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We sell an ERP catered to distributors and many do sell on Amazon. I’ve always wondered why on earth they would continue to sell on a platform that’s constantly

We sell an ERP catered to distributors and many do sell on Amazon. I’ve always wondered why on earth they would continue to sell on a platform that’s constantly gathering their selling data, or even inventory if they’re going FBA, and eventually try to undercut them if their products sell well. Their response is usually “I’m making enough money now, why worry about later?” or “our product category is too niche for Amazon to enter.” It seems like that kind of reasoning makes sense for traditional retailers like Costco/Walmart/Macy’s etc., but not Amazon where Amazon virtually has no risk in listing a product.

bootlooped 6y ago
The other thing is that Amazon effectively has unlimited funds to fight a seller for control of an ASIN. They can sell at a loss for as long as it takes to squeeze you out. They have a massive unfair advantage.
toasterlovin 6y ago
When your customers say that their product is too niche, they're probably right in a lot of cases. The argument that Amazon can enter every niche and cater to every consumer want is essentially saying that planned economies can actually function. But they can't. Amazon is skimming the highest volume product categories and that's it. They couldn't manage the complexity of branching out into every single long tail product.
- PaulDavisThe1st 6y ago
  Not highest volume. Highest gross profit (volume * margin). And how would you ever know either of these two (volume, margin) if you were an arbitrary 3rd party? Amazon doesn't need to branch out into every single long tail product to cause severe disruption to a retail sector that is often predicated on low single digit margins.
  - econcon 6y ago
    How does Amazon know margin? Amazon know volume, Amazon goes to suppliers on alibaba and gives them the quantity they require and then Amazon figures out what margin they'll be making if they sell it at the same or lower price than the original seller.
    - PaulDavisThe1st 6y ago
      If you can't see volume, you can't estimate profit, and you can't differentiate which products are worth considering as a primary seller. Start with volume as a suggestion of which products to investigate for purchase price with sellers. If you can get the "right" price with the "appropriate" volume, start selling the product direct. Also, at Amazon scale, you can estimate margin by looking at price variation over time and throwing in some well tested assumptions.
      - toasterlovin 6y ago
        > Also, at Amazon scale, you can estimate margin by looking at price variation over time and throwing in some well tested assumptions. You really can't. You have to do research and modeling to figure out margins. There are probably half a dozen factors that determine a product's margin.
- econcon 6y ago
  Yes they can't but what Amazon is usually doing is pretty simple. It gets into things where not much is needed. For example, USB cables, laptop sleeves, kettle bells, dumbell, weight plates, led light and this kind of category is simply too big and it will put whoever ever discovered a new niche which doesn't require anything more than the physical product get outcompeted by Amazon.

bootlooped 6y ago

The other thing is that Amazon effectively has unlimited funds to fight a seller for control of an ASIN. They can sell at a loss for as long as it takes to squeeze you out. They have a massive unfair advantage.

toasterlovin 6y ago

When your customers say that their product is too niche, they're probably right in a lot of cases. The argument that Amazon can enter every niche and cater to every consumer want is essentially saying that planned economies can actually function. But they can't. Amazon is skimming the highest volume product categories and that's it. They couldn't manage the complexity of branching out into every single long tail product.

PaulDavisThe1st 6y ago
Not highest volume. Highest gross profit (volume * margin). And how would you ever know either of these two (volume, margin) if you were an arbitrary 3rd party? Amazon doesn't need to branch out into every single long tail product to cause severe disruption to a retail sector that is often predicated on low single digit margins.
- econcon 6y ago
  How does Amazon know margin? Amazon know volume, Amazon goes to suppliers on alibaba and gives them the quantity they require and then Amazon figures out what margin they'll be making if they sell it at the same or lower price than the original seller.
  - PaulDavisThe1st 6y ago
    If you can't see volume, you can't estimate profit, and you can't differentiate which products are worth considering as a primary seller. Start with volume as a suggestion of which products to investigate for purchase price with sellers. If you can get the "right" price with the "appropriate" volume, start selling the product direct. Also, at Amazon scale, you can estimate margin by looking at price variation over time and throwing in some well tested assumptions.
    - toasterlovin 6y ago
      > Also, at Amazon scale, you can estimate margin by looking at price variation over time and throwing in some well tested assumptions. You really can't. You have to do research and modeling to figure out margins. There are probably half a dozen factors that determine a product's margin.
econcon 6y ago
Yes they can't but what Amazon is usually doing is pretty simple. It gets into things where not much is needed. For example, USB cables, laptop sleeves, kettle bells, dumbell, weight plates, led light and this kind of category is simply too big and it will put whoever ever discovered a new niche which doesn't require anything more than the physical product get outcompeted by Amazon.