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I think any manufacturer will tell you that one of the worst ways to do business is to sell your product for less than you're listing it in the storefronts of c

I think any manufacturer will tell you that one of the worst ways to do business is to sell your product for less than you're listing it in the storefronts of companies willing to buy from you for retail. If you're going to undercut your business partners, they will find someone else to do business with. Most manufacturers with their own storefronts won't discount product unless they've allowed it in other storefronts and / or until the product has been discontinued. Don't bite the hand that feeds you. On the other hand, Amazon enforcing this as a rule is sort of ass-backwards. I remember a 2007ish USSC case that utterly changed the premium cigar market because it allowed manufacturers to enforce MSRP against gigantic volume discounters, which raised prices across the board overnight but also gave the manufacturers breathing room when it came to their own profit.

gmadsen 4y ago
the difference is that amazon is an online monopoly with insane fees on sellers. Forcing them to use the pricing on amazon elsewhere, ensures people buy it on amazon, and ensures amazon can continue to bleed sellers for however much they deem appropriate.
- wiremonger 4y ago
  > with insane fees on sellers We sell on Amazon. The fees are not insane. It varies by category, but typically they range from 10-15%. Amazon brings tons of value to the relationship, so we're happy to pay that fee.
  - theturtletalks 4y ago
    10-15% could be 50-60% profit for most sellers. Sure they’re beneficial to you now, but what happens when Amazon starts private labeling the same things you sell? Or your supplier starts selling on Amazon and undercutting you? There’s a reason new DTC brands avoid Amazon and that’s cause you’re not building a customer base or your brand, just helping Amazon build there’s.
    - NickC25 4y ago
      >There’s a reason new DTC brands avoid Amazon and that’s cause you’re not building a customer base or your brand, just helping Amazon build there’s. THIS X10000! Happened to a colleague of mine not too long ago. She developed a product, and sold on Amazon as well as her own storefront. As soon as she started seeing solid volume on Amazon, her product became an "Amazon preferred product" or something like that. However, within 2 weeks of getting that distinction, her sales dropped to 0 on Amazon. Why? Amazon started selling a nearly identical product - Amazon used the sales data to understand her product was popular, and went right to her supplier and cut her out of the equation. Amazon does this constantly.
      - deleted 4y ago
        [deleted]
      - scarby2 4y ago
        > Amazon used the sales data to understand her product was popular, and went right to her supplier and cut her out of the equation. This is not a new thing either. Or unique to amazon. This has been going on for decades (or as long as retailers have had own label products). Every Walmart/safeway/target/kroger branded product is essentially a clone of somebody else's product that they figured out they could do cheaper. Years ago my MiL was selling her baked goods directly to a local grocery chain. They then decided to bring baking in house and came out with an almost identical product line. If you have a product that is easily copied/reproduced (and not patentable) then a retailer can remove your margin by doing it themselves and in this case your value becomes the brand/brand recognition and not the product itself.
    - wiremonger 4y ago
      > 10-15% could be 50-60% profit for most sellers. Yup. Amazon provides an extremely valuable service to us: they provide a stream of customers who are at the end of the sales funnel and ready to convert because they trust Amazon's platform. > What happens when Amazon starts private labeling the same things you sell? Or your supplier starts selling on Amazon and undercutting you? This is going to blow your mind, but we compete against both Amazon Basics and our factory. We compete with Amazon Basics by selling a differentiated product. Amazon will never be able to compete in every product niche and at every level of quality/differentiation. It's actually not possible for the same reason that a centrally planned economy breaks down above a certain level of complexity: there are simply too many different niches that need to be addressed and the profit motive is the only system we've discovered which ensures that they get addressed. And we compete with our supplier by understanding the market better. They're good at manufacturing, but they don't really understand the end user. The type of personality that is good at operating a factory tends not to be the type of personality that is good at marketing. HN doesn't really like to hear this, but sales and marketing are actually an important part of running a business, especially one that sells to consumers.
- lotsofpulp 4y ago
  >the difference is that amazon is an online monopoly with insane fees on sellers It is very easy for me to not type Amazon.com and type any other website address. In fact, I am easily able to avoid Amazon for any non garbage goods I’m looking for. I can even go to eBay.com or aliexpress.com if I want equivalent garbage sold on Amazon.com I struggle to see how it is a monopoly in any sense. On the seller side, they can choose to use USPS/FedEx/UPS to ship.
  - themagician 4y ago
    It's easy for you, but not for others. And if you make a product getting it off Amazon is basically impossible, so it's in your interest to use it and maintain your own listings. If you don't, someone else will.
    - lotsofpulp 4y ago
      Surely it is easy enough to be able to expect people to become literate enough in using computers and the internet to search and visit different websites. We expect people to learn how to read, how to drive, how to do basic math, I do not see why the line would be drawn before learning how to go to different URLs or using a search website. > And if you make a product getting it off Amazon is basically impossible, so it's in your interest to use it and maintain your own listings. If you don't, someone else will. This is a not so easy issue, but if the problem is counterfeits, then the government should pursue that.
    - dh2022 4y ago
      I struggle to see how hard is for someone to type Ebay.com in a browser....
themagician 4y ago
Was 100% true years ago. Now it's less so. With Amazon, as with local retail, there are people who are willing to pay more simply for the convenience. Elasticity varies by category and item, of course, but people would be surprised just how many manufactures do undercut retailers and distributors that they sell to. Part of this is that retail has tried to maintain its >50% margin for items that it doesn't even sell in store anymore. Manufactures know this and effectively cut their discount by selling an item $10 themselves, while only giving the retailer 40% discount. Retail still wants their >50% margin, so they will sell that same item for $11 both online and at B&M. In many cases this actually works out well for everyone. You would think that everyone would just buy direct and save a dollar, but you'd be surprised how many people want the convenience or simply have loyalty to a retailer for some reason.

gmadsen 4y ago

the difference is that amazon is an online monopoly with insane fees on sellers. Forcing them to use the pricing on amazon elsewhere, ensures people buy it on amazon, and ensures amazon can continue to bleed sellers for however much they deem appropriate.

wiremonger 4y ago
> with insane fees on sellers We sell on Amazon. The fees are not insane. It varies by category, but typically they range from 10-15%. Amazon brings tons of value to the relationship, so we're happy to pay that fee.
- theturtletalks 4y ago
  10-15% could be 50-60% profit for most sellers. Sure they’re beneficial to you now, but what happens when Amazon starts private labeling the same things you sell? Or your supplier starts selling on Amazon and undercutting you? There’s a reason new DTC brands avoid Amazon and that’s cause you’re not building a customer base or your brand, just helping Amazon build there’s.
  - NickC25 4y ago
    >There’s a reason new DTC brands avoid Amazon and that’s cause you’re not building a customer base or your brand, just helping Amazon build there’s. THIS X10000! Happened to a colleague of mine not too long ago. She developed a product, and sold on Amazon as well as her own storefront. As soon as she started seeing solid volume on Amazon, her product became an "Amazon preferred product" or something like that. However, within 2 weeks of getting that distinction, her sales dropped to 0 on Amazon. Why? Amazon started selling a nearly identical product - Amazon used the sales data to understand her product was popular, and went right to her supplier and cut her out of the equation. Amazon does this constantly.
    - deleted 4y ago
      [deleted]
    - scarby2 4y ago
      > Amazon used the sales data to understand her product was popular, and went right to her supplier and cut her out of the equation. This is not a new thing either. Or unique to amazon. This has been going on for decades (or as long as retailers have had own label products). Every Walmart/safeway/target/kroger branded product is essentially a clone of somebody else's product that they figured out they could do cheaper. Years ago my MiL was selling her baked goods directly to a local grocery chain. They then decided to bring baking in house and came out with an almost identical product line. If you have a product that is easily copied/reproduced (and not patentable) then a retailer can remove your margin by doing it themselves and in this case your value becomes the brand/brand recognition and not the product itself.
  - wiremonger 4y ago
    > 10-15% could be 50-60% profit for most sellers. Yup. Amazon provides an extremely valuable service to us: they provide a stream of customers who are at the end of the sales funnel and ready to convert because they trust Amazon's platform. > What happens when Amazon starts private labeling the same things you sell? Or your supplier starts selling on Amazon and undercutting you? This is going to blow your mind, but we compete against both Amazon Basics and our factory. We compete with Amazon Basics by selling a differentiated product. Amazon will never be able to compete in every product niche and at every level of quality/differentiation. It's actually not possible for the same reason that a centrally planned economy breaks down above a certain level of complexity: there are simply too many different niches that need to be addressed and the profit motive is the only system we've discovered which ensures that they get addressed. And we compete with our supplier by understanding the market better. They're good at manufacturing, but they don't really understand the end user. The type of personality that is good at operating a factory tends not to be the type of personality that is good at marketing. HN doesn't really like to hear this, but sales and marketing are actually an important part of running a business, especially one that sells to consumers.
lotsofpulp 4y ago
>the difference is that amazon is an online monopoly with insane fees on sellers It is very easy for me to not type Amazon.com and type any other website address. In fact, I am easily able to avoid Amazon for any non garbage goods I’m looking for. I can even go to eBay.com or aliexpress.com if I want equivalent garbage sold on Amazon.com I struggle to see how it is a monopoly in any sense. On the seller side, they can choose to use USPS/FedEx/UPS to ship.
- themagician 4y ago
  It's easy for you, but not for others. And if you make a product getting it off Amazon is basically impossible, so it's in your interest to use it and maintain your own listings. If you don't, someone else will.
  - lotsofpulp 4y ago
    Surely it is easy enough to be able to expect people to become literate enough in using computers and the internet to search and visit different websites. We expect people to learn how to read, how to drive, how to do basic math, I do not see why the line would be drawn before learning how to go to different URLs or using a search website. > And if you make a product getting it off Amazon is basically impossible, so it's in your interest to use it and maintain your own listings. If you don't, someone else will. This is a not so easy issue, but if the problem is counterfeits, then the government should pursue that.
  - dh2022 4y ago
    I struggle to see how hard is for someone to type Ebay.com in a browser....

themagician 4y ago

Was 100% true years ago. Now it's less so. With Amazon, as with local retail, there are people who are willing to pay more simply for the convenience. Elasticity varies by category and item, of course, but people would be surprised just how many manufactures do undercut retailers and distributors that they sell to. Part of this is that retail has tried to maintain its >50% margin for items that it doesn't even sell in store anymore. Manufactures know this and effectively cut their discount by selling an item $10 themselves, while only giving the retailer 40% discount. Retail still wants their >50% margin, so they will sell that same item for $11 both online and at B&M. In many cases this actually works out well for everyone. You would think that everyone would just buy direct and save a dollar, but you'd be surprised how many people want the convenience or simply have loyalty to a retailer for some reason.