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Solid interview. But one thing I saw that was missing was that Amazon also doesn't charge itself the 15% marketplace fee (it varies slightly depending on categ
by turc1656 7y ago
Solid interview. But one thing I saw that was missing was that Amazon also doesn't charge itself the 15% marketplace fee (it varies slightly depending on category but most are 15%) that it charges 3rd party sellers. Since Amazon directly sells tens of millions of items, it had at least a 15% head start on every single one of those products in terms of price competition. Since we're talking retail here, the margins on most items don't exceed 15% in many cases. The fact that they have been allowed to charge 3rd party sellers this fee while not facing it themselves or being forced to stop selling products at all if they are going to run the marketplace is mind-boggling to me.
At the previous company I worked for, they were very careful about this issue. It was a fintech company that had 20+ different lines of business/revenue. Due to the nature of the fintech space, certain business units wanted information/data/services from the other divisions. For example, the index and ETF team wanted corporate actions data from the team that monitored all corporate actions globally and delivered it via a standardized feed. The ETF and index teams were forced to take money from their budget and actually buy the service from the other team to avoid legal issues. They knew that if other ETF and index providers found out they had to pay for the product but our internal team got everything for free and could then undercut them and charge less for the ETF and index products, I guaran-fucking-tee you they would have sued us. Every division in the company was financially separated for exactly this reason. There should be some sort of class-action lawsuit on this basis from all sellers against Amazon, in my opinion. Amazon should be forced to separate that business that actually sells its own products into a new legal entity and have to pay the fees.
- ksdale 7y agoYour description of your company sounds like it might be more of a transfer pricing issue than an antitrust issue. If the companies all have their own tax situations, then transactions between them need to be "arm's length" so that income isn't shifted from one company to another without the proper entity paying tax on it. That's generally the reason for companies under the same umbrella charging for things. I think you're on to something about the competitive advantage that comes from those fees though. Matt Levine (who writes for Bloomberg) often mentions how odd it is that it's illegal for, say, two plumbers with their own companies to get together and agree to set their prices higher, but it's perfectly legal for those same plumbers to form a company together and then set their prices wherever they want. What's "anticompetitive" for two individuals is ok for a firm, unless the firm gets too big... It definitely makes you wonder if the definition of too big is actually set too high.
- metalliqaz 7y agoAmazon doesn't have to pay the 15%, but they DO have to pay for the massive web infrastructure of their retail storefront and for the massive order fulfillment infrastructure.
- tk75x 7y agoThat's what the 15% fee is for. I can envision splitting up amazon into its retail, web, and logistics branches where the retail branch pays the logistics branch the 15% fee to use their network.
- thirdsun 7y agoI don't think it's the government's job the dictate the structure of a company, which, frankly, isn't anywhere near monopoly status in my opinion. I can order most products from countless other stores, which allows me to easily avoid Amazon if I wanted to.