4 ms·

What Amazon is typically accused of, having store brands, is what every retailer does. That's hard to win. Maybe there are other things, but I haven't heard of

by wbl 6y ago

What Amazon is typically accused of, having store brands, is what every retailer does. That's hard to win. Maybe there are other things, but I haven't heard of them.

mabbo 6y ago
Perhaps that practice should be examined at every retailer. Should we define a line between marketplace operators and marketplace competitors? Or at least define rules to better ensure fair competition?
- treis 6y ago
  Branded and store/white-label products have coexisted for a while now. It seems to work for everyone involved. The only players that it doesn't seem to work for are those with a brand but not anything underlying to differentiate themselves. But they're ultimately not driving any economic value so it's not that bad when we lose them.
hef19898 6y ago
I'd say some markteplace behaviour is potentially problematic. Amazon knows all sales data on every product on every seller, if Amazon is then selling the same items, Private brand or OEM, it can benefit from a lot of data the individual sellers dont have. Plus the possibilitis Amazon has by owning the marketplace. From personal experience so, once Amazon loses the buy box, the measures to gain it back are more or less what other seller could do as well. No idea how much seller data they use in selecting private brand products so.
- actuator 6y ago
  Playing the devil's advocate here, Amazon is definitely not the only retailer that can use data. All the retailers have data on what sells in their store, they also have the data on how sales are influenced by shelf placement. Amazon to me is a logistics company, along with their storefront and AWS. Their focus on margins and their competence to use data to drive their logistics chains is what's truly scary. They can optimize a lot of inefficiencies that exist in logistics right now just because of the involvement of different disjoint players.
  - hef19898 6y ago
    I totally agree with that. And having seen Amazon and various other companies from the inside, I jave to say that Amazon was definitely the most extreme, but all the most compliant one. They are looking for the legal limits, but the they stay within them. If these limits aren't clearly defined, they test them. So I would suspect that from a legal perspective, Amazon might be fine. Hoe all that translates into anti-trust law, I have no idea.
  - deleted 6y ago
    [deleted]
mathnmusic 6y ago
Retailers do not operate as marketplaces or storefront services though, do they?
- sova 6y ago
  Right. IF a shopping mall started a competing brand for every store in the mall, what would happen?
gamblor956 6y ago
What Amazon is typically accused of, having store brands, is what every retailer does. This is simply not true and displays a fundamental misunderstanding of how retail works. A retailer pays the supplier for the stock of inventory that goes on its shelves, Amazon does not. (It is only in very rare cases the supplier only gets paid for actual sales of retail inventory; generally this happens for new products offered on a consignment basis to demonstrate market demand.) Frequently, retailers will share sales data with their suppliers so that the suppliers can make more attractive products, because then they can sell more units to end customers or charge higher markups. But importantly, with retail, the retailer is the supplier's customer, not you. In contrast, Amazon does not buy the inventory from the suppliers, instead it charges them money to store their inventory in Amazon's warehouses. On top of that, Amazon uses its access to sales data of external suppliers' products to design competing products which it then offers for sale, utilizing its ownership of the platform to promote its own products above competing products. While both of these latter two activities are problematic, it is the last one that definitely runs afoul of antitrust law (and was what got Microsoft into trouble with the EU). The problem with Amazon: it is using its position as the controller of the dominant online marketplace to establish a position in the market for individual categories of goods in a manner that interferes with the normal dynamics of the market.
- nearbuy 6y ago
  > In contrast, Amazon does not buy the inventory from the suppliers, instead it charges them money to store their inventory in Amazon's warehouses. That part seems entirely reasonable. Would you rather Amazon pay sellers for unsold stock? That seems like a sure way to get Amazon to reduce the number of 3rd party sellers they stock.
  - henryfjordan 6y ago
    Amazon's model is entirely reasonable until they become a 1st-party seller that competes with 3rd parties. Then it is all too natural for there to be some market abuse. For instance, configuring search ranking to always put the Amazon branded option in the top results is Amazon abusing their market position as a marketplace/distributor to now directly sell goods.

by wbl 6y ago

What Amazon is typically accused of, having store brands, is what every retailer does. That's hard to win. Maybe there are other things, but I haven't heard of them.

mabbo 6y ago

Perhaps that practice should be examined at every retailer. Should we define a line between marketplace operators and marketplace competitors? Or at least define rules to better ensure fair competition?

treis 6y ago
Branded and store/white-label products have coexisted for a while now. It seems to work for everyone involved. The only players that it doesn't seem to work for are those with a brand but not anything underlying to differentiate themselves. But they're ultimately not driving any economic value so it's not that bad when we lose them.

hef19898 6y ago

I'd say some markteplace behaviour is potentially problematic. Amazon knows all sales data on every product on every seller, if Amazon is then selling the same items, Private brand or OEM, it can benefit from a lot of data the individual sellers dont have. Plus the possibilitis Amazon has by owning the marketplace. From personal experience so, once Amazon loses the buy box, the measures to gain it back are more or less what other seller could do as well. No idea how much seller data they use in selecting private brand products so.

actuator 6y ago
Playing the devil's advocate here, Amazon is definitely not the only retailer that can use data. All the retailers have data on what sells in their store, they also have the data on how sales are influenced by shelf placement. Amazon to me is a logistics company, along with their storefront and AWS. Their focus on margins and their competence to use data to drive their logistics chains is what's truly scary. They can optimize a lot of inefficiencies that exist in logistics right now just because of the involvement of different disjoint players.
- hef19898 6y ago
  I totally agree with that. And having seen Amazon and various other companies from the inside, I jave to say that Amazon was definitely the most extreme, but all the most compliant one. They are looking for the legal limits, but the they stay within them. If these limits aren't clearly defined, they test them. So I would suspect that from a legal perspective, Amazon might be fine. Hoe all that translates into anti-trust law, I have no idea.
- deleted 6y ago
  [deleted]

mathnmusic 6y ago

Retailers do not operate as marketplaces or storefront services though, do they?

sova 6y ago
Right. IF a shopping mall started a competing brand for every store in the mall, what would happen?

gamblor956 6y ago

What Amazon is typically accused of, having store brands, is what every retailer does. This is simply not true and displays a fundamental misunderstanding of how retail works. A retailer pays the supplier for the stock of inventory that goes on its shelves, Amazon does not. (It is only in very rare cases the supplier only gets paid for actual sales of retail inventory; generally this happens for new products offered on a consignment basis to demonstrate market demand.) Frequently, retailers will share sales data with their suppliers so that the suppliers can make more attractive products, because then they can sell more units to end customers or charge higher markups. But importantly, with retail, the retailer is the supplier's customer, not you. In contrast, Amazon does not buy the inventory from the suppliers, instead it charges them money to store their inventory in Amazon's warehouses. On top of that, Amazon uses its access to sales data of external suppliers' products to design competing products which it then offers for sale, utilizing its ownership of the platform to promote its own products above competing products. While both of these latter two activities are problematic, it is the last one that definitely runs afoul of antitrust law (and was what got Microsoft into trouble with the EU). The problem with Amazon: it is using its position as the controller of the dominant online marketplace to establish a position in the market for individual categories of goods in a manner that interferes with the normal dynamics of the market.

nearbuy 6y ago
> In contrast, Amazon does not buy the inventory from the suppliers, instead it charges them money to store their inventory in Amazon's warehouses. That part seems entirely reasonable. Would you rather Amazon pay sellers for unsold stock? That seems like a sure way to get Amazon to reduce the number of 3rd party sellers they stock.
- henryfjordan 6y ago
  Amazon's model is entirely reasonable until they become a 1st-party seller that competes with 3rd parties. Then it is all too natural for there to be some market abuse. For instance, configuring search ranking to always put the Amazon branded option in the top results is Amazon abusing their market position as a marketplace/distributor to now directly sell goods.