problem only arises when monopolies are forced into people by the government. Instead, people choose Amazon on their own.
  - alexgmcm 7y ago
    But Telecoms and the old Robber Barons had monopolies without government forcing people. I mean there are areas where peoples only choice of ISP is Comcast and equally the Government wasn't forcing people to buy Standard Oil. Any monopoly is bad because it allows them to ignore consumers as there is no competition.
    - ernst_klim 7y ago
      > But Telecoms and the old Robber Barons had monopolies without government forcing people. Telecoms were totally built by govs. Back in the days govs were obsessed with controlling the means of communication, so all the related biz was due to the monopoly right. > AT&T established a network of subsidiaries in the United States and Canada that held a government-authorized phone service monopoly, formalized with the Kingsbury Commitment, throughout most of the twentieth century. > With $18.8 million spent in 2013, Comcast has the seventh largest lobbying budget of any individual company or organization in the United States.[62] Comcast employs multiple former U.S. Congressmen as lobbyists. Sure, nothing to do with the government. Go ahead, try to bypass FCC and establish a new telecom company. It's literally pushed by the gov, as in any heavily regulated domain with patents and other monopoly rights. As for robber barons, that's mostly an antitrust myth to scare people > After 1900 it did not try to force competitors out of business by underpricing them.[37] The federal Commissioner of Corporations studied Standard's operations from the period of 1904 to 1906[38] and concluded that "beyond question ... the dominant position of the Standard Oil Co. in the refining industry was due to unfair practices—to abuse of the control of pipe-lines, to railroad discriminations, and to unfair methods of competition in the sale of the refined petroleum products".[39] Due to competition from other firms, their market share had gradually eroded to 70 percent by 1906 which was the year when the antitrust case was filed against Standard, and down to 64 percent by 1911 when Standard was ordered broken up[40] and at least 147 refining companies were competing with Standard including Gulf, Texaco, and Shell.
weddpros 7y ago
and the same goes abroad, in Europe and everywhere else
NeonVice 7y ago
This can benefit the consumer at the expense of the supplier. The lower Walmart can lower the price, the lower Walmart can offer the product.
- scarface74 7y ago
  Isn’t that basically Adam Smith Capitalism 101 that any commodity good’s profit tends toward $0?
  - dodobirdlord 7y ago
    More or less. In a competitive system profit margins should trend downward. They won't necessarily reach 0 in the limit, because at some point you'll reach the point where everyone has something better to do with their resources than move into your market and undercut you (and you have no better prospect by undercutting anyone else). A profit margin of 0 is a stable equilibrium, but equilibria can also be reached when everyone's profit margin is sufficiently low that the fixed costs of starting a competitive business are larger than cumulative expected profits over a long time horizon.
    - TheOtherHobbes 7y ago
      This factoid has failed so many times it's astonishing it keeps being repeated. Any competitive system tends towards monopoly/oligoply. Market mechanisms encourage monopoly/cartel price/payment fixing that benefits shareholders/owners through strong-arming of downstream businesses, and - depending on the market - of customers. There is no "moving into the market", because as soon as a market consolidates around one or $very_small_number of players, cost of entry and market capture make competition impossible. So competition ends. This is where we are now with tech. It's basically impossible for anyone new to compete with Amazon, Google, Facebook, etc. It's also where we are with established players in other sectors such as Airbus. The only two things that can break the logjam are government action to split up monopolists, and the invention of a new market space with a viably low cost of entry.
      - 7y ago
cylinder 7y ago
That doesn't invalidate the point

laughinghan 7y ago

What does "Amazon won't accept" mean? Doesn't Amazon just show the lowest price of all its current suppliers, and if the current lowest-priced supplier runs out, it shows the next lowest price? (No fan of Amazon here, just trying to understand what you're saying.)

lotyrin 7y ago
I imagine this is a supplier (as in B2B, Amazon is negociating prices for buying bulk stock from them to sell on Amazon as Amazon), not a marketplace seller.
hobofan 7y ago
For marketplace sellers, yes that's the rough gist. There are however many more factors: seller rating, shipping speed, whether the fulfillment is done by Amazon, and a few hidden ones. Source: Have built price optimization software for Amazon Marketplace sellers in the past

joe_the_user 7y ago

That sounds pretty terrible but I'm not sure if it relates to Amazon being a monopoly in the usual sense. Ford motor company is huge and may have, for all I know, abusive practices towards it's suppliers. But Ford is certainly in the oligopoly, not monopoly category. Ford could be absolutely the only game in town for a given small or medium sized company but this doesn't mean Ford controls markets on the supplier end, which I believe is the measure of monopoly control. See: https://en.wikipedia.org/wiki/Monopoly https://en.wikipedia.org/wiki/Monopoly

riffraff 7y ago
isn't that monopsony? I think the situation for Amazon is different that for Ford, but I'd agree it seems `single buyer` rather than `single provider`

jyu 7y ago

This situation sounds overblown. If you look at Amazon guidance, $X-million / year means you don't hit the threshold to get an Amazon rep. If you're over $10 million / year you do get a rep. Either increase sales to get a rep or stop being a vendor.

5trokerac3 7y ago

> A client was on track to be selling $X-million this year of some appliances. Our client was forced to to stop selling because of trump tariffs. Amazon won't accept a "higher price" from our little company that only sells $Xm/year. A devil's advocate view: perhaps the supplier was buying low cost appliances from China, built in factories with who knows what labor standards or whether the work was compulsory, made almost certainly to a lower quality than appliances made in North America, taking advantage of China's currency and trade manipulation to mark up the price and make a larger profit than if they had distributed appliances made in a western nation with labor and wage standards. Now the U.S. is putting the same tariffs on Chinese imports that they put on U.S. imports to their country and the supplier is having difficulty getting Amazon to bear the cost of the supplier's desire to keep the same margin.

sutterbomb 7y ago
The devil usually knows a thing or two about what they speak of.
- thfuran 7y ago
  Are you trying to agree or to say that the parent commenter doesn't know what they're talking about? Or maybe to make some kind of religious statement?
ggg3 7y ago
the devil's advocate's advocate would say that even if that was the case, a private organization being the world police of manufacturers' margin doesn't feel right.
calimac 7y ago
There goes another hypothetical... BEWARE anytime a rebuttal post started with “perhaps”.
digitaltrees 7y ago
Why is amazon setting the price rather than letting the supplier and the market?