4 ms·

Does that mean its a big bate and switch model? Get market share with cheap prices, destroy the competition then ramp up your prices.

jpadkins 14y ago
which has never worked in history. as soon as you raise prices, you lose market share...
singleuse 14y ago
With its low profit margin amazon leaves virtually no room for a small size competitor to dislodge them from their share of the market. Say you want a bite of the tablet market dominated by apple, it's easy, make a somewhat decent tablet for cheap and there you have it. If you want a bite of an amazon dominated market, well good luck with that, and while at it hope that amazon is not planning to get into the market you're in. It seems their strategy relies on tiny margins, maybe with a different set or circumstances amazon would change their stance, but I don't think it's currently part of their plans to ramp up prices.
- robryan 14y ago
  It depends on the product, a lot of cosmetics they seem to be selling at a decent margin and getting undercut by marketplace sellers. If you are going up against the loss leader kindle though it is going to be a lot harder.
carolus4 14y ago
From Amazon's perspective, it's the only way to exist in the long term. If they keep costs and margins low, they don't give their competitors much breathing room to challenge them on price.
jfoster 14y ago
More likely the other way around. Destroy the competition and keep prices the same, but push costs down.
taproot 14y ago
No, they're using low margins to keep market share, indefinitely. There was an article on HN a couple of weeks ago precisely about this topic, decent read / informative. Link: http://www.eugenewei.com/blog/2012/11/28/amazon-and-margins http://www.eugenewei.com/blog/2012/11/28/amazon-and-margins HN Discussion: http://news.ycombinator.com/item?id=5112998 http://news.ycombinator.com/item?id=5112998
wpietri 14y ago
I'm sure it's just a typo. But for the record, it's "bait and switch". A 'bate and switch model is something else entirely.
- al_james 14y ago
  Lol, yes typo.

jpadkins 14y ago

which has never worked in history. as soon as you raise prices, you lose market share...

singleuse 14y ago

With its low profit margin amazon leaves virtually no room for a small size competitor to dislodge them from their share of the market. Say you want a bite of the tablet market dominated by apple, it's easy, make a somewhat decent tablet for cheap and there you have it. If you want a bite of an amazon dominated market, well good luck with that, and while at it hope that amazon is not planning to get into the market you're in. It seems their strategy relies on tiny margins, maybe with a different set or circumstances amazon would change their stance, but I don't think it's currently part of their plans to ramp up prices.

robryan 14y ago
It depends on the product, a lot of cosmetics they seem to be selling at a decent margin and getting undercut by marketplace sellers. If you are going up against the loss leader kindle though it is going to be a lot harder.

carolus4 14y ago

From Amazon's perspective, it's the only way to exist in the long term. If they keep costs and margins low, they don't give their competitors much breathing room to challenge them on price.

jfoster 14y ago

More likely the other way around. Destroy the competition and keep prices the same, but push costs down.

taproot 14y ago

No, they're using low margins to keep market share, indefinitely. There was an article on HN a couple of weeks ago precisely about this topic, decent read / informative. Link: http://www.eugenewei.com/blog/2012/11/28/amazon-and-margins http://www.eugenewei.com/blog/2012/11/28/amazon-and-margins HN Discussion: http://news.ycombinator.com/item?id=5112998 http://news.ycombinator.com/item?id=5112998

wpietri 14y ago

I'm sure it's just a typo. But for the record, it's "bait and switch". A 'bate and switch model is something else entirely.

al_james 14y ago
Lol, yes typo.