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I don’t see what’s wrong with this. Many retailers reserve some of their best shelves paces for their private label products, both as a form of differentiation

I don’t see what’s wrong with this. Many retailers reserve some of their best shelves paces for their private label products, both as a form of differentiation and to extract higher margins. You could argue that Amazon is unique in that it is large and potentially has a monopoly over eCommerce, but it is hard to say that in the end, consumers are on the loosing end. Most amazon basic products are commodities, and prices gets lower because of economies of scale. Should amazon jack up the price, consumers will just switch to another whitelabel/run of the mill variant from another seller. It will be problematic if amazon dumps on the market and drives theirs party sellers out of existence, but I don’t think that is the case here.

chillacy 6y ago
Add to this the fact that a lot of these brands don’t even manufacture their items in the first place: they source manufacturers and slap their logo and marketing on, then markup the item price. Does that really add value? In some cases the private label even uses the same manufacturers, the people producing the product still get paid in the end.
- Spivak 6y ago
  Sooooooo many no-name brands that just buy something on Aliexpress and put their logo on it. I'm happy to wait the long shipping times just to get the unbranded version.
- throwaway0a5e 6y ago
  > Does that really add value? The value add is that you can have decent confidence the product isn't so crappy that the brand is unwilling to put their name on it. Presumably Walmart, Harbor Freight, Amazon, whoever at least got a test batch of the product and made sure it actually worked before ordering millions of them. The consumer can just buy the widget at a slight markup for $1.99 and know it will work instead of going on Ebay or Alibaba and buying direct from exporters and wondering whether they should get varieties A, B or C for $1.59, $1.69 or $1.79.
- sidlls 6y ago
  The value in those private label items is sometimes the aesthetic is more appealing. One example: the pattern on a textile such as a curtain or blanket, or the colors/patterns on casing for an electronics item. There are considerations people have that are above and beyond the purely utilitarian.
  - chillacy 6y ago
    Yea in those cases I agree that they do have more involvement than slapping a logo on. That's the case of sunglasses and luxottica: companies are selling a design/logo which is the distinguishing factor, and the manufacturer is simply building it. On the opposite end is where a manufacturer of pasta/salt/milk puts the exact same product in boxes with different labels.
- mjevans 6y ago
  I would really LOVE if Amazon required all sellers to disclose the company and country of original origin. Including for Amazon products. If it's an electronics part, I would also like the FCC submission numbers, UL submission numbers, etc. For every regulatory agency in which a filing was made, I would like to be able to see those filings. Those filings should also count as the advertised product specification. If they change chips or designs outside of the specified list I should be able to return the product for it being different than the listed item.
- robryan 6y ago
  I think what Amazon is saying here is if it is just about slapping a logo on something Amazon can do it better and cheaper than all of these 3rd parties. In some of these categories it is basically heaps of 3rd parties slapping logos on the same stuff and the winner is whoever best games the reviews for search rankings. They are now annoyed that in some cases Amazon decides that there is no winner.
Dahoon 6y ago
> but it is hard to say that in the end, consumers are on the loosing end It's quite easy. Amazon is abusing its position to drive others out of business. They collect a lot of data and when someone finds a great selling product they move in and take over a big chunk of the market. That can and will hurt the customer. It should be illegal, as it actually is in some markets.
- ChrisLomont 6y ago
  Amazon's share of the US retail market is too small to call them a monopoly there, and they hold around half of online retailing, again too small to be a monopoly, since there are ample places to get goods elsewhere. Until they're a legal monopoly in some suitable category, they are welcome to do this. One effect may drive amazon competitors to cater to all the sellers. And at any rate, to be the top spot Amazon has to be offering good enough prices to get consumer dollars. For now it benefits the consumer, because they are getting good prices and possibly avoiding lots of junk sellers selling bad goods. Amazon brand good are trustworthy compared to a lot of sellers.
  - clairity 6y ago
    it's a mistake to only consider (perceived) market share (100%, 51%, or otherwise) as the primary metric of monopoly. it is, in fact, only one metric of many by which monopoly is judged. being a platform business that competes directly with its business customers can be a significant (but not necessarily sufficient) indicator as well.
    - Novukus 6y ago
      I don't know exactly what US anti-trust law says, but German anti-trust law also considers what kind of power you have over competitors and suppliers to decide whether you're behaving anti-competitively. We call it (roughly translated) "Law against constraint of competition". Amazon might qualify as abusing their position under our laws. Unfortunately, it can be difficult to get a case started if the relevant authority isn't paying attention because of how the justice system is structured here and there's a question of how badly companies are actually being impacted in Germany by Amazon's behavior. Our wholesale/retail market seems to be a bit different and far more diverse than in the US.
ponker 6y ago
Lots of things that are "normal" become highly anti-human when done with Amazon's scale and lack of human review/input.
- robertlagrant 6y ago
  > Lots of things that are "normal" become highly anti-human when done with Amazon's scale and lack of human review/input. This would make more sense if the consumers benefiting were not human.
  - ponker 6y ago
    Sure, there is a short term consumer benefit in that someone gets to save 9 cents on AA batteries. It’s not at all clear that consumers benefit in the long term from Amazon becoming ever more powerful.
  - uoaei 6y ago
    It matters how many humans are benefiting, versus how many humans exist.
mikepurvis 6y ago
I've found the "basics" products to be a little hit and miss, at least as far as electronics— USB cables, network hubs, and the like. However, one thing I really do like about them is the minimal packaging. So much other e-commerce stuff still arrives in retail-style blister packages, which is absurd.
- nullandvoid 6y ago
  My girlfriend had nail varnish delivered in ana Amazon box 30x30cm it was ridiculous! So I wouldn't be singing too many praises on their packaging stance
  - cameronbrown 6y ago
    Recycleable cardboard boxes are fine, plastic is the big no no.
  - ehh2heiddn 6y ago
    Funny how people buy a single small item have it shipped to them then have the gall to complain about shipping waste.
    - theplague42 6y ago
      Plenty of small things get mailed in small packages or envelopes; ever ordered a cable off eBay? Amazon prioritizes shipping speed and low labor cost more than packaging waste.
    - pstrateman 6y ago
      even if you buy a bunch of things at once they'll often ship them in nonsensical ways, presumably it reduces their shipping costs
    - heavyset_go 6y ago
      Are you consistent about your stance on shipping small items and don't receive any paper mail at your address, either?
throwaway_USD 6y ago
Under Anti-trust law Company A and Company B can do the same exact thing, but 1 Company may violate Anti-trust laws while the other doesn't. >You could argue that Amazon is unique in that it is large and potentially has a monopoly over eCommerce, but it is hard to say that in the end, consumers are on the loosing end. It is not about a "monopoly", under Anti-trust you can't unfairly leverage your market position to force others out of competition. That is clearly being done, and the entire body of Anti-trust law would disagree with you and say Amazon unfairly using its market position to kill competition (even if Amazon has a lower cost) is a detriment to consumers. In the eyes of Anti-trust law unfairly forcing competitors out of the market limits consumer choice which is always a detriment to consumers.
- saltking112 6y ago
  but some industries clearly needs economies of scale in order to provide the consumer with cheaper and better products. Can you truly argue just because a firm is large they are no longer allowed to offer the same product for cheaper simply because they have a strong foothold in distribution?
  - JumpCrisscross 6y ago
    > some industries clearly needs economies of scale in order to provide the consumer with cheaper and better products This isn't an economy of scale. The component that has scale is distribution. A third-party seller selling through Amazon gets those advantages the same as Amazon. What's different is the sourcing and manufacturing of the product. Amazon has an edge. But it's not one of economies of scale.
    - saltking112 6y ago
      With commoditized products the brand/manufacturer has no pricing power, so in order to go down the cost curve the firm would need to deploy more capital. This means making things in bigger batches, more efficient shipping, more advertisement investment taking ads out on Amazon to get initial reviews etc... In each of these components Amazon Basics has an advantage over third parties whom are often mom and pop and are undercapitailized. The points of contention are 1) If amazon competes fairly in Ad bidding so Basics products shows up first on the paid search results, is this anti-competitive? I don't think so. They just have more capital. Any other well capitalized firm can do the same. 2) Is it fair for amazon to display their products more prominently? I don't think so. How is this any different than Walmart refusing to carry a product? Or putting their private labels more prominently?
MChristopherson 6y ago
"Many retailers reserve some of their best shelves paces for their private label products" A key difference is that in those situations (a grocery store, for example), the marketplace owners have already purchased all the products on the shelves. It's the grocery store's decision to choose what and how the products that they have paid for are presented to customers. This is not a hundred-percent comparison, of course, but it came to mind in the last number of weeks as this Amazon topic has come up.
- kaibee 6y ago
  > A key difference is that in those situations (a grocery store, for example), the marketplace owners have already purchased all the products on the shelves. It's the grocery store's decision to choose what and how the products that they have paid for are presented to customers. Is this actually true these days? I was under the impression that this varied by product.
- txcwpalpha 6y ago
  It might work like that in a mom-and-pop corner store, but for most retailers it is much more complicated than that. Larger stories like Target don't just buy a truckload of Playstations and then put them on the shelf. Instead, one of the ways it happens is that Target works out a specific deal with Sony where Sony essentially 'rents' the shelf space, and Sony then gets to design where on the shelf their products go and is responsible for filling the shelves. Other agreements might be to for Target to purchase a certain amount of Playstations but only as long as Target places them on the top shelf. These are just two of the many different ways that the shelves get filled. In these examples, it's much much harder to draw a comparison to Amazon without knowing how Amazon makes similar agreements with its sellers. (Target and Sony are just examples, I don't know if Target actually does contract specifically with Sony in this way)
  - MChristopherson 6y ago
    I agree, and should have expanded my "not a direct comparison" more clearly to expand on the more nuanced situation. But, I mean my point kind of at the more general level that the topic concerning Amazon often starts at: everyone's (and mine as well) first thought is to mentally compare to a grocery store with own-brand products competing with name-brand versions. In many cases, tho absolutely not all as you correctly point out, the jars of mayonnaise from Kraft and from Safeway are both bought and paid for by Safeway. So, while that is not an absolutely example (as lots of stuff in the store is still owned by the separate vending companies), it is a good caveat to our first "grocery stores do it" thought that comes to mind when thinking about this Amazon topic.
aeturnum 6y ago
I think it's easy to describe why it's problematic without even referring to antitrust. Amazon's brand (as a store / marketplace) is that it helps you sort through many options to select the product they believe you will like the best. This is different from the service offered by traditional grocery stores which offer many different products, but are not arranging those products in relation to a particular request. This means that, when Amazon is operating as a store, any re-ordering of the display results disrupts the value they provide to consumers. It also, of course, disrupts the value they provide to the products they sell. Any other product that receives poor reviews would be punished by being displayed later, but Amazon branded products will never suffer that fate. The same is true of any other algorithmic sorting. Amazon is, with one side of its mouth, suggesting a business model that it claims will benefit both sellers and buyers (that the best products will win and consumers will be shown the product best matched to them) and also explicitly excluding itself from that system. To return to the supermarket situation, you might imagine a supermarket which stocks all brands, but the first item in every row is the store-brand equivalent of that product which you must remove to get to the branded one.
- txcwpalpha 6y ago
  >This is different from the service offered by traditional grocery stores which offer many different products, but are not arranging those products in relation to a particular request. Grocery stores (and all other brick-and-mortars) spend tons and tons of money and effort specifically arranging their stores to influence which products you will buy. It's done on the scale of which aisle certain products are on, all the way down to the scale of specifically which shelf (and even exact inches away from eye level) certain products are on. Every single time you walk into a store, the first product you see (maybe in front of the entryway, maybe it's a big banner hanging from the ceiling, or maybe it's the design of the shelf near the cash register) is all meticulously planned.
  - aeturnum 6y ago
    Yes, they do. That's why I said they "are not arranging those products in relation to a particular request." We are all in the same store, and that store must arrange itself in a way that will serve all customers. Amazon's business model is premised on the idea that they provide a better service than that.
obvthrowaway2 6y ago
I agree. As far as I can see, this is good for the consumer.
mattlutze 6y ago
It's not hard at all to say consumers are on the losing end when a monopolistic company controls product discovery. Amazon getting the sales reduces income to anyone else selling, and when Amazon is almost the only place to sell, smaller companies will go under and new ones will have a harder time starting.
macspoofing 6y ago
>I don’t see what’s wrong with this. I'm with you from an ideological perspective, but from a practical perspective living in the current world the way it is, they will get in trouble from either the American or European[1] regulatory bodies. And I'm surprised they don't get it. It's only a matter of time. It will take only one of their platform users or competitors to get fed-up and make a big stink (and there's already griping), that will start a chain reaction where they will have to do something to firewall their divisions, or they will be broken-up while paying multi-billion dollar fines and taking a huge PR hit. I'm not a genius, but it doesn't take a genius to see that this WILL happen. And they are so stupid for doing what they are doing just to sell some Amazon-branded toilet-paper. They should have just stayed an open platform and not competed with their users. They screwed this up and it's too late to do anything about it now. >Many retailers reserve some of their best shelves paces for their private label products, Sure. And Apple can get away with heavily restricting the type of apps that can be distributed on iOS (so much so that you can't even ship your own HTML rendering engine!!!), but if Microsoft tries something like that with Windows, they would get in tons of trouble. Do you think Amazon in this example is more like Apple or more like Microsoft? [1] Nothing makes European regulators as happy as going after American tech companies.
- boardwaalk 6y ago
  I’m assuming they’ve done some sort of calculus. If you were cynical, you could say they’re pushing the bounds because they know they’ll get whacked for something eventually, even if just for owning a huge chunk of e-commerce (already the case). And if they are going to, why don’t they choose what that’ll be, and the thing that makes them hardly any money? I’m sure they’d be happy to pay basically nothing (what, use their lawyers already on retainer and wind-down contracting of white-label crap? — and maybe pay damages, which seems unlikely they’d let it go that far).
  - macspoofing 6y ago
    You must be correct. They are a trillion-dollar company and they can certainly afford lobbyists and lawyers and accountants and consultants to tell them where the regulatory limits are. And yet, I cannot see how regulators will just let them take over consumer goods given their size and clout, and the fact that they are using data from their users to drive their business decisions on which products to launch and compete with those same users. I just cannot see them not getting into major regulatory trouble for that.
snowwrestler 6y ago
The difference between Amazon and traditional retailers with shelf space a la grocery stores is that grocery stores pay wholesale for the 3rd party products they put on their shelves. So when you see generic fexofenadine sitting next to name-brand Allegra in CVS, Sanofi already received payment for the name-brand bottles (or at least a commitment to pay, depending on net terms). The risk of selling them to consumers now falls on the store. Amazon does not pay wholesale for items in its marketplace. In fact the marketplace was explicitly set up to be a logistics-only service and level playing field for anyone who joined. Now it's not, of course. Basically they pulled a bait-and-switch on their marketplace customers. (Ironically, they also pulled a bait-and-switch on their first retail partners by signing exclusivity agreements, and then breaking them when they launched marketplace.) This is also why Amazon struggles to fight counterfeit products. For most of the products you can buy on amazon.com, Amazon the company does not have buyers who can verify product quality and supply chain before placing a wholesale order. It's a logistical struggle made worse by a cultural struggle, i.e. they don't want to sell counterfeits but they also don't want to do any of the normal work that retailers do to prevent counterfeits.
ryanmcbride 6y ago
I believe the difference between Amazon and a grocery store is that a storefront has to pay for its stock up front and then sell it. This means that if a store stocks a competitor, the company that created the competing product has already been paid. Stores often have agreements with distributers to return and get partial refunds for unsold stock, but not usually the full amount. Whereas Amazon is not a storefront, it's a digital marketplace. They don't have to buy the stock of the product that is being sold, they just put up the listing and take their percentage if the listing sells, and then it's fulfilled by whatever company created the listing. This means that Amazon doesn't lose any money if a competing product doesn't sell. Obviously amazon _does_ buy and fulfill orders themselves for many items, but not all. I think there's a planet money on this specific topic
- TheOtherHobbes 6y ago
  The difference between Amazon and a grocery store is that Amazon has access to global supply chains, Amazon also does logistics, Amazon also does web services, Amazon does its own customer analytics, Amazon uses some very sophisticated algorithms to personalise search results, Amazon sells books and videos and other digital content which it produces and sometimes publishes, Amazon makes special user-friendly control and access hardware, Amazon is also a digital storefront and backend warehouse system, which sellers pay for, at prices that Amazon sets, often with most or all of the risk loaded on the sellers. Among others. Including aggressive tax avoidance in most jurisdictions in which it operates. Amazon is nothing like a grocery store. Nor is it like a department store. Nor is it an online store. It's more like a B-movie monster which is trying to devour retail, manufacturing, supply chain management, logistics, consumer analytics, advertising, content creation, web services, publishing, consumer AI - and a significant proportion of the cardboard box industry.
egd 6y ago
> but it is hard to say that in the end, consumers are on the loosing end. Consumers are actual humans with complex lives that often also include producing things. Every seller that Amazon drives out of business is a consumer (or consumers) that no longer has an income. That's how this harms consumers.
- malandrew 6y ago
  Every Amazon shareholder is also a consumer.
Shivetya 6y ago
At least Amazon isn't hiding that an item is a store brand unlike most if not all grocery chains who go out of their way to disassociate a brand with the store name. Now that is not to say there isn't a brand being sold on Amazon that isn't labeled as such. While I have bought many Amazon branded items there have been a few I skipped because of reviews.
m463 6y ago
If you see amazon as a brick-and-mortar store, maybe it is ok. If you see it as a platform, like the windows 95 desktop with the IE icon, it might be different. Personally as a customer, it's annoying the liberties amazon takes with my shopping experience and sponsored results and toolbar like extras and prime interstitial ads and so on...
kerkeslager 6y ago
How predictable: someone on HN thinks that if something makes money, it must be okay! Why bring a product to market at all if Amazon will just position their own version of your product in front of yours as soon as you have any success? This stifles innovation. How could you possibly think that it doesn't harm consumers when products are sorted by "Whether or not Amazon makes it" rather than something users care about, like quality or price? > Should amazon jack up the price, consumers will just switch to another whitelabel/run of the mill variant from another seller. Sure, but now you're putting the burden of finding those other variants onto the user--this is a problem which marketplaces like Amazon are supposed to solve, not complicate. > It will be problematic if amazon dumps on the market and drives theirs party sellers out of existence, but I don’t think that is the case here. Oh, well as long as you don't think it, it must not be true!
koolhead17 6y ago
Amazon also knows my previous buying shopping history, it can target princely the white labeled product of its, which I have been buying regularly. It is more than best shelves. Tyranny and data moat when marketplace also becomes your competitor.
ashtonkem 6y ago
It certainly feels intuitively wrong, especially when you find out that they use their own sales data and inventory to determine what white labeled products to release. That’s not to say that it’s new or illegal, it just feels scummy.
PopeDotNinja 6y ago
For physical retailers, I never needed to worry web scale, store brand Tasty-Os impacting the availability of my Cheerios.

chillacy 6y ago

Add to this the fact that a lot of these brands don’t even manufacture their items in the first place: they source manufacturers and slap their logo and marketing on, then markup the item price. Does that really add value? In some cases the private label even uses the same manufacturers, the people producing the product still get paid in the end.

Spivak 6y ago
Sooooooo many no-name brands that just buy something on Aliexpress and put their logo on it. I'm happy to wait the long shipping times just to get the unbranded version.
throwaway0a5e 6y ago
> Does that really add value? The value add is that you can have decent confidence the product isn't so crappy that the brand is unwilling to put their name on it. Presumably Walmart, Harbor Freight, Amazon, whoever at least got a test batch of the product and made sure it actually worked before ordering millions of them. The consumer can just buy the widget at a slight markup for $1.99 and know it will work instead of going on Ebay or Alibaba and buying direct from exporters and wondering whether they should get varieties A, B or C for $1.59, $1.69 or $1.79.
sidlls 6y ago
The value in those private label items is sometimes the aesthetic is more appealing. One example: the pattern on a textile such as a curtain or blanket, or the colors/patterns on casing for an electronics item. There are considerations people have that are above and beyond the purely utilitarian.
- chillacy 6y ago
  Yea in those cases I agree that they do have more involvement than slapping a logo on. That's the case of sunglasses and luxottica: companies are selling a design/logo which is the distinguishing factor, and the manufacturer is simply building it. On the opposite end is where a manufacturer of pasta/salt/milk puts the exact same product in boxes with different labels.
mjevans 6y ago
I would really LOVE if Amazon required all sellers to disclose the company and country of original origin. Including for Amazon products. If it's an electronics part, I would also like the FCC submission numbers, UL submission numbers, etc. For every regulatory agency in which a filing was made, I would like to be able to see those filings. Those filings should also count as the advertised product specification. If they change chips or designs outside of the specified list I should be able to return the product for it being different than the listed item.
robryan 6y ago
I think what Amazon is saying here is if it is just about slapping a logo on something Amazon can do it better and cheaper than all of these 3rd parties. In some of these categories it is basically heaps of 3rd parties slapping logos on the same stuff and the winner is whoever best games the reviews for search rankings. They are now annoyed that in some cases Amazon decides that there is no winner.

Dahoon 6y ago

> but it is hard to say that in the end, consumers are on the loosing end It's quite easy. Amazon is abusing its position to drive others out of business. They collect a lot of data and when someone finds a great selling product they move in and take over a big chunk of the market. That can and will hurt the customer. It should be illegal, as it actually is in some markets.

ChrisLomont 6y ago
Amazon's share of the US retail market is too small to call them a monopoly there, and they hold around half of online retailing, again too small to be a monopoly, since there are ample places to get goods elsewhere. Until they're a legal monopoly in some suitable category, they are welcome to do this. One effect may drive amazon competitors to cater to all the sellers. And at any rate, to be the top spot Amazon has to be offering good enough prices to get consumer dollars. For now it benefits the consumer, because they are getting good prices and possibly avoiding lots of junk sellers selling bad goods. Amazon brand good are trustworthy compared to a lot of sellers.
- clairity 6y ago
  it's a mistake to only consider (perceived) market share (100%, 51%, or otherwise) as the primary metric of monopoly. it is, in fact, only one metric of many by which monopoly is judged. being a platform business that competes directly with its business customers can be a significant (but not necessarily sufficient) indicator as well.
  - Novukus 6y ago
    I don't know exactly what US anti-trust law says, but German anti-trust law also considers what kind of power you have over competitors and suppliers to decide whether you're behaving anti-competitively. We call it (roughly translated) "Law against constraint of competition". Amazon might qualify as abusing their position under our laws. Unfortunately, it can be difficult to get a case started if the relevant authority isn't paying attention because of how the justice system is structured here and there's a question of how badly companies are actually being impacted in Germany by Amazon's behavior. Our wholesale/retail market seems to be a bit different and far more diverse than in the US.

ponker 6y ago

Lots of things that are "normal" become highly anti-human when done with Amazon's scale and lack of human review/input.

robertlagrant 6y ago
> Lots of things that are "normal" become highly anti-human when done with Amazon's scale and lack of human review/input. This would make more sense if the consumers benefiting were not human.
- ponker 6y ago
  Sure, there is a short term consumer benefit in that someone gets to save 9 cents on AA batteries. It’s not at all clear that consumers benefit in the long term from Amazon becoming ever more powerful.
- uoaei 6y ago
  It matters how many humans are benefiting, versus how many humans exist.

mikepurvis 6y ago

I've found the "basics" products to be a little hit and miss, at least as far as electronics— USB cables, network hubs, and the like. However, one thing I really do like about them is the minimal packaging. So much other e-commerce stuff still arrives in retail-style blister packages, which is absurd.

nullandvoid 6y ago
My girlfriend had nail varnish delivered in ana Amazon box 30x30cm it was ridiculous! So I wouldn't be singing too many praises on their packaging stance
- cameronbrown 6y ago
  Recycleable cardboard boxes are fine, plastic is the big no no.
- ehh2heiddn 6y ago
  Funny how people buy a single small item have it shipped to them then have the gall to complain about shipping waste.
  - theplague42 6y ago
    Plenty of small things get mailed in small packages or envelopes; ever ordered a cable off eBay? Amazon prioritizes shipping speed and low labor cost more than packaging waste.
  - pstrateman 6y ago
    even if you buy a bunch of things at once they'll often ship them in nonsensical ways, presumably it reduces their shipping costs
  - heavyset_go 6y ago
    Are you consistent about your stance on shipping small items and don't receive any paper mail at your address, either?

throwaway_USD 6y ago

Under Anti-trust law Company A and Company B can do the same exact thing, but 1 Company may violate Anti-trust laws while the other doesn't. >You could argue that Amazon is unique in that it is large and potentially has a monopoly over eCommerce, but it is hard to say that in the end, consumers are on the loosing end. It is not about a "monopoly", under Anti-trust you can't unfairly leverage your market position to force others out of competition. That is clearly being done, and the entire body of Anti-trust law would disagree with you and say Amazon unfairly using its market position to kill competition (even if Amazon has a lower cost) is a detriment to consumers. In the eyes of Anti-trust law unfairly forcing competitors out of the market limits consumer choice which is always a detriment to consumers.

saltking112 6y ago
but some industries clearly needs economies of scale in order to provide the consumer with cheaper and better products. Can you truly argue just because a firm is large they are no longer allowed to offer the same product for cheaper simply because they have a strong foothold in distribution?
- JumpCrisscross 6y ago
  > some industries clearly needs economies of scale in order to provide the consumer with cheaper and better products This isn't an economy of scale. The component that has scale is distribution. A third-party seller selling through Amazon gets those advantages the same as Amazon. What's different is the sourcing and manufacturing of the product. Amazon has an edge. But it's not one of economies of scale.
  - saltking112 6y ago
    With commoditized products the brand/manufacturer has no pricing power, so in order to go down the cost curve the firm would need to deploy more capital. This means making things in bigger batches, more efficient shipping, more advertisement investment taking ads out on Amazon to get initial reviews etc... In each of these components Amazon Basics has an advantage over third parties whom are often mom and pop and are undercapitailized. The points of contention are 1) If amazon competes fairly in Ad bidding so Basics products shows up first on the paid search results, is this anti-competitive? I don't think so. They just have more capital. Any other well capitalized firm can do the same. 2) Is it fair for amazon to display their products more prominently? I don't think so. How is this any different than Walmart refusing to carry a product? Or putting their private labels more prominently?

MChristopherson 6y ago

"Many retailers reserve some of their best shelves paces for their private label products" A key difference is that in those situations (a grocery store, for example), the marketplace owners have already purchased all the products on the shelves. It's the grocery store's decision to choose what and how the products that they have paid for are presented to customers. This is not a hundred-percent comparison, of course, but it came to mind in the last number of weeks as this Amazon topic has come up.

kaibee 6y ago
> A key difference is that in those situations (a grocery store, for example), the marketplace owners have already purchased all the products on the shelves. It's the grocery store's decision to choose what and how the products that they have paid for are presented to customers. Is this actually true these days? I was under the impression that this varied by product.
txcwpalpha 6y ago
It might work like that in a mom-and-pop corner store, but for most retailers it is much more complicated than that. Larger stories like Target don't just buy a truckload of Playstations and then put them on the shelf. Instead, one of the ways it happens is that Target works out a specific deal with Sony where Sony essentially 'rents' the shelf space, and Sony then gets to design where on the shelf their products go and is responsible for filling the shelves. Other agreements might be to for Target to purchase a certain amount of Playstations but only as long as Target places them on the top shelf. These are just two of the many different ways that the shelves get filled. In these examples, it's much much harder to draw a comparison to Amazon without knowing how Amazon makes similar agreements with its sellers. (Target and Sony are just examples, I don't know if Target actually does contract specifically with Sony in this way)
- MChristopherson 6y ago
  I agree, and should have expanded my "not a direct comparison" more clearly to expand on the more nuanced situation. But, I mean my point kind of at the more general level that the topic concerning Amazon often starts at: everyone's (and mine as well) first thought is to mentally compare to a grocery store with own-brand products competing with name-brand versions. In many cases, tho absolutely not all as you correctly point out, the jars of mayonnaise from Kraft and from Safeway are both bought and paid for by Safeway. So, while that is not an absolutely example (as lots of stuff in the store is still owned by the separate vending companies), it is a good caveat to our first "grocery stores do it" thought that comes to mind when thinking about this Amazon topic.

aeturnum 6y ago

I think it's easy to describe why it's problematic without even referring to antitrust. Amazon's brand (as a store / marketplace) is that it helps you sort through many options to select the product they believe you will like the best. This is different from the service offered by traditional grocery stores which offer many different products, but are not arranging those products in relation to a particular request. This means that, when Amazon is operating as a store, any re-ordering of the display results disrupts the value they provide to consumers. It also, of course, disrupts the value they provide to the products they sell. Any other product that receives poor reviews would be punished by being displayed later, but Amazon branded products will never suffer that fate. The same is true of any other algorithmic sorting. Amazon is, with one side of its mouth, suggesting a business model that it claims will benefit both sellers and buyers (that the best products will win and consumers will be shown the product best matched to them) and also explicitly excluding itself from that system. To return to the supermarket situation, you might imagine a supermarket which stocks all brands, but the first item in every row is the store-brand equivalent of that product which you must remove to get to the branded one.

txcwpalpha 6y ago
>This is different from the service offered by traditional grocery stores which offer many different products, but are not arranging those products in relation to a particular request. Grocery stores (and all other brick-and-mortars) spend tons and tons of money and effort specifically arranging their stores to influence which products you will buy. It's done on the scale of which aisle certain products are on, all the way down to the scale of specifically which shelf (and even exact inches away from eye level) certain products are on. Every single time you walk into a store, the first product you see (maybe in front of the entryway, maybe it's a big banner hanging from the ceiling, or maybe it's the design of the shelf near the cash register) is all meticulously planned.
- aeturnum 6y ago
  Yes, they do. That's why I said they "are not arranging those products in relation to a particular request." We are all in the same store, and that store must arrange itself in a way that will serve all customers. Amazon's business model is premised on the idea that they provide a better service than that.

obvthrowaway2 6y ago

I agree. As far as I can see, this is good for the consumer.

mattlutze 6y ago

It's not hard at all to say consumers are on the losing end when a monopolistic company controls product discovery. Amazon getting the sales reduces income to anyone else selling, and when Amazon is almost the only place to sell, smaller companies will go under and new ones will have a harder time starting.

macspoofing 6y ago

>I don’t see what’s wrong with this. I'm with you from an ideological perspective, but from a practical perspective living in the current world the way it is, they will get in trouble from either the American or European[1] regulatory bodies. And I'm surprised they don't get it. It's only a matter of time. It will take only one of their platform users or competitors to get fed-up and make a big stink (and there's already griping), that will start a chain reaction where they will have to do something to firewall their divisions, or they will be broken-up while paying multi-billion dollar fines and taking a huge PR hit. I'm not a genius, but it doesn't take a genius to see that this WILL happen. And they are so stupid for doing what they are doing just to sell some Amazon-branded toilet-paper. They should have just stayed an open platform and not competed with their users. They screwed this up and it's too late to do anything about it now. >Many retailers reserve some of their best shelves paces for their private label products, Sure. And Apple can get away with heavily restricting the type of apps that can be distributed on iOS (so much so that you can't even ship your own HTML rendering engine!!!), but if Microsoft tries something like that with Windows, they would get in tons of trouble. Do you think Amazon in this example is more like Apple or more like Microsoft? [1] Nothing makes European regulators as happy as going after American tech companies.

boardwaalk 6y ago
I’m assuming they’ve done some sort of calculus. If you were cynical, you could say they’re pushing the bounds because they know they’ll get whacked for something eventually, even if just for owning a huge chunk of e-commerce (already the case). And if they are going to, why don’t they choose what that’ll be, and the thing that makes them hardly any money? I’m sure they’d be happy to pay basically nothing (what, use their lawyers already on retainer and wind-down contracting of white-label crap? — and maybe pay damages, which seems unlikely they’d let it go that far).
- macspoofing 6y ago
  You must be correct. They are a trillion-dollar company and they can certainly afford lobbyists and lawyers and accountants and consultants to tell them where the regulatory limits are. And yet, I cannot see how regulators will just let them take over consumer goods given their size and clout, and the fact that they are using data from their users to drive their business decisions on which products to launch and compete with those same users. I just cannot see them not getting into major regulatory trouble for that.

snowwrestler 6y ago

The difference between Amazon and traditional retailers with shelf space a la grocery stores is that grocery stores pay wholesale for the 3rd party products they put on their shelves. So when you see generic fexofenadine sitting next to name-brand Allegra in CVS, Sanofi already received payment for the name-brand bottles (or at least a commitment to pay, depending on net terms). The risk of selling them to consumers now falls on the store. Amazon does not pay wholesale for items in its marketplace. In fact the marketplace was explicitly set up to be a logistics-only service and level playing field for anyone who joined. Now it's not, of course. Basically they pulled a bait-and-switch on their marketplace customers. (Ironically, they also pulled a bait-and-switch on their first retail partners by signing exclusivity agreements, and then breaking them when they launched marketplace.) This is also why Amazon struggles to fight counterfeit products. For most of the products you can buy on amazon.com, Amazon the company does not have buyers who can verify product quality and supply chain before placing a wholesale order. It's a logistical struggle made worse by a cultural struggle, i.e. they don't want to sell counterfeits but they also don't want to do any of the normal work that retailers do to prevent counterfeits.

ryanmcbride 6y ago

I believe the difference between Amazon and a grocery store is that a storefront has to pay for its stock up front and then sell it. This means that if a store stocks a competitor, the company that created the competing product has already been paid. Stores often have agreements with distributers to return and get partial refunds for unsold stock, but not usually the full amount. Whereas Amazon is not a storefront, it's a digital marketplace. They don't have to buy the stock of the product that is being sold, they just put up the listing and take their percentage if the listing sells, and then it's fulfilled by whatever company created the listing. This means that Amazon doesn't lose any money if a competing product doesn't sell. Obviously amazon _does_ buy and fulfill orders themselves for many items, but not all. I think there's a planet money on this specific topic

TheOtherHobbes 6y ago
The difference between Amazon and a grocery store is that Amazon has access to global supply chains, Amazon also does logistics, Amazon also does web services, Amazon does its own customer analytics, Amazon uses some very sophisticated algorithms to personalise search results, Amazon sells books and videos and other digital content which it produces and sometimes publishes, Amazon makes special user-friendly control and access hardware, Amazon is also a digital storefront and backend warehouse system, which sellers pay for, at prices that Amazon sets, often with most or all of the risk loaded on the sellers. Among others. Including aggressive tax avoidance in most jurisdictions in which it operates. Amazon is nothing like a grocery store. Nor is it like a department store. Nor is it an online store. It's more like a B-movie monster which is trying to devour retail, manufacturing, supply chain management, logistics, consumer analytics, advertising, content creation, web services, publishing, consumer AI - and a significant proportion of the cardboard box industry.

egd 6y ago

> but it is hard to say that in the end, consumers are on the loosing end. Consumers are actual humans with complex lives that often also include producing things. Every seller that Amazon drives out of business is a consumer (or consumers) that no longer has an income. That's how this harms consumers.

malandrew 6y ago
Every Amazon shareholder is also a consumer.

Shivetya 6y ago

At least Amazon isn't hiding that an item is a store brand unlike most if not all grocery chains who go out of their way to disassociate a brand with the store name. Now that is not to say there isn't a brand being sold on Amazon that isn't labeled as such. While I have bought many Amazon branded items there have been a few I skipped because of reviews.

m463 6y ago

If you see amazon as a brick-and-mortar store, maybe it is ok. If you see it as a platform, like the windows 95 desktop with the IE icon, it might be different. Personally as a customer, it's annoying the liberties amazon takes with my shopping experience and sponsored results and toolbar like extras and prime interstitial ads and so on...

kerkeslager 6y ago

How predictable: someone on HN thinks that if something makes money, it must be okay! Why bring a product to market at all if Amazon will just position their own version of your product in front of yours as soon as you have any success? This stifles innovation. How could you possibly think that it doesn't harm consumers when products are sorted by "Whether or not Amazon makes it" rather than something users care about, like quality or price? > Should amazon jack up the price, consumers will just switch to another whitelabel/run of the mill variant from another seller. Sure, but now you're putting the burden of finding those other variants onto the user--this is a problem which marketplaces like Amazon are supposed to solve, not complicate. > It will be problematic if amazon dumps on the market and drives theirs party sellers out of existence, but I don’t think that is the case here. Oh, well as long as you don't think it, it must not be true!

koolhead17 6y ago

Amazon also knows my previous buying shopping history, it can target princely the white labeled product of its, which I have been buying regularly. It is more than best shelves. Tyranny and data moat when marketplace also becomes your competitor.

ashtonkem 6y ago

It certainly feels intuitively wrong, especially when you find out that they use their own sales data and inventory to determine what white labeled products to release. That’s not to say that it’s new or illegal, it just feels scummy.

PopeDotNinja 6y ago

For physical retailers, I never needed to worry web scale, store brand Tasty-Os impacting the availability of my Cheerios.