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I'm honestly intrigued as to how this is so morally unambiguous. Walmart, any-given-supermarket, Costco, etc., have in-house brands (for example Kirkland with

I'm honestly intrigued as to how this is so morally unambiguous. Walmart, any-given-supermarket, Costco, etc., have in-house brands (for example Kirkland with Costco). These became prominent in the 90's and there was similar discussion at the time about the ethics of a supermarket introducing competitors to the brands it stocks. Such controversy has died down and now it is commonplace. Looking at some updated articles, in-house brands at those retailers have in many (most?) cases outsold their branded competitors, so in-house brands like Kirkland are actually the largest brands in the country. So my question is: what makes Amazon different, behaviorally, than Costco, Walmart, Vons, etc.? Both use an (arguably) unfair data asymmetry to introduce in-house branded products to compete with the external brands they also sell. You then have brands like Trader Joe's that go out of their way to have an in-house brand, and make few exceptions. On open question is: who is this behavior actually hostile to? I think it's now conventional wisdom that if you're a brand selling in Vons or Trader Joe's that you need some special sauce to compete successfully with an inevitably-introduced in-house brand. So what is that special sauce? You have some brands that are exclusive because of their provenance or method of creation (say, a particular Scotch). But then you have many brands that are actually manufactured in the same locations and by the same people as the in-house brands, wherein the brand itself is a middleman who created a particular formulation or price/materials ratio that may or may not be the best one. These would seem to be the most vulnerable to Amazon building an in-house competitor, or Walmart, or Vons, etc. I suppose, looking for the other side of the argument, that the question would be if Amazon has so much monopolistic market clout that the third party has no way to exist once the in house brand has taken over. E.g. as though Costco were the only supermarket period, or, more accurately, if Trader Joe's were the only supermarket period.

vkou 6y ago
> So my question is: what makes Amazon different, behaviorally, than Costco, Walmart, Vons, etc.? Both use an (arguably) unfair data asymmetry to introduce in-house branded products to compete with the external brands they also sell. You then have brands like Trader Joe's that go out of their way to have an in-house brand, and make few exceptions. The difference is that Costco very clearly discriminates about whose products it will stock on shelves, whereas Amazon is more like a flea market that charges people for renting bazaar stalls to sell from, and POS machines for processing payments. I'm not sure that should result in legislative differences, but that is a pretty significant difference between the two.
- lemmsjid 6y ago
  It's interesting how perspectives differ and I'm not disagreeing with yours. If you'd asked me before this discussion whether or not I felt, given those criteria, that Amazon was a store or a flea market, I'd say I'd prefer Amazon to act like a store, and while it does have flea market aspects, I'd be happy for it to move away from them and in the store direction. The times I've actively disliked Amazon was when I bought some cheap but well-reviewed product and got something that was below cheap quality. I realized at those times that my natural expectation of Amazon was that it had some quality threshold for what it sold. I realized my thinking about Amazon did need to become flea-market-like, e.g. look that gift horse in the mouth! Except that isn't viable online where you can't personally evaluate what you're buying, especially on the low end of the market. I now like buying Amazon Basics at the low end price tier because it has a certain quality bar. I'd be more than happy, from a pure consumerist perspective, for Amazon to be mainly stocked with high quality third parties, its in-house brand filling in the cheaper side of the market, and then non-premium third parties who have somehow successfully competed with the in-house brand with some angle (say, sourcing a cheaper process that still gets results).
mc32 6y ago
I wouldn’t be mad if they had their own products without using data mining to compete against their sellers. It’s that they use advanced data intelligence to compete. If they competed naively (had a hard wall between their market place division and their consumer products division, I wouldn’t have an issue.
- lemmsjid 6y ago
  That sounds ideal to me too, but you have the same data asymmetry in the supermarket example. Supermarkets are pioneering data aggregators, having the ability to observe foot traffic and having the final seller aggregations. They can and do have a bird's eye view that they actively use to choose what to do with Kirkland, Parent's Choice, etc. I'd be very interested in what comprehensive reform in that area might look like and unintended consequences that might impact the consumer. I'm a big Trader Joe's fan, and they aggressively push out or white label third party brands. Only brands that are seemingly irreplacable, like Roquefort cheese or single malt Scotch-es, are spared the white label (and even then Trader Joe's constantly puts up 'Trader Joes blue', or 'Trader Joe's scotch' in an endless attempt to replicate). Should it be legal for Trader Joe's to do exactly that, but illegal for them to use sales data to optimize? I'm not sure I'd find that a happy outcome.
  - mc32 6y ago
    If Trader Joe’s were the only supermarket chain or they had an 80% market share, yes I’d have a problem, unless they had always been no frills label only and then decades later decided, you know what, we’ll bring in some independent brands in. My problem is their using independent brand/seller data to undermine/undersell that brand by leveraging that morally dubious data.

vkou 6y ago

> So my question is: what makes Amazon different, behaviorally, than Costco, Walmart, Vons, etc.? Both use an (arguably) unfair data asymmetry to introduce in-house branded products to compete with the external brands they also sell. You then have brands like Trader Joe's that go out of their way to have an in-house brand, and make few exceptions. The difference is that Costco very clearly discriminates about whose products it will stock on shelves, whereas Amazon is more like a flea market that charges people for renting bazaar stalls to sell from, and POS machines for processing payments. I'm not sure that should result in legislative differences, but that is a pretty significant difference between the two.

lemmsjid 6y ago
It's interesting how perspectives differ and I'm not disagreeing with yours. If you'd asked me before this discussion whether or not I felt, given those criteria, that Amazon was a store or a flea market, I'd say I'd prefer Amazon to act like a store, and while it does have flea market aspects, I'd be happy for it to move away from them and in the store direction. The times I've actively disliked Amazon was when I bought some cheap but well-reviewed product and got something that was below cheap quality. I realized at those times that my natural expectation of Amazon was that it had some quality threshold for what it sold. I realized my thinking about Amazon did need to become flea-market-like, e.g. look that gift horse in the mouth! Except that isn't viable online where you can't personally evaluate what you're buying, especially on the low end of the market. I now like buying Amazon Basics at the low end price tier because it has a certain quality bar. I'd be more than happy, from a pure consumerist perspective, for Amazon to be mainly stocked with high quality third parties, its in-house brand filling in the cheaper side of the market, and then non-premium third parties who have somehow successfully competed with the in-house brand with some angle (say, sourcing a cheaper process that still gets results).

mc32 6y ago

I wouldn’t be mad if they had their own products without using data mining to compete against their sellers. It’s that they use advanced data intelligence to compete. If they competed naively (had a hard wall between their market place division and their consumer products division, I wouldn’t have an issue.

lemmsjid 6y ago
That sounds ideal to me too, but you have the same data asymmetry in the supermarket example. Supermarkets are pioneering data aggregators, having the ability to observe foot traffic and having the final seller aggregations. They can and do have a bird's eye view that they actively use to choose what to do with Kirkland, Parent's Choice, etc. I'd be very interested in what comprehensive reform in that area might look like and unintended consequences that might impact the consumer. I'm a big Trader Joe's fan, and they aggressively push out or white label third party brands. Only brands that are seemingly irreplacable, like Roquefort cheese or single malt Scotch-es, are spared the white label (and even then Trader Joe's constantly puts up 'Trader Joes blue', or 'Trader Joe's scotch' in an endless attempt to replicate). Should it be legal for Trader Joe's to do exactly that, but illegal for them to use sales data to optimize? I'm not sure I'd find that a happy outcome.
- mc32 6y ago
  If Trader Joe’s were the only supermarket chain or they had an 80% market share, yes I’d have a problem, unless they had always been no frills label only and then decades later decided, you know what, we’ll bring in some independent brands in. My problem is their using independent brand/seller data to undermine/undersell that brand by leveraging that morally dubious data.