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By selling soap for a loss for longer than the competitors can stomach. If you have 10 businesses making $100M/yr, you can lose $1B/yr on soap (by selling a $2
by adt2bt 3y ago
By selling soap for a loss for longer than the competitors can stomach. If you have 10 businesses making $100M/yr, you can lose $1B/yr on soap (by selling a $2 bar for $1) and get a ton of customers who buy your cheaper soap. Eventually, other basic soap sellers will either need to match your prices and take their own losses to match, or hold steady hoping you'll fold.
Eventually, they are either sold to Amazon or fold, and Amazon can increase the price to $2.20/bar and mint another $100M/year for the next industry to attack with $1.1B. Rinse & repeat and eventually the customer is charged some percentage more for the same product once the competition is kowtowed.
- deleted 3y ago[deleted]
- WalterBright 3y agoWhen they raise prices again to cover for the losses, another soap company appears. "Predatory" pricing is not sustainable.
- altcognito 3y agoIt is possible that large scale soap companies will be deterred due to previous anticompetitive behavior
- afavour 3y agoThat is surely a vast simplification. By sheer operating scale Amazon can ship items at a cost far lower than any brand new “soap company” could. There’s no way you could be competitive on such a low priced item.
- nickpp 3y agoAnd still countless competitors do exist. They must find some other ways to compete, because your point is valid. It's almost like the human ingenuity knows no bounds...
- WalterBright 3y agoIf you sell 100 soaps for a loss of $1 each, you lose $100. If Amazon competes by selling 10,000 soaps for a loss of $1 each, Amazon loses $10,000. This is a losing proposition for Amazon. Spread that over its product line, and it is not sustainable.