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We see this because small players have a visibility problem: if they stick to their private little corner of the internet, they have to put a lot of effort into

We see this because small players have a visibility problem: if they stick to their private little corner of the internet, they have to put a lot of effort into getting noticed and attracting customers. Likewise, customers also have a harder time finding good offers if they are hard to notice. Centralized market platforms (Amazon, app stores) reduce that offer on both sides by pooling both sides and making them accessible to each other. And because of the inherent networking effects, these platforms can ask a nice premium and still be attractive.

Ididntdothis 7y ago
This is a really bad trend. The little guy never develops a reputation. Let's say you are the best Uber driver or the best Amazon merchant with a perfect track record. The day Uber or Amazon decide to cut you off you lose everything. You have nothing to show for. it would be better if these platforms were neutral entities that just connected sellers to buyers in an efficient way. But they try to totally control the sellers. Back to the contracting example. For a while I worked with an agency that took only a 3% cut for filing paperwork with the big company. they provided an efficient service for both buyer and seller (me). But the 30% guys are just parasites that control the market.
- nindalf 7y ago
  > the 30% guys ... control the market. Why is that? Is it because they were providing a superior service? If they were providing an inferior service, how did they control the market?
  - moate 7y ago
    Because many of them created their market space years ago and are now so established that it's difficult for a competitor to stage a worthwhile effort to draw revenue away from them. Because they have so much money available to them they can even afford to deal with a challenger by dropping their prices/rates lower than that competitor, operating at a loss for however long it would take for that competitor to die off, and then go back to business as usual(the "Walmart" strategy).
    - nkurz 7y ago
      You refer to this as the "Walmart" strategy, but I don't think that's a standard interpretation of Walmart's strategy. From what I can tell, Walmart is more focussed on the long term, contracting with supplies in ways that allow them to keep prices low enough to prevent competitors from ever entering the market. Can you find any examples of Walmart actually following the strategy you suggest?
      - moate 7y ago
        https://www.investopedia.com/terms/w/walmart-effect.asp https://www.investopedia.com/terms/w/walmart-effect.asp It's generally understood that "back in the day" (whenever that was) when Walmart was going through it's greatest period of expansion that Walmart would be able to enter an area and have a negative effect on existing businesses that didn't have it's advantages (massive corporate bankroll, improved supply chain, variety of offerings, etc). Eventually those business would atrophy, often closing. At this point, the local store had established itself and was able to behave in whatever manner it wanted (raise prices, lower wages, etc) because they had essentially become the only game in town. At this point, as they are so entrenched, they probably behave in a very different way and have different needs.
    - navigatesol 7y ago
      >Because many of them created their market space years ago and are now so established that it's difficult for a competitor to stage a worthwhile effort I find this opinion (which is common on HN) hard to reconcile with the idea that established companies are "old and slow" and susceptible to "disruption" (also common on HN). Like, no one can take out Apple's AppStore stronghold, but Tesla is going to bankrupt a century-old trillion dollar auto industry with a global supply chain infrastructure? Which one is it?
      - wtetzner 7y ago
        Aren't these different things, though? Auto companies aren't platforms for the small guys to sell their things. Nobody is saying it's impossible to sell your product without going through one of the big platforms, just that it's expensive and difficult to market your product without doing so. Also, I don't think it's ever as simple as established companies being "old and slow" so startups can "disrupt" them. Some companies are old and slow in certain dimensions, but at the top of the game in other dimensions. Further, established companies have inertia, which can work for or against them.
- AnthonyMouse 7y ago
  > it would be better if these platforms were neutral entities that just connected sellers to buyers in an efficient way. But they try to totally control the sellers. This is more true of Apple than of Uber or Amazon. There are ways to build your own reputation. You can operate your own store and your own website and also at the same time make your products/services available via Amazon for the people who look for them there first, and include information about your own website on the retail product packaging. The real problem is that building a reputation is hard and a lot of people will fail. The large majority of small business fail. That isn't something Amazon invented or caused. By contrast, what Apple is doing would be like there being a city where Uber owns the roads. You can go where you want (unless they decide you can't), but you have to take an Uber, you can't use Lyft or a taxi or buy your own car or get a ride from a friend. Which is a much bigger problem, because it prevents anyone from going from client to competitor. It prevents, for example, what Valve does with Steam on Windows (and other platforms), or Amazon or F-Droid does on Android. Even once you're a big enough producer to justify doing your own distribution, you still can't. But that's how distribution competitors come about, which means there can't be any, and then you're completely at the mercy of the monopoly distributor. If they decide they don't like you, or they start to compete with you in your market, or they just fat finger some paperwork, you're completely excluded from the market. Can't switch to Lyft or Walmart, can't strike out on your own, you're just dead in the water. Most companies will never make it to the point where that matters, but the ones who do are really important because that's where competition in distribution comes from. Recall that Amazon started off as a book store at a time when Walmart was considered unstoppable.
rohit2412 7y ago
And the platforms become middlemen. Infact, they are the definition of middlemen. What needs to happen is a standardization and commodification of different platforms. I think Elizabeth Warren has this as a part of her campaign.
- Ididntdothis 7y ago
  "What needs to happen is a standardization and commodification of different platforms." Exactly. Right now the seller gets commodified instead of the middleman.
mariushn 7y ago
Right. The biggest problem is that they make it extremely hard to compete with them. Being a marketplace, it's hard for another player to capture enough of both sides of the market to gain momentum. Buyers will just go to the big players, which can then take a hefty 20+% commission. It's a hard-to-break circle. Any ideas? Other examples: Booking.com, AirBnB

Ididntdothis 7y ago

This is a really bad trend. The little guy never develops a reputation. Let's say you are the best Uber driver or the best Amazon merchant with a perfect track record. The day Uber or Amazon decide to cut you off you lose everything. You have nothing to show for. it would be better if these platforms were neutral entities that just connected sellers to buyers in an efficient way. But they try to totally control the sellers. Back to the contracting example. For a while I worked with an agency that took only a 3% cut for filing paperwork with the big company. they provided an efficient service for both buyer and seller (me). But the 30% guys are just parasites that control the market.

nindalf 7y ago
> the 30% guys ... control the market. Why is that? Is it because they were providing a superior service? If they were providing an inferior service, how did they control the market?
- moate 7y ago
  Because many of them created their market space years ago and are now so established that it's difficult for a competitor to stage a worthwhile effort to draw revenue away from them. Because they have so much money available to them they can even afford to deal with a challenger by dropping their prices/rates lower than that competitor, operating at a loss for however long it would take for that competitor to die off, and then go back to business as usual(the "Walmart" strategy).
  - nkurz 7y ago
    You refer to this as the "Walmart" strategy, but I don't think that's a standard interpretation of Walmart's strategy. From what I can tell, Walmart is more focussed on the long term, contracting with supplies in ways that allow them to keep prices low enough to prevent competitors from ever entering the market. Can you find any examples of Walmart actually following the strategy you suggest?
    - moate 7y ago
      https://www.investopedia.com/terms/w/walmart-effect.asp https://www.investopedia.com/terms/w/walmart-effect.asp It's generally understood that "back in the day" (whenever that was) when Walmart was going through it's greatest period of expansion that Walmart would be able to enter an area and have a negative effect on existing businesses that didn't have it's advantages (massive corporate bankroll, improved supply chain, variety of offerings, etc). Eventually those business would atrophy, often closing. At this point, the local store had established itself and was able to behave in whatever manner it wanted (raise prices, lower wages, etc) because they had essentially become the only game in town. At this point, as they are so entrenched, they probably behave in a very different way and have different needs.
  - navigatesol 7y ago
    >Because many of them created their market space years ago and are now so established that it's difficult for a competitor to stage a worthwhile effort I find this opinion (which is common on HN) hard to reconcile with the idea that established companies are "old and slow" and susceptible to "disruption" (also common on HN). Like, no one can take out Apple's AppStore stronghold, but Tesla is going to bankrupt a century-old trillion dollar auto industry with a global supply chain infrastructure? Which one is it?
    - wtetzner 7y ago
      Aren't these different things, though? Auto companies aren't platforms for the small guys to sell their things. Nobody is saying it's impossible to sell your product without going through one of the big platforms, just that it's expensive and difficult to market your product without doing so. Also, I don't think it's ever as simple as established companies being "old and slow" so startups can "disrupt" them. Some companies are old and slow in certain dimensions, but at the top of the game in other dimensions. Further, established companies have inertia, which can work for or against them.
AnthonyMouse 7y ago
> it would be better if these platforms were neutral entities that just connected sellers to buyers in an efficient way. But they try to totally control the sellers. This is more true of Apple than of Uber or Amazon. There are ways to build your own reputation. You can operate your own store and your own website and also at the same time make your products/services available via Amazon for the people who look for them there first, and include information about your own website on the retail product packaging. The real problem is that building a reputation is hard and a lot of people will fail. The large majority of small business fail. That isn't something Amazon invented or caused. By contrast, what Apple is doing would be like there being a city where Uber owns the roads. You can go where you want (unless they decide you can't), but you have to take an Uber, you can't use Lyft or a taxi or buy your own car or get a ride from a friend. Which is a much bigger problem, because it prevents anyone from going from client to competitor. It prevents, for example, what Valve does with Steam on Windows (and other platforms), or Amazon or F-Droid does on Android. Even once you're a big enough producer to justify doing your own distribution, you still can't. But that's how distribution competitors come about, which means there can't be any, and then you're completely at the mercy of the monopoly distributor. If they decide they don't like you, or they start to compete with you in your market, or they just fat finger some paperwork, you're completely excluded from the market. Can't switch to Lyft or Walmart, can't strike out on your own, you're just dead in the water. Most companies will never make it to the point where that matters, but the ones who do are really important because that's where competition in distribution comes from. Recall that Amazon started off as a book store at a time when Walmart was considered unstoppable.

rohit2412 7y ago

And the platforms become middlemen. Infact, they are the definition of middlemen. What needs to happen is a standardization and commodification of different platforms. I think Elizabeth Warren has this as a part of her campaign.

Ididntdothis 7y ago
"What needs to happen is a standardization and commodification of different platforms." Exactly. Right now the seller gets commodified instead of the middleman.

mariushn 7y ago

Right. The biggest problem is that they make it extremely hard to compete with them. Being a marketplace, it's hard for another player to capture enough of both sides of the market to gain momentum. Buyers will just go to the big players, which can then take a hefty 20+% commission. It's a hard-to-break circle. Any ideas? Other examples: Booking.com, AirBnB