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Anti-trust laws were slowly defanged for decades until the main metric considered was 'will consumers see lower prices?' which is very easy to promise and tempo

by rtkwe 5y ago

Anti-trust laws were slowly defanged for decades until the main metric considered was 'will consumers see lower prices?' which is very easy to promise and temporarily deliver for the merging corporations. Then you just start rachetting up prices once you're a year or so out because unwinding a merger is tough.

lotsofpulp 5y ago
Retail businesses have had low single digit profit margins for many decades. Is the claim here that Amazon will be able to destroy all other retail and increase the profit margins? And is it not easier than ever for a competitor to start a retail business due to the internet? All you need is a website and UPS/FedEx/USPS. Seems like a bad business to get into if your goal is to earn a lot of profits by raising prices after cornering a market.
- nerdponx 5y ago
  What are Amazon's profit margins? They are already deep into the "destroy all other retail" part, but it's not just about retail for them. They are vertically integrated, so it's also about distribution, fulfillment, and product search/discovery.
  - lotsofpulp 5y ago
    https://www.macrotrends.net/stocks/charts/AMZN/amazon/profit-margins https://www.macrotrends.net/stocks/charts/AMZN/amazon/profit... Any increase in profit margins from the 2% to 4% range is due to AWS, and earning the commission from resellers (the actual retailers) as a platform. There really is not much left to juice in the business of getting detergent from Procter and Gamble to an end user.
    - fencepost 5y ago
      There really is not much left to juice in the business of getting detergent from Procter and Gamble to an end user. Possibly, but P&G is big enough to have all its own in house production. One place this CAN really hit is any smaller market or company that's using contract manufacturing for smaller lots. In that area the information Amazon can get is actually better than any of the brands or sellers get because Amazon gets sales info across multiple brands /sellers.
      - lotsofpulp 5y ago
        That’s the same advantage any business enjoys when other businesses give them their data. The internet has enabled the smaller company to have access to customers worldwide without the use of any large retailer. The situation has never been better for smaller retail companies, assuming they can differentiate and protect their IP. Obviously they are going to get killed going up against Amazon, Target, Walmart, Home Depot, Lowes, Best Buy, etc. But there is no avoiding economies of scale.
gruez 5y ago
>Anti-trust laws were slowly defanged for decades until the main metric considered was 'will consumers see lower prices?' That seems like the correct metric to use, no? The other definition didn't make much sense either. >GOLDSTEIN: 1966, United States v. Von's Grocery - can two local grocery store chains merge in Los Angeles? >MALONE: I don't know, merger? >GOLDSTEIN: OK, but after the merger, they'd only have 7.5 percent of the local market. >MALONE: Supreme Court was like, no. No, you can't do it. It would be too hard on mom-and-pop shops. >GOLDSTEIN: OK, 1967, Utah Pie v. Continental Baking - can big national frozen pie companies sell really cheap pies in Utah and make business tough for a local pie company? >MALONE: No way. >GOLDSTEIN: OK, but what if the local pie company controls most of the local market and keeps making a profit through most of the price war? >MALONE: Still no, nope. >GOLDSTEIN: So in case after case, the court kept ruling for the little guy, kept ruling for team David, and expanding the definition of what was illegal, what was bad for competition. https://www.npr.org/transcripts/696337392 https://www.npr.org/transcripts/696337392 >which is very easy to promise and temporarily deliver for the merging corporations. Then you just start rachetting up prices once you're a year or so out because unwinding a merger is tough. But amazon didn't get here by a series of mergers?

by rtkwe 5y ago

lotsofpulp 5y ago

Retail businesses have had low single digit profit margins for many decades. Is the claim here that Amazon will be able to destroy all other retail and increase the profit margins? And is it not easier than ever for a competitor to start a retail business due to the internet? All you need is a website and UPS/FedEx/USPS. Seems like a bad business to get into if your goal is to earn a lot of profits by raising prices after cornering a market.

nerdponx 5y ago
What are Amazon's profit margins? They are already deep into the "destroy all other retail" part, but it's not just about retail for them. They are vertically integrated, so it's also about distribution, fulfillment, and product search/discovery.
- lotsofpulp 5y ago
  https://www.macrotrends.net/stocks/charts/AMZN/amazon/profit-margins https://www.macrotrends.net/stocks/charts/AMZN/amazon/profit... Any increase in profit margins from the 2% to 4% range is due to AWS, and earning the commission from resellers (the actual retailers) as a platform. There really is not much left to juice in the business of getting detergent from Procter and Gamble to an end user.
  - fencepost 5y ago
    There really is not much left to juice in the business of getting detergent from Procter and Gamble to an end user. Possibly, but P&G is big enough to have all its own in house production. One place this CAN really hit is any smaller market or company that's using contract manufacturing for smaller lots. In that area the information Amazon can get is actually better than any of the brands or sellers get because Amazon gets sales info across multiple brands /sellers.
    - lotsofpulp 5y ago
      That’s the same advantage any business enjoys when other businesses give them their data. The internet has enabled the smaller company to have access to customers worldwide without the use of any large retailer. The situation has never been better for smaller retail companies, assuming they can differentiate and protect their IP. Obviously they are going to get killed going up against Amazon, Target, Walmart, Home Depot, Lowes, Best Buy, etc. But there is no avoiding economies of scale.

gruez 5y ago

>Anti-trust laws were slowly defanged for decades until the main metric considered was 'will consumers see lower prices?' That seems like the correct metric to use, no? The other definition didn't make much sense either. >GOLDSTEIN: 1966, United States v. Von's Grocery - can two local grocery store chains merge in Los Angeles? >MALONE: I don't know, merger? >GOLDSTEIN: OK, but after the merger, they'd only have 7.5 percent of the local market. >MALONE: Supreme Court was like, no. No, you can't do it. It would be too hard on mom-and-pop shops. >GOLDSTEIN: OK, 1967, Utah Pie v. Continental Baking - can big national frozen pie companies sell really cheap pies in Utah and make business tough for a local pie company? >MALONE: No way. >GOLDSTEIN: OK, but what if the local pie company controls most of the local market and keeps making a profit through most of the price war? >MALONE: Still no, nope. >GOLDSTEIN: So in case after case, the court kept ruling for the little guy, kept ruling for team David, and expanding the definition of what was illegal, what was bad for competition. https://www.npr.org/transcripts/696337392 https://www.npr.org/transcripts/696337392 >which is very easy to promise and temporarily deliver for the merging corporations. Then you just start rachetting up prices once you're a year or so out because unwinding a merger is tough. But amazon didn't get here by a series of mergers?