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From the Bloomberg article : "Chuck Gregorich, who sells fire pits and outdoor furniture, says turning a profit on Amazon is getting harder. One of his popular

• thomastjeffery 3y ago
  Considering they have to pay 56% of their revenue to Amazon, how do you expect them to be able to afford locally manufactured products?
  • verdverm 3y ago
    Do the fees and commissions scale linearly with product price? Are any of them flat fees or capped? Perhaps selling a higher priced product would find a lower share going to Amazon? I don't know myself
  • highwaylights 3y ago
    It wouldn’t matter if they could, Amazon can still acquire and sell them for less regardless. The only viable business here would be a product you’re self-manufacturing or having made bespoke, and even then you better hope you can get some recognition behind your trademark before the chaps out in Shenzhen get a hold of it.
  • danielmarkbruce 3y ago
    They don't have to. They could get their own distribution channel. Distribution is a thing, you can't just complain that you don't have it for free.
    • selcuka 3y ago
      That's literally the meaning of being a monopoly: There are no other distribution channels that can compete with Amazon. They are a distribution monopoly.
      • danielmarkbruce 3y ago
        There is no monopoly in distribution. The vast majority of items are bought offline. Walmart, Costco, Target, Kroger and on and on and on and on. The world wide web + google and facebook make finding eyeballs open for all. Fedex, UPS and USPS make shipping products open to all. Stripe makes accepting payments open to all. Cheap 3rd party manufacturing makes making things open to all. We've probably never been further from a monopoly in any of the areas in question. The reason it's so damn hard to make any money selling random products is that there is just so much competition.
      • root_axis 3y ago
        Huh? That's just totally incorrect. Consider FedEx, UPS, DHL, even USPS.
      • katbyte 3y ago
        ? Sure there is Newegg Best Buy Walmart Home Depot bh photo wayfair webpage that takes you to shoppay or something else
      • missedthecue 3y ago
        Most things aren't bought on Amazon, but if you're a middleman droppshipping stuff from China, Amazon is an easy way to get in front of a lot of eyeballs. It's not clear to me why droppshippers deserve special care and treatment by the FTC.
        • chongli 3y ago
          The chair of the FTC is Lina Khan. As a law student, she wrote this article [1] for the Yale Law Journal. It attracted so much attention in the antitrust law community that it led to her becoming the youngest FTC chair in history. She has literally been building this case against Amazon since she was a student. It’s not just about dropshippers. It’s also about how Amazon uses automated price controls, guided by scraping of competitors, to engage in dumping [2] and predatory pricing [3] to wipe out competing e-commerce sites. Since everything is automated, prices can change in a matter of seconds, so once competitors are destroyed, prices go back up automatically. [1] https://www.yalelawjournal.org/pdf/e.710.Khan.805_zuvfyyeh.pdf https://www.yalelawjournal.org/pdf/e.710.Khan.805_zuvfyyeh.p... [2] https://en.wikipedia.org/wiki/Dumping_(pricing_policy)?wprov=sfti1 https://en.wikipedia.org/wiki/Dumping_(pricing_policy)?wprov... [3] https://en.wikipedia.org/wiki/Predatory_pricing?wprov=sfti1 https://en.wikipedia.org/wiki/Predatory_pricing?wprov=sfti1
• BowBun 3y ago
  You make a good point, but I think the parent point is true as well. You still have people actually producing work, unable to compete on these platforms where Amazon will literally make a copy of their product at a lower price. This is the result of commoditizing 'starting a business' to the point of near-worthlessness in the bottom 50%+. Like you say, I don't value the businesses that simply re-sell re-labeled products without ever interacting with anything very much. But let's not confuse the 'spam' of the problem with the squashing of actual business that this is historically known to cause.
  • notyourwork 3y ago
    Is drop shopping the kind of business to fight for supporting? That’s all this is.
    • thghtihadanacct 3y ago
      Dude needs to learn how to weld his own fire pits, teach some new employees, rinse repeat
      • meetingthrower 3y ago
        Yeah all for < $200 shipped!
        • buildsjets 3y ago
          Dude needs to learn how to build his own fully automated robotic fire pit factory.
          • hellojesus 3y ago
            The complaint here is that someone cannot offer a comparable product for as low cost as their competitor? For all of history we've known that this would lead the least competitive to liquidation.
        • 3y ago
• notyourwork 3y ago
  Ding ding ding. Middlemen get squeezed and are mad about it would be equally fair headline here.
  • omnimus 3y ago
    Amazon is also the middlemen.
    • LadyCailin 3y ago
      They serve more of a purpose than the dropshippers at least. Common market place, guarantees, etc.
    • Stephen_0xFF 3y ago
      Yeah, but they created a moat and became sticky. Netflix knew they were a middleman too so they started to produce their own content years before the streaming wars. I worked for one near the border that bought American industrial parts and sold it to Mexican factories. I helped build their quoting and ERP software, but the boss wanted to build a platform for him and his competition to try to become sticky and build a moat. Middlemen should always be finding ways to stay in the process.
    • chongli 3y ago
      But Amazon adds real value. They built out a huge logistics and PoS system. They have warehouses everywhere. They have millions of subscribers for Prime which gets people to buy large amounts of stuff on the site. Any business owner is free to build their own website, set up payments, set up accounts with FedEx and UPS, and rent some warehouse space. That’s a tough row to hoe!
    • eru 3y ago
      And if someone manages to squeeze Amazon out, good for them!
  • hackerlight 3y ago
    Ok but that is just one example. If the guy they chose for the example happened to make his own firepits he'd also be getting squeezed.
• mlsu 3y ago
  I know that there's the "5x rule" -- BOM cost is supposed to be 5x less than retail. Is there such a rule for fulfillment and delivery? Of course, 56% seems monstrously high to me, but then again, so did 5x BOM cost before I had that explained.
  • 22289d 3y ago
    Food cost in restaurants in similarly shocking. They operate on metrics similar to BOM. Might shock you to find out how much that $40 pizza cost in dough, sauce, cheese and toppings. (Probably just a couple bucks).
    • papertokyo 3y ago
      And yet a 10% profit margin in the restaurant business is considered high.
• afavour 3y ago
  There’s maybe a chicken/egg scenario here. Perhaps, knowing the cut they would have to give to Amazon, they had no option but to manufacture in China?
• BeetleB 3y ago
  Yes - some of the complaints seem legitimate (e.g. burying search results really far low - that hurts me as a buyer, and hurts the seller). But complaining that you need to use Amazon's warehouses to be part of Prime? That's rather obvious! You can always sell as non-Prime. Many do and are successful at it! Basically, Amazon allowed many businesses to exist by creating a very convenient way to sell. Chances are a lot of businesses selling on Prime who are complaining would not have been able to exist at all. (Source: I'm a former FBA seller).
  • sokoloff 3y ago
    Seller Fulfilled Prime is also a thing: https://sell.amazon.com/programs/seller-fulfilled-prime https://sell.amazon.com/programs/seller-fulfilled-prime
    • BeetleB 3y ago
      Did not know about it - is it new? Wonder what additional fees are associated with it.
      • sokoloff 3y ago
        Launched 2015 (but I think launched with literally 3 fulfillers, then expanded).
      • toasterlovin 3y ago
        It's not new, but admission to the program has been unofficially paused for years. They just announced in the last few weeks that they're relaunching the program.
• libraryatnight 3y ago
  I agree but I also don't want to punish legit businesses that are also impacted just because this guy sounds like a pointless middleman and I don't feel bad for him specifically. Seems like a real problem and he's just a bad spokesperson
• mahastore 3y ago
  https://www.aboutamazon.com/news/company-news/amazon-ftc-antitrust-lawsuit-full-response https://www.aboutamazon.com/news/company-news/amazon-ftc-ant...
• KorematsuFredt 3y ago
  Yup. Everything thinks the other person is greedy while they themselves are made of pure virtue.
• billjings 3y ago
  You have a hard time sympathizing? Say what you will about their means of getting it, but this person did 100% of the leg work of getting that sale. That sale doesn't exists without them. And Amazon gets the MAJORITY of the revenue cut for that? I sympathize with the idea that China should get more of that, but make no mistake: Amazon's logistics and warehousing were not an option here. They were the cost of doing business. And Amazon took more for that service than this person who actually made that market happen.
  • somsak2 3y ago
    > this person did 100% of the leg work of getting that sale. That sale doesn't exists without them. I don't really see it that way. The sale wouldn't exist without anyone in the pipeline (Amazon, manufacturer in China, shipping merchant, etc.)
    • unclebucknasty 3y ago
      >The sale wouldn't exist without anyone in the pipeline (Amazon, manufacturer in China, shipping merchant, etc.) I think it's actually worse than that. The merchant is the only party that is not needed. In fact, calling a lot of these folks "merchants" at this point is probably a little too generous. Amazon is the merchant. Many of these other guys are sourcing and marketing "partners" for Amazon and the manufacturers.
      • tylergetsay 3y ago
        Yes -- They even ship the products directly from China to Amazon, who handles all the logistics of importing. https://www.sellerapp.com/blog/how-to-get-your-shipments-from-china-to-amazon-fba/ https://www.sellerapp.com/blog/how-to-get-your-shipments-fro...
  • nemothekid 3y ago
    >100% of the leg work of getting that sale. What leg work? Customer acquisition? They paid amazon for that. Delivery? They paid amazon for that. Manufacturing? They paid China for that.
• seanmcdirmid 3y ago
  They farm out manufacturing to China, but if they designed the products, this isn’t very different from having Foxconn assemble iPhones. But of course, now the Chinese manufacturer could sell their design directly and undercut them, since they aren’t Apple. If they are using a design from the manufacturer, I have no sympathy for them. They are just trying to make money by adding some marketing and connecting dots together.
  • notatoad 3y ago
    https://www.amazon.com/stores/page/DA1BA85C-60B5-4150-B030-AB5C66459DDA https://www.amazon.com/stores/page/DA1BA85C-60B5-4150-B030-A... a quick google search turns up this store. whether they designed these firepits themselves or it's a catalog design from a chinese seller, i don't think it's really fair to compare it to an iPhone. and given the sheer number of designs in his store, i think it's a fairly safe bet that they're reselling catalog products from chinese sellers.
    • conorgdaly 3y ago
      alibaba link for exact product(same images/title/description etc.) https://www.alibaba.com/product-detail/Black-Crossweave-Large-Outdoor-Fire-Pit_1600723821434.html https://www.alibaba.com/product-detail/Black-Crossweave-Larg... alibaba unit price(list): $40.00 amazon seller price: $199
      • spookthesunset 3y ago
        Not really a straight comparison. That one on alibaba has a 100 unit minimum. But yeah, for some extra money, the dudes on alibaba will slap your logo and print your packaging.
    • seanmcdirmid 3y ago
      Either they are selling someone else’s design, or someone else is also selling their design.
  • SkyPuncher 3y ago
• lobochrome 3y ago
  Agreed. It’s a net positive for society if the entire CSFC (Cheap Shit From China) economy is slowly collapsing.
  • meowtimemania 3y ago
    Is the "cheap shit from china" any different than the "slightly more expensive shit from america" that probably isn't even from america?
• user_named 3y ago
  The issue is that Amazon is taking over more and more parts of the process from manufacturing to delivery to the end user. What you don't seem to understand is that they "let" Amazon handle warehousing and logistics because Amazon has in many ways forced this.
  • bluesign 3y ago
    Not Amazon directly but indirectly with customer expectations, you want to have it tomorrow now, instead of waiting for few weeks
• cramjabsyn 3y ago
  This is a tangent but the consumerism that leads to people spending $200 instead of digging a hole in the ground for a fire pit is part of the issue.
• hackerlight 3y ago
  > They farm out manufacturing to China and logistics/warehousing to Amazon You miss the key distinction. The former part of that equation is competitive, the latter part isn't. A guy who sells firepits can't be expected to create a competitor to Amazon. Amazon has complete monopolistic pricing power. Whenever a company is in that position, they will abuse it.
  • sfifs 3y ago
    No telhey can distribute in Walmart Home Depot or Lowe's or equivalent. Amazon is just a more convenient way to distribute and will probably charge you less than the others :-)
• sambazi 3y ago
  fwiw retail taking >50% of the final price is the norm
• resuresu 3y ago
  Human labor has little value in the age of chatgpt and onlyfans. Did you know there are teenage girls selling bottles of their dirty bathwater for more money than the average blue collar worker makes in a month. As time goes on, its starting to look like this whole free market thing isnt such a good idea anymore.
  • hellojesus 3y ago
    What is not free market about teenage girls offering dirty bathwater? Are you upset that there is demand for this product? The girls here actually have a competitive advantage! They have a time limited product (beauty, youth) that is not easily replicable.
    • desiarnezjr 3y ago
      Exactly! In whichever market that you can sell dirty bathwater, I think they may have an advantage over my sales of "Smelly Old Nerd dirty bath water". I'll either find a better channel, price point or give up on my dream of dirty bath water money. Point being the actual value is the packaging and selling of said bathwater.
• SkyPuncher 3y ago
  I'm not supporting Amazon here, but I'd love to know what Chuck thinks his costs would be when he brings this all in house? It seems like he's expecting some sort of crazy margins selling a commodity.
• yosho 3y ago
  I'm a $5m+ Amazon seller here, so many wrong assumptions in the comments, hard to know where to begin... - Firstly, not every Amazon seller is a drop shipper, or private label products. In fact most of the successful ones I know all design and brand their own unique products. We ourselves design everything in-house and own multiple design and utility patents on ALL of our products, you won't find these products on Alibaba. Yes, we manufacture in China, but it is really cost prohibitive and uncompetitive to do so almost anywhere else. - Yes, Amazon's policies hurt us and is completely unethical. The biggest one being losing the "buy box" (ability for customer to buy from your brand) when a lower priced product from your brand is found on a competing website such as Target, Walmart, Shopify, etc. They essentially force you to have the best price possible on Amazon at all times or get severely punished. Why this is terrible... let me explain, let's say Walmart stores offer your product as a holiday sale item in their stores, or let's say a particular color variation of your product isn't doing well so they offer it as a clearance item. Now someone can buy that product at a discount, sell it back on a Target or Walmart online marketplace at a slightly lower price and guess what, your Amazon listing is now practically worthless. You lose the "buy box" and all your sales because another site has it listed for cheaper. This happens ALL THE TIME. And sometimes, there's almost nothing you can do about it. - They practically force you to use Prime fulfillment. Technically you don't HAVE to use it, all you have to do is again, be uncompetitive with products that do offer Prime and lose half your sales. Same with Marketing, PPC, adwords, etc. They've created an ecosystem where all of these options aren't really options because there's no way to compete otherwise. - Amazon basics and Amazon using private sales data to find out which products sell the best and compete with those brands directly. It's just really evil. They have all the info, all the data, and they know exactly which products to target to offer a cheaper version at a discounted price and steal all the sales... I'll be the first to say that I owe Amazon a lot for allowing small businesses the opportunity to be making millions. But at the same time, some of the criticisms are valid, and with a few changes, the platform could be truly great for small business owners.
• stolsvik 3y ago
  As far as I know, the device I’m writing this on is also made in China. And I don’t even have to specify the brand.