In Germany Amazon pressured third-party sellers to use their fulfillment/warehousing service, which would reveal to them where those sellers source their goods from. They then just went to those sources and offered them a better deal, cutting out the third-party seller. So basically third-party sellers are doing free market research for Amazon: They take on the entrepreneurial risk and if they're successful Amazon will know exactly how many goods they sell to which customers and from who they get those goods. They can then use that information in their own product strategy and simply take over the business of their most profitable sellers. Really clever strategy IMHO, albeit not very fair.
That’s not like this at all. You have businesses who are making a profit off of an information asymmetry and reselling goods for higher prices. Totally normal, not begrudging it. But it’s always a risk that someone will figure out your suppliers and cut you out of the deal.
Have you never looked around to figure out where some dropshipper gets their stuff and bought direct?
This is exactly the same thing Walmart used to do.
They would buy supply of a product from a startup supplier, who had done all the work of sourcing and designing the production of their product, and then demand ever-declining prices of said supply until the startup supplier had no choice but to abandon ship due to lack of profitability. At which point Walmart would simply re-create the supply chain themselves.
The solution is to never deal with a corporation like Amazon or Walmart, Bezos didn't get to be a pretend-astronaut wannabe by paying his bills.
The difference between Walmart and Amazon, is that Amazon can study products it had no analog for. It could decide that it wants to enter a market, study sales patterns, force a supply chain change that let them spy on it, and launch their own products from that data.
The depth of data they have is much deeper. Walmart hasn't had 3rd party sellers for as long as Amazon, and that sort of historical sales data is priceless to retailers. They don't willingly share that.
1. your product doesn't sell very well, but doesn't fail entirely. you bought yourself a job, basically, you work longer hours for the same or a little less money than you made when you were employed.
2. your product doesn't sell well enough to stay on the shelves, you've probably sunk some of your own money into a failed venture and if you have debt you're probably looking at bankruptcy.
3. your product sells well, Amazon or Walmart steal it from you.
I'd say the only way to win this game is not play. Build a product for a nice market outside of their clientele's price target that sells at a premium Amazon and Walmart shoppers are unwilling to pay.
Really clever short term strategy. Once word gets out only sellers who don't care will list their products, and your product listings will be page after page of cheap, knock-off crap only an idiot would buy.
Yes, Amazon is rotting from the inside by their own foul tactics. But by then, everybody involved will be heroes of their field and Bezos will literally be flying away on a rocket.
However, by no means is this different from the store branded products you find at Safeway or Walgreens. They do the exact same thing. The vendors pay for shelf space, share their profits, only for the supermarkets to copy the product and sell it as store branded ones.
Like a lot of things a fresh perspective helps. People are talking about it now but it was a minor shock when I saw this the first time I visited the US (2012is). I was curious on how the brands were okay with it. I assume they rely on their brand sway. Apparently it's been a thing that goes back a very very long time.
> by no means is this different from the store branded products you find at Safeway or Walgreens
It is different because Amazon controls exposure to products. In the store if I want ketchup, Heinz and the store brand are right next to each other and easily distinguishable. Amazon can bury the original product on page 2 of the search results. Also, its not always obvious in Amazon's search results that there is a viable option other than the Amazon branded product.
Stores absolutely use placement to promote one product over another. Eye level shelves are prime space, low ones near the floor are for cheap products with low margins. And “end caps” (the short end of an aisle of shelving) are for high visibility product placement.
The brick and mortar equivalent of pushing search results to page 2 is to just stop carrying the product—considerably worse than being on page 2.
No, that is not the brick and mortar equivalent at all.
Amazon does not purchase most of the inventory listed in its search results.
Retail stores actually buy (almost) everything they sell (albeit at lower "wholesale" prices), and "resell" to end customers. So when a retail store stops carrying a product, they stop buying the product from the supplier, and that is always because the item was not profitable to sell.
(In rare cases, they sell on consignment, but such arrangements would apply to less than .001% of products sold at retail. Selling on consignment has a whole host of separate issues, which is why it is so rare even though it would seem most profitable to retail stores.)
Yes, in rare cases, such as for low volume goods (or new goods with an unproven sales history), manufacturers might sell inventory on consignment through a retail store.
But that is the exception that proves the rule, and suppliers go into those situations with the option of simply selling to competing retail stores.
Yep. Then the vendor has to add the responsibility of covering “shrinkage”, as the store doesn’t care when the product is stolen, as it doesn’t belong to them!
Vendors do not cover shrinkage, except for the rare items sold on consignment. Shrinkage losses are either absorbed by the store or handled by insurance.
Rack jobbing means the vendor stocks the shelves, sometimes literally. The vendor isn’t paid until the item sells. That’s common for a variety of merchants.
What I've noticed is many retailers only carry one or two name brands and flank them with their store brands of which they usually have three tiers.
So for example you only find Ryobi tools at the Home Depot but Craftsman and Black+Decker are exclusive to Lowes. Grocery stores do similar exclusivity with certain brands, Sargento's cheese comes to mind.
Many brands do not want to sell branded products at a discount, so they see the store brand as a positive.
Some stores manage to get their brands recognized as high-quality, but not nearly as many as you probably think. The usual consumer recognition is that they are knock-offs. So the more known brands don't see them as direct competition.
However, by no means is this different from the store branded products you find at Safeway or Walgreens. They do the exact same thing. The vendors pay for shelf space, share their profits, only for the supermarkets to copy the product and sell it as store branded ones.
A comment like this pops up every time this happens with Amazon, and it's not even remotely the same thing at all.
Amazon only "resells" a limited subset of products. Most of the products on Amazon are sold on consignment or by third party sellers with fulfillment by Amazon.
Stores buy all of their products from their suppliers, both the name brand products and the store brand products and "resell" those products to end customers. In fact, the same company (or companies) supplies both the name brand and store brand products. Store brand products are just white label variants of the name brand. The supplier deliberately offers it as part of a market segmentation strategy, with the goal of making the name brand appear (more) premium.
Suppliers also do not pay for shelf space for most products in grocery stores. Paying for shelf space is an optional marketing strategy; suppliers can choose to pay for premium placement, and if they do not the store will simply place the most profitable items in the premium locations.
Suppliers also don't share their profits, and I don't know where you got that idea from. Suppliers sell to grocery stores at wholesale prices. And the grocery stores than "resell" those items at a markup to end customers.
Finally, grocery stores very rarely sell items on consignment, because most suppliers won't put up with that shit. Only low volume or new/trial products with no sales history get sold on consignment, because the store can't and won't purchase perishable inventory without knowing how (or when) it will sell.
Store brands for stuff like bread, etc. are not only bought from the same manufacturers as the "real stuff", they show up on the same trucks and are faced by the employees of the same distributor.
Just because something is made by the same manufacturer at the same location, doesn't mean that the manufacturer used the same inputs/recipes in everything it produces. It can easily have different lines that use different quality levels of input at different price points.
I felt the implication of your original comment was "store brands are functionally the same as name brands", and wanted to clarify that was not necessarily the case. Apologies if I misunderstood.
store branded products have a reputation as crappy ripoffs, can you tell these amazon products are from amazon? Haven't used amazon in years so wouldn't know.
I believe there is one glaring difference: The deception/sneakiness factor. I know Kirkland is Costco's brand, Great Value is Walmart's brand, No Name is Superstore.
Does this not fall under "unreasonably constraining competition" section of anti-trust laws? I'm only familiar with the US anti-trust debates (and even then, not too familiar) is there a German equivalent that should be preventing this?
Also, isn't there a law strictly forbids this in Germany? As a middle-man, you are not allowed to use their data to compete with them? Because the place I work has a marketplace with third party sellers as well and we have internal rules explicitly disallows this, cited by our compliance team because of the regulations.
În Germany it might stand, but you are forgetting the American legal system is very much moneybased, so Amazon can just fight it in court an win, or at worst settle, which I have no doubt it's overall still a win
Those organisations have gotten so big, they've branched out and are now multi-national. They have been quite successful. I hear their biggest competitor is called RICO.
>They take on the entrepreneurial risk and if they're successful Amazon will know exactly how many goods they sell to which customers and from who they get those goods.
What "entrepreneurial risk" are they taking there? Sending the initial batch of products over and creating a product listing? Are they involved with the design/creation of the product itself? If they're just taking already designed/made products and reselling on amazon, and amazon's cutting them out, I can't say I feel sorry for them losing their middle-man position.
> What "entrepreneurial risk" are they taking there
If there was no entrepreneurial risk, why wouldn't Amazon just use it's AI to predetermine all the successful combinations of product+supplier+customers ? There would be zero reason for Amazon to allow third party sellers, except for very niche areas. This is a very predatory practice and I'm amazed they're allowed to do it.
some people’s news choices begin and end on Facebook. Does that mean Facebook would have a monopoly on news if it that market shared increased enough? What’s stopping people from just typing in a non Amazon.com address into their browser?
I get maybe for the older population but that’d put a 10-20 year cap on Amazon dominance before the majority of their customer base understands the internet enough to look for alternatives if amazons service isn’t good enough.
You ask that about Facebook and thanks to the recent outage we can already see that YES Facebook is having a significant impact on traffic to non-Facebook news sites. When Facebook went down earlier this month there was a 40% spike in traffic to news sites during the outage.
Now imagine a company that has been just as effective as Facebook at replacing/consuming/killing it's competition in the retail space and you've got Amazon. If Amazon went down for a proportional extended period, say for a few days, you'd likely see a massive spike in sales at other retailers just as we saw a massive spike in new site traffic when Facebook was down.
That's true, but I think there's a solid case for why this type of practice is anti-competitive and unfair.
Let's say I own a restaurant and instead of improving my food or service I go to my competitor's food suppliers and offer them extra money to not sell to any of my competitors. In isolation, there shouldn't be anything wrong with me making an agreement with another private corporation, but the effect of this is that it creates an unfair playing field for my competition.
Amazon's position as both the marketplace and a competitor in that marketplace, creates very similar "unfair" circumstances that benefit them uniquely on that marketplace (for example placing their offerings higher up in search results, or creating special "recommendations" specifically for their offerings, etc) not to mention, the unique access to information that they have into how well their competitors do (which is not inherently unfair, but when combined with all of the other aspects does make a decent case for fitting the "unreasonably constraining competition" section of anti-trust law)
With your restaurant example, you are describing an "exclusive dealing agreement". This usually takes monopolistic conditions to become illegal.
Personally I don't like what Amazon is doing. But I don't think it is illegal under current anti-trust laws. The laws really need to change, but I don't see that happening.
You're right it definitely doesn't fit neatly under any current anti-trust laws.
I think the justification for why something like exclusive dealing agreements in monopolistic conditions is unfair could definitely be applied to why being a competitor in your own marketplace, while leveraging your customer's data, and boosting your own listings could be deemed unfair and lead to monopolistic conditions too.
They're taking on financial risk but I wouldn't call it entrepreneurial risk. They can list any number of products at time, risking nothing but money. There's nothing innovative or novel being added to the world.
The closest thing to entrepreneurial risk is the "creating demand" claim but that seems unlikely to be very true in most cases. In most cases, they're likely capturing demand on Amazon itself by being among the first to list a product.
It seems pretty clear that they're arbitraging and Amazon is taking advantage of its position to out-arbitrage them. In many cases, it seems reasonable to assume Amazon would've tried selling the product themselves regardless.
These arbitragers probably just have to accept that the reward for finding new products to arbitrage is very time-limited, because if Amazon doesn't start competing with them, someone else will.
This is a great example of a ruthlessness, but highly functional, capitalist market. It seems to work out great for consumers, all things considered.
And, importantly, it's also their money. Perhaps personal, perhaps a loan. But they don't get to just pull in VC funding under the assumption that they can burn through it, close shop, and carry on like nothing happened. This is the real entrepreneurial risk.
They pay Amazon for that middle-man position already. And then Amazon gets to determine that it's more profitable for them to also compete with you in addition to taking the cut from your sales.
I find it interesting the FedEx hasn’t entered this market by purchase someone like Square and competing with Amazon. At this pace, left unchecked, Amazon is going to destroy their business as well.
I don't know about the US, in Europe FBA (Fulfillment by Amazon) is getting competition from affiliates from Hermes (the logistics arm of Otto Group, one Amazon's biggest competition in Germany) and others. Multi marketplace capability and cost being among the main reasons.
Though, it sound like the bottom line us good: completion helps consumers, as the efficiency goes up (no unefficient small middle man) and eventually the price goes down?
This is not true. These products are not “developed” by the middle-man seller. They are simply identified and repackaged from their existing factories in low cost regions. If anything, this would force “entrepreneurs” to actually develop a product which is difficult and risky rather than just further rent-seeking on a global scale.
Completely and patently false. Amazon is literally copying and reselling completely unique designs/products after determining through their marketplace data that it would be worth their time to do so. They're using their own data to undermine the companies that they should be dealing with in good faith.
It doesn't sound bad when you're just talking about one product or company but we're not just talking about one.
Amazon has done this to thousands of products as part of a plan to use third party sellers as guinea pigs to see what products will sell enough to rip off. This is systemic anti-competitive behavior that is at the very least unethical if not outright criminal.
Thank you for making my point. That bag doesn’t compete with the Peak design bag in any way other than general shape. It’s poorer in design and quality at every step and the user reviews show this clearly when comparing both products. It’s safe to say that Peak is in no danger from poor quality knockoffs because they actually have a value proposition that customers recognize. Lastly, if you need non-public “analytics” to know that Peak bags are popular…
Now what happens when quality and design aren't a priority? Cleaning products, adapters, chargers, widgets like a cutlery tray or kitchen scrubber... not every product can't be knocked off.
Maybe you're going to tell me everything in your home is of the highest quality, but trust me that isn't how the vast majority do their purchasing.
This one was probably affected by the Peak marketing campaign, but when it happens hundreds of times,it's not Verge news any more, it's just life. See: how so many T shirt and hoodie designs in mass market stores are ripped off indie artists.
The grocery stores I visit do the same in the Netherlands, maybe even worse, especially the biggest one here, Albert Hein (Ahold), is very skilled at it. They copy the most popular products, sell them slightly cheaper, similar designs as the most popular brand, then go on and display their products at eye height and move the big brands down. Yet every court case against them they've won. And the sentiment is far less negative about them than Amazon. They have a similar significant market share (35% of grocery market) as Amazon here. Maybe in the end, it's slightly more ethical since their strategy is mostly at the cost of the big corporates (Unilever) who can handle and fight them and not the smaller companies; and arguably, the consumer wins in the end.
Aren't all those products whitelabel and don't all big supermarkets do this nowadays? I'm pretty sure all similarly packaged products from almost all grocery stores' own brands are exactly the same in all grocery stores despite the labeling being different. They all do look like the top-brand ones though.
Most of the products they’re white labeling aren’t new per se. It doesn’t take a genius to white label juice, soap, or butter. While Amazon is copying everything, including novel products.
Stores are increasingly moving away from "their own sales data". Costco, for instance, demands a 6 month payment plan on inventory[0], which effectively means they are following the Amazon route by being a marketplace for inventory which the distributor still owns. Best Buy does this as well.
By “vendor”, do you mean the one providing it to the customer? Because Amazon does that to with their FBA service.
The vendors I’m talking about are ones like Frito Lay, Nabisco, Coke, etc. The vendors deliver the product and (sometimes) put it out, but the store knows what’s selling and when. If the vendor wanted that information, they’d have to ask the store (through contracts), or watch the shelves themselves.
And despite what Amazon says, they’re a store. They just blur the line between store and marketplace. The “vendors” in Amazon’s case are the third party sellers. They pay Amazon a percentage of their sale for the ability to sell on Amazon.com. At the same time, Amazon sells stuff they buy and markup themselves (books for example).
In both cases, the product is commingled (white label next to name brand), and the customer doesn’t always know if they’re buying a vendor or a store brand. Amazon will tell you “sold and shipped by X”, but you have to know to look for that.
The vendor is the party you form a contract with. They get liability for product problems. In a store that's the store. On Amazon it might be dropshipper748.
This gives stores an incentive not to stock, say, dangerous electronics from untraceable vendors in China. And it gives you someone to sue if the phone charger burns your house down.
Again. I’m not talking about that definition of vendor. But if you insist to use that one, Amazon can be liable for products sold on their marketplace (at least in California).
The supermarket makes a deal to buy products from the producer that the producer white labels while also selling the normally labelled product. Amazon doesn't work with the producers, they kill the producers, then apply pressure to the suppliers. Their monopoly like power is bad for so many in the supply chain.
I wouldn't call drop-shippers the producer. The producers are the factories. The individual Amazon is cutting out is the middle-man. He tends to get our sympathy because he's smaller than Amazon, but really, he's just a needless step in the process of getting goods from factory to consumer. Amazon isn't stealing IP here, they are cutting out a middle man.
And you and I win when he is cut out of the process.
You and I don't win when amazon becomes the sole supplier and they have no reason to undercut competitor prices anymore and jack up their prices and they no longer have any incentive to innovate. This business practice of theirs is not solely done with resellers, but with manufacturers as well. It is ridiculously unfair that they are the market, they see what products sell quickly and for what prices, and that they are then able to take over the ones that have great margins. The end state is Amazon eats all profitable business lines and everyone else fights for scraps. That will be good for shareholders and no one else.
Amazon is not the sole supplier. Amazon buys from a variety of suppliers and distributes it via their online sales platform. Amazon doesn't have factories. They don't build widgets. They sell them.
Assuming there's no legitimate IP infringement going on, then it's not different as far as I can tell. In my view, if the Amazon store is so big that it can use its market power to make the market worse (for buyers, sellers, or both), then make that argument on its own. The specific practice of noticing that popular third-party items can be offered by the store at a lower price isn't a problem in my view. If the convenience store on the corner sells homemade cookies cheaper than the Oreos on the shelf, is that really a problem?
Not defending amazon but the same happens in the UK and has done for at least the past ten years. There is a German chain, Aldi, who's entire business is built around selling knock-off brands and then boasting their products are so much cheaper than the actual branded products sold elsewhere.
The closest comparison to the amazon issue would be Tesco who have a range of budget products that look very similar to the branded alternative.
Aldi absolutely doesn't do this IMO - they have own-brands that they have developed with 'knock off' branding, however almost all of their products are own-brand from the start, rather than working with the 'brand' first to work out it's sales and supplier and then cutting them out.
Aldi's questionable ethics are on the branding-similarity side, rather than the Amazon approach of using marketplace data to cut-out middlemen distributors. I'm not saying if their approach is right and wrong, but it's a different and distinct issue.
One notable element from the article is that Amazon.in was intentionally going to the same manufacturers and plants being used by the 'top' brands they were cloning so they could bring to market products with the exact same dimensions manufactured in the same plants presumably by the same people.
I might be old fashioned, but if your contribution to a product is so little that you just take it from a factory in China, stamp your company's name and hand it to an Amazon warehouse, giving yourself a healthy cut in the process, then I really don't mind if Amazon steps in and pass a portion of those savings to me.
Yes! I tinker a lot (3D printing, home automation, drones, etc...) and AliExpress is such an amazing place to buy components for 10% of the price I'd see in hobby shops or Amazon.
Shipping is often 1-2 months out, though, and you often don't get refunds without a return shipping cost (as in, FBA has free returns). It's useful to think that the cost of shipping is built into the price on Amazon.com and not on AliExpress.
True but even then for $2 shipped I get an ESP8266. On top of that most sellers are really accommodating if the package is lost and will send you another (sure that means in total it takes 5 months for the chip to get to you).
Aldi don't pretend that their brands are the famous brands and they don't stock the expensive ones so making cornflakes look a little like "Kellogs Cornflakes" is probably more about customers spotting them on the shelves than trying to get customers to buy yours instead.
If Kellogs claimed trademark infringement, it would be hard for them to prove that they are losing out since Aldi would simply say that they don't sell Kellogs and people aren't in any way being tricked into thinking any of the Aldi brands are real ones.
Many "white-label" groceries are in fact produced in the exact same factories as the branded ones (and the factories are owned by those brands), often just with slightly changed recipes or cheaper ingredients. It's not simply blatant unauthorized copies of more expensive groceries.
Is this shocking to anyone? I don't mean to sound cynical but I thought we already knew this. It is fairly obvious if you search anything and the first product is a Amazon Basic product that they are toying with the results. There is no way a Amazon Basic product is the #1 in every category there is one. Just search "batteries" in Amazon Canada, Duracell has 30k reviews and 5/5, the only reason it is "above" Amazon Basic is because they pay (sponsored). A regular search shows two Amazon Basic listings (AA and AAA) both have less rating (4.8/5 versus 5/5) and reviews then the Duracell equivalents. Quiet clearly rigged.
> A trove of internal Amazon documents reveals how the e-commerce giant ran a systematic campaign of creating knockoff goods and manipulating search results to boost its own product lines in India - practices it has denied engaging in. And at least two top Amazon executives reviewed the strategy.
As far as I understand, those documents were not known before.
What I find interesting and somewhat unfair is the practice of allowing Amazon marketplace resellers to list every product of every other brand (even Costco snd Target house brands) EXCEPT Amazon brands.
So really every other brand has to contend with counterfeit or at least pricing arbitraged products being listed against their brand on Amazon, except Amazon.
That seems to give Amazon a monopoly driven upper hand and is materially different from what other marketplace platform players are doing.
To be a fair and transparent marketplace platform and avoid anti-trust litigation - Amazon should be allow resellers to price gouge and counterfeit Amazon brands as well.
[1] Kirkland and Target T-shirt on Amazon available from a variety of price gougers and potential counterfeiters
Is it also "rigged" if a 3rd party can buy the top spot?
Is the grocery store rigged if they put their house brand on the endcap? Is it different if a 3rd party buys endcap placement?
I expect Amazon to order their search results in a way to maximize their bottom line, i.e. the likelihood of making a sale AND the profit from that sale.
If I change the sort order from "featured" to "avg customer review", Amazon batteries drop down to #26.
> It is fairly obvious if you search anything and the first product is a Amazon Basic product that they are toying with the results. There is no way a Amazon Basic product is the #1 in every category there is one.
I'm not claiming they don't prioritize their own products, but two obvious reasons why it could be possible for Amazon products to regularly be the most popular is 1) if they're the cheapest and 2) if the Amazon brand is considered reliable. I personally tend to deliberately choose Amazon Basic for products that are cheap and which I perceive to be fairly commoditized, like AA batteries.
Why do I feel that whole review culture is entirely broken. How could a battery receive 5/5. If it works and contains perceived average amount of charge it deserves exactly 3/5. And that should expected experience for most consumers...
Monopolization Defined. The antitrust laws prohibit conduct by a single firm that unreasonably restrains competition by creating or maintaining monopoly power
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.
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.
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.
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.
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.
>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.
>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?
What exactly is "monopolization defined"? This is the definition of a monopoly in India? Or where?
I know in the US a majority market share is the primary determinant of whether a company has a monopoly or not.
Does Amazon.in have a monopoly in India (we can use the definition of >50% market share for this question)? If they do, I am amazed at the progress in the last couple of years since I had read much about Amazon.in!
> I know in the US a majority market share is the primary determinant of whether a company has a monopoly or not.
I really feel this should be considered an outdated view. Software, technology, and automation has changed things, and companies can exert market and monopoly power much more easily with less market share than previously found in monopolistic practices.
If we read the Justice Department’s own documents, we find:
> The Supreme Court has defined market power as "the ability to raise prices above those that would be charged in a competitive market,"(8) and monopoly power as "the power to control prices or exclude competition."(9) The Supreme Court has held that "[m]onopoly power under § 2 requires, of course, something greater than market power under § 1."(10) Precisely where market power becomes so great as to constitute what the law deems to be monopoly power is largely a matter of degree rather than one of kind. Clearly, however, monopoly power requires, at a minimum, a substantial degree of market power.(11)… antitrust law does not regard as illegal the mere possession of monopoly power where it is the product of superior skill, foresight, or industry.(14) Where monopoly power is acquired or maintained through anticompetitive conduct, however, antitrust law properly objects.
> Monopoly power is conventionally demonstrated by showing that both (1) the firm has (or in the case of attempted monopolization, has a dangerous probability of attaining) a high share of a relevant market and (2) there are entry barriers--perhaps ones created by the firm's conduct itself--that permit the firm to exercise substantial market power for an appreciable period.(16) Unless these conditions are met, defendant is unlikely to have either the incentive or ability to exclude competition.(17)
If we follow these definitions and discussions, it’s clear firms like Amazon and Apple have incredibly substantial market and monopoly power. To me, the fact that they may not have even majority market share in certain markets is inconsequential. If one keeps reading the linked Justice Department document, there’s discussions about percentages of market shares that the courts have typically gone off of. These are seemingly arbitrary and obviously rooted in businesses of a different type. Through technology and scale, firms like Amazon and Apple are among the richest and most powerful corporations ever, despite not necessarily having high percentages of market share in the relevant market, but they absolutely meet the definitions above. So these percentage of market share ideas are outdated and need revamped, in my opinion.
I got hammered making this point re: Apple and the Dutch case about their payment system, but I suppose I'll make it again.
The whole premis here seems naive. Of course Amazon is anticompetitive within their own ecosystem. If course it's not a free market, its a market with a proprietor.
The analogy I made was to ice cream parlours in Disneyland. Any competition that exists, exists there at Disney's pleasure. They could standardize prices, ban ice cream, convert everything to franchises, force them to buy Disney insurance, etc. They own that market.
I think every Amazon seller knows that Amazon creams the market, uses them for free market research and validation, and such.
I'm not saying this is good, but "red handed" seems like a very naive frame. If Amazon marketplace needs to be a competitive market, that's a question of structure, not policy. Nitpicking Amazon's policies and catching them on noncompliance may work for a lawyer making a case, but that road does not lead to a competitive market.
Watching this pre-launch (https://www.youtube.com/watch?v=uEhdlIor-do) is just surreal. The self-handshaking and music engulfed promotional garbage is just disgusting. "This is the first step in mankind's space exploration", stfu. You are running space tourism for the rich. If you gave a shit about human kind you would pay your workers a living wage and do something about the environment.
Edit: spelling
Edit2: This is literally an ad for going on this trip. They are showing the hospitality suites for the "astronauts". With so many people barely making ends meet and many also starving I find this incredibly distasteful.
> You are running space tourism for the rich. If you gave a shit about human kind you would pay your workers a living wage and do something about the environment.
Are you this upset over 500k cars? Purses that cost 20k? Watches that cost 200k? Designer t-shirts that cost 2k? Luxury goods exist. Some people purchase homes that cost over 100 million dollars. Imagine that wealth going to the things you approve of instead. The world would be fixed but alas.
You must have been apoplectic over the original Tesla Roadster considering the business model is shared with the same lofty goals—the wealthy fund the initial product, mass production eventually. There for EVs, here for human transportation and habitation in space.
I mean sure, but what's the relevance to this article or discussion? Any product targeting the wealthy - automobile, Rolex, or iPhone ads - could also be considered distasteful when people are starving.
I'm currently reading Titan: Rockefeller biography. and it suddenly dawned on me, you don't become a monopoly through excellent business practices. but though unethical means. legal, yes but also unethical. same thing as amazon, do they have excellent leaders, yes. is bezos unethical yes.
I bring up this point every time something like this comes up and people usually say that somehow Amazon using "Analytics" and better ranking is the difference.
Walmart's Great Value is exactly the same idea and is created and promoted the exact same way both in the their stores and on their website.
I think what astonish me the most is that people are opposed to something that is actually a plus for the customer. Amazon Basics is definitely one of the great thing on Amazon right now. Instead of random cheap garbage I can buy stuff that I know will be "good enough" at a great price.
Amazon owns a larger % of the online ecommerce market than Walmart owns of either the brick-and-mortar or ecommerce, which I think is a notable distinction... Amazon is approaching half of all ecommerce sales.
If Walmart is 10% of brick-and-mortar sales it's hard to argue that store brands are too competitive. 90% of that market is not walmart.
When Amazon approaches the majority of all ecommerce sales, it starts to become a bigger problem when they control the marketplace and start to undercut your products.
In general I think the fair thing to do is to make the marketplace distinction (even for store brands, which are often white-labeled third-party generics sold under multiple names anyway). You run the marketplace that allows others to sell their products, or you sell your products directly... you shouldn't be able to coordinate both as one business.
It’s only a plus for the customer in the short term. It kills the companies doing innovation and optimizing the products. Sure it makes the current crop of products cheaper (and lower quality bc Amazon basics often mimic the top product but with cheaper parts) but it puts the innovators out of business. Amazon is too big to care about innovating on small products and too big to do it well if even if they did.
They are not. They are rent-seeking. If you didn’t convince your customers of your brand value or at leadt get a patent, you probably didn’t innovate and thus a free economy makes you vulnerable to competition from more efficient businesses. Surprise! The consumer benefits and the rent-seeker has to try something else.
Why is it wrong? The goal of anti-trust laws isn't to protect inefficient businesses. It's to promote competition, and the entire point of having competition is that it lowers prices for consumers.
What happens when everything is free/subsidised by advertising? How do you assess the competitiveness of Facebook when they don't charge anything to use Facebook, Instagram, Whatsapp, ...
This might be a plus for the customer in the short term, but how is it a plus in the long term, when the innovation which creates the new products is snuffed?
Do you think Amazon is going to innovate on niche products? Why would they steal other peoples designs if that were the case. They put the original company in financial straits or out of business and then don’t do any meaningful iteration on the products
Amazon isn't stealing IP and building their own factories. They are cutting out middle men and going straight to the producers themselves. Cutting out the middle man gives the inventors greater income and the consumers lower prices.
First order effect might be a benefit to consumers, but this kills competition. Those brands and products that amazon copies could eventually die out, and now there's less competition in the market and less forces for better products for customers.
Do we have any evidence of this? Walmart still sells non-great value products (started in 1993!) while I get why copying a niche product might cause the original manufacturer to die out and if there are examples of this I am more than willing to change my opinion.
If you actually take a look at their offering (https://www.amazon.ca/-/en/stores/page/BFAE3282-E15B-47EE-90...), most of these are legitimately "basics", things that existed 50-100 years ago. Wilson won't die out because Amazon sells a volleyball, nor will Duracell because of offbrand AA batteries
Do we know that one can avoid counterfeit goods via Amazon's brands? I'd think that one could mix in counterfeit goods the same way one could with any other product.
White Label store brands are anticompetitive. They are a form of the pricing discrimination games that retailers and manufacturers play to allow one set of companies to capture multiple segments of business with the same product. It should be illegal for the same retailer to sell both a name brand product and the equivalent product as a white label.
Difference is that in retailers, they take on the risk and product research. They buy the items from manufacturers, sell it and then sometimes they make their own cheap unlabeled versions (usually buying from the same manufacturer).
Amazon is offering a big open marketplace where they invite people to offer goods, then they observe which goods sell well and how are they made, then the push out the sellers and they offer their own versions of it, essentially pushing the risk onto sellers and only reaping the benefits.
They are abusing the trust of sellers on their platform and they get away with it because of their sheer size.
> Amazon is offering a big open marketplace where they invite people to offer goods, then they observe which goods sell well and how are they made, then the push out the sellers and they offer their own versions of it, essentially pushing the risk onto sellers and only reaping the benefits.
But this is exactly what is done at innumerable retailers like Walgreens and Safeway. The retailer is a "marketplace" (they sell multiple brands for each product) who controls "search placement" (where each product is displayed, e.g., eye height vs. near the floor) and have insider information on how well the different products sell. They use this advantage to make their own knock-off brands, and its generally a win for the consumer.
At an absolute minimum, meeting with a brand to look at their proprietary production processes to duplicate their look and feel. A practice called out in the article.
retailers don't work to hide the name brand option or promote their generic alternative over it, usually. Amazon might well have gone further than advertising tricks; if they just failed to make alternative listing available to some number of users... how could that be proved?
They may not work to hide the name brand option. They just choose to not offer the brand's products in the store at all, right?
We don't hear about Wal-mart deciding to place Procter & Gamble's laundry detergent on the fourth row down and their private label at eye level in the store, do we?
> We don't hear about Wal-mart deciding to place Procter & Gamble's laundry detergent on the fourth row down and their private label at eye level in the store, do we?
Because that's not at all how Walmart operates. All of the laundry detergent is on the same aisle and the generic versions are immediately next to their brand-name equivalents.
They do, though, by giving it favorable shelf space. Sometimes the even put tags on their product that say "Compare to X!" to point shoppers to compare prices with the equivalent product.
To add, a general argument is that retailers buy their stock and thus have the right to analyze sales of it, but this is a dying practice. Costco, for instance, demands a 6 month delayed payment on inventory[0], which effectively means they are following the Amazon route by being a marketplace for inventory which the distributor still owns.
As all monopoly related things: market power. There are at least half a dozen retailers in my tiny home town alone, all with a good market share, they would have to coordinate to push a competing product that ends up driving everyone else out of the market. Amazon doing that by itself with a product on the other hand is devastating on competing products, because it has by far the largest online market share making it impossible to compete on equal terms with a possibly inferior product pushed by Amazon.
Retailers generally want to sell brand goods, and the cheaper own label stuff is there to provide a range of prices. An exception would be budget retailers like Lidl who only sell their own goods.
This is not accurate. They attempt to maximize their profits and private label brands is a major effort to do that across retail.
“With its billion-dollar private labels, Target has become a master at spotting trends, copying them, and capitalizing on them”
“Target, for its part, seemed to see the C9 contract’s expiration as a chance to do what it increasingly does best: develop and launch a stylish brand internally—and keep all the revenue for itself.”
because amazon owns the marketplace and has access enormous information on what sells well and can use for its own benefits. This creates unfair competition.
Walmart doesn't know where I live/lived, what I've purchased for the past decade, what I might be mildly interested in (searched for at one point), what movies I watch, what books I read, etc, etc.
Walmart cannot cater it's experience to what it thinks I might buy. Amazon can.
It's just not the same. There is a huge asymmetry of information (from both suppliers and customers) that makes Amazons overall practice feel much more predatory.
Oh, and Amazon is 50% of all online retail. Walmart is something like 10% of all brick and mortar retail.
The examples are a mouse pad for 60% cheaper and knock off products 15% cheaper made by same mfg as brand name products- absolutely miserable business practices for other businesses but don’t they need to show some consumer harm? For all the antitrust claims?
Other people in the thread have argued that "consumer harm" is difficult to prove and easy to disprove, and not strong enough of a criterion because the harms from monopolization can span decades, and don't just apply to direct consumers.
And this is where anti-trust lost the plot (and popular support).
Anti-trust ignores situations with CLEAR customer harm, and goes after folks like Apple (which many consumers like) for blocking scammers from doing the noncancellable subscriptions and other things in the store.
This diminishes confidence in govt and unfortunately increases confidence in big business.
Literally thousands of folks getting scammed daily online - govt does nothing. Some business hurt (and consumers SAVE money) -whammo.
I don't know if I'm too cynical or if people are naive. Like of course these big actors (Amazon, Google, etc) are going to "abuse" their power and use their platforms to push their own stuff. People should not be surprised, regulators should have been on this years ago.
Microsoft introduced code in Internet Explorer that tracked Google result clicks and fed that data to Bing, copying the most relevant results. Then you could see the top results in Bing.
I don't know... would we be better off if we reverted to the time where you didn't have a flashlight function in your settings, and instead you had to go buy a flashlight app from the app store? Or download a free one stuffed with ads?
The goal of anti-monopoly legislation isn't to protect the incomes of small business.
So this sounds like what every major retailer does with their store brand. Why is this different? Given the way that media coverage is biased against big tech, my default assumption is that this is just more jealousy driven selective outrage.
I personally think it depends on if the sales data is from FBA or sold by Amazon. If it's sold by Amazon data that should be fair game for Amazon to do whatever it wants.
I'm a little uncomfortable with them using FBA data (marketplace), since those FBA sellers are paying Amazon for all kinds of services (distribution, storage, ads, payments, returns). So it seems a little unfair that they'd be paying a company who goes back around and uses their data to launch competing products.
Is this data different than the data that a major retailer would get from sales of a product on its shelves?
I'm also not saying that this is certainly 100% fair. I just doubt the motives of the media on this point because they knew that major retailers were doing this, and they never said a word about it.
>Is this data different than the data that a major retailer would get from sales of a product on its shelves?
This is what sold by Amazon items are like, and also why I don't care what Amazon does with that data.
With FBA, to me it seems more like if like a cloud provider (who I pay for specific services) decided to launch products/services based my internal data that they could see and wasn't public.
> With FBA, to me it seems more like if like a cloud provider (who I pay for specific services) decided to launch products/services based my internal data that they could see and wasn't public.
Amazon has been accused of that as well.[1] They claimed to have a policy not to do it, but admitted they could not guarantee that they have never violated it.[2] They are also known to monitor client data to help them decide which companies to try to acquire.[3]
Think of it like the modern 4K TV who’s price factors in the manufacturer selling your viewing habits to marketers. Of course nobody wants that, but it’s already baked into the price.
In Amazon’s case, all sellers know they’re hoovering up their sales data and have done so since day one. Now whether they should have a more expensive, “don’t mine my data” option is debatable. But if it’s anything like the TV industry there’s just no viable market for it. The price difference would allow someone who doesn’t care about the long term to undercut you.
Because stores do not pressure sellers to ask where their product is made to then go to the same manufacturer and make a better deal and then move the sellers product to a location less easy to find....
That's ridiculous. Anybody with an internet connection and phone could figure out where a product was manufactured. This type of security by obscurity to hide a manufacturing location was never something with any market relevance.
Genuinely curious: if Amazon was very up front about this, and in no way pretended to be a neutral marketplace would this be allowed? Example: when a user signs up to sell something on Amazon they're hit with a warning like "Amazon will always prioritize its own products over that of third party products, including future products that may be very similar to ones currently allowed in our marketplace. Be prepared to be removed for any or no reason, including because Amazon does not want too many similar products in the same category."
Amazon is in the business of making money. If their AI notifies them that a product is selling like hot cakes and that product has no brand protection they'll knock it off. Tha is why it is important to build a brand instead of building a product, people buy the brand not the product and thats a different ball game. - 2 cents.
Color me shocked. Our public forums, and markets take place on privately owned platforms like Facebook and Amazon. What’s next, Google prioritizing its own properties in search results?
The answer isn’t more legislation, it’s an open source ecosystem that will gradually disrupt the closed gardens the same way the Web disrupted AOL and Compuserve and Prodigy and MSN. It wasn’t much different from Facebook and LinkedIn back in the day. Give people a way to run their own store AND make an app (such as a browser) that can search across all of them and compare, and Amazon go bye bye. More info:
One the one hand, blatantly copying a manufacturer's custom design is kinda scummy. In the article they show some Williams & Sonoma furniture that was copied and looks similar but not identical. I've read similar stories about bike bags and other things.
On the other hand, sourcing the same item from the same factory that two dozen other sellers are already selling isn't. TBH I wouldn't mind if those duplicative items just went away because they just pollute results. There's a similar problem on eBay where there are 1500 listings for the exact same item from 100 different sellers all using the same stock photos but with slightly different prices.
For example, supermarkets have been in the generic brands business for decades. They contract out making some generic version a name brand product and sell it a lower price, giving it preferential space (both size and position) on the shelves. Why? To capture a greater portion of the profit for themselves.
Why is anyone surprised Amazon is any different?
I've said it once and I'll say it again: the current focus on antitrust in Big Tech is, at best, completely misguided. If anyone is guilty of anticompetitive behaviour, it's not Google or Facebook, it's Amazon.
Amazon literally controls online selling, logistics, distribution and delivery to such a degree that no one else can reasonably compete.
I don't think anyone is surprised, but they're worried about the scale. Amazon encompasses more of the ecommerce market (approaching the majority of all ecommerce) than any individual retailer covers brick-and-mortar, by a large margin. IIRC even Walmart is only ~15% of physical retail, Amazon is >40% all ecommerce.
Personally I think all store-brands should be stopped. These companies should have to choose between being the marketplace or being the product and should have to diverge if they're both.
I mean....yes this is despicable behavior, but did anyone really expect otherwise? Why would you sell your product on a website which can be your competitor, granting it access to all of your sales metrics and customers? I most definitely don't want to 'blame the victim' here, but any third-party sellers on Amazon should understand the fundamental irrationality and danger of their decision to do so
Isn't it more about whether it is illegal rather than whether it is done in bad-trust?
If you worked for Amazon, I suspect you would push very close to the line of legality in order to maximise profits, which makes you look dirty but doesn't necessarily get you in court.
The problem for me, perhaps like many, is that there are just too many things that I can easily find on Amazon that are much harder to find elsewhere. I don't believe they are particularly ethical but I also don't want to spend hours looking around different sites when everything is on Amazon.
> The problem for me, perhaps like many, is that there are just too many things that I can easily find on Amazon that are much harder to find elsewhere.
Like what? Ebay, Alibaba, Etsy, Newegg, Abebooks...these seemingly cover most use-cases...
I feel like there are plenty of other e-retailers which allow you to sell your product on their platform, which are not in the business of selling competing products that they manufacture themselves. Ebay obviously comes to mind, followed by outfits like Etsy, etc.
"Don't mind this everyone, watch five people who paid a ridiculous amount of money blast off into low earth orbit for all of 5 seconds just to come right back down. Publicity stunt? Why never! Hey look here's William Shatner, something something space give me your money" - Bezos
"we decided to only partner with the manufacturers of our reference product.” - so not only are they copying a product and ranking their replacement above the original, they also put themselves into a position to influence the manufacturer of the original.
How different is this from what B&M stores have been doing for years with the store brand? Where I'm from, CVS has a store brand stocked next to most brand-name items, often at a cheaper price.
