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Comment by bitL | Hacker News Reader

Yes, it happens all the time on Amazon. Not only Amazon itself, but also other companies observing hot sellers (there is an API for that), then "cloning" the item and ordering manufacturing in Shenzhen. If you complain to Amazon, your selling privileges might be removed... Amazon desperately needs a competitor.

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In theory though, if Amazon is making a superior product that's cheaper, isn't that what competition is supposed to achieve? I've bought a few AmazonBasics(cables, mostly) and have been pleased with the quality, but it could be radically different with other products.

But that's the thing, it's a little bit questionable for Amazon to be a competitor. They started out as a partner that offered a retail platform for Rain Design, only to turn around and come up with a cheaper product. Even though it's perfectly legal, there's still an expectation of trust, which they've violated.

Would you sell products on a platform knowing that if you were too successful the people operating the platform would turn around and come out with a cheaper product? I wouldn't.

It is questionable because no one has been able to do it before. Free markets yada yada. . . I would sell a product until I couldn't sell any more regardless of the risk.

If only copyrights on media properties were this fluid.

Absolutely not true.

Supermarket own-brand has been around for years and years, along with department store own-brands. The original brand sells based on brand reputation and (perceived) quality of product.

This is exactly the same.

No only that, walmart will use their purchasing power to force manufacturers to make products specifically for them. Examples of this include things like specific SKUs that are smaller so that walmart can sell similar products at a lower price (e.g. 12oz versus 16oz).

That's not a great comparison, because of the way house brands are marketed -- basically store brands are marketed to the left of the name brand and cost a few margin points less. One of the reasons for store brands to exist is to incentivize manufacturers to buy the other product supermarkets sell -- premium shelf space.

Amazon is a big catalog, and they play all sorts of games with how and why they prioritize listings.

I meant that it is questionable to the parent because Amazon has never done it before.

Grocery chains have had store brands since before the internet, so this conflict of interest is not novel.

Lots of those are manufactured by the same companies that make the branded ones. So they can still get their cut.

What's to stop the "same companies" from working with Amazon to do the same? Amazon Hair Conditioner (made by Pantene"

Perhaps that is already happening, with a select few manufacturers. But consider that many marketplace sellers are third parties (e.g. an electronics shop). Or other manufacturers with different costs (many factors affect this... location, workforce..). What happens with these?

I do wonder if Amazon are making any kind of profit on these items. With their long term strategy they can very well afford to make a loss just to undercut the competition and put their products out there, make a name.

They can do cost/benefit analysis. They don't have to pay themselves 15% of the price including shipping in fees, they have good relationships with cheap overseas manufacturers (in China you pay literally pennies for plastic stuff in large quantities) utilizing economy of scales, they know the exact demand/sales of their competitor/"partner", probability they can convert competitor's sales into their own sales, control the visibility on their platform etc. I am sure they make larger profit than what they would get by taking a cut from a 3rd party seller. Or they are irrational, which I don't believe.

So... why don't these companies get on the phone with Amazon and make the same deal?

Because they will be destroyed in either case? (See how Wal-Mart treats its suppliers and grinds them into the dust.)

Amazon isn't manufacturing these products either. They're just cutting out the middleman and going straight to the source in exactly the same manner as grocery stores do with their private labels.

Right - if you are already having a product made in China, you are the middle man. If you are actually making the product yourself, then Amazon might come to you and create an off-brand version with some trivial differences. But, in any case the designs of simple products are not nearly as sacred as the actual manufacture of them.

Unfortunately, it does have a depressing effect on new design and innovation. And it certainly seems that the low-cost Chinese manufacturers haven't got the knack for originality yet.

I would, as long as selling my products with their platform still gives me more profit than not selling with it.

My business strategy would probably change to proving the market for my product before selling my business to the people operating the platform for slightly less than it would cost for them to set up a competitor product.

That would likely be profitable, but only as long as you can keep picking winners with your rolled-over cash.

Most people seem perfectly happy to use AWS.

This happens constantly on the iOS platform. Popular apps are replaced by built in iOS features.

That's one possible benefit. But try to compete with Amazon on price directly; many (now former) sellers reported having their accounts under review shortly after (often leading to permanent selling rights removal - there's always some odd item that you might have in your huge catalog, even if you never sold one, that might be interpreted as not allowed on Amazon) and nowadays many small operations just try to avoid competing on items Amazon sells itself because of fear of getting kicked out. That's not beneficial to customers at all. So basically Amazon might be heading to be in this mode:

- allow 3rd party sellers/manufacturers to sell items - once items are hot and are easily clonable, start manufacturing them - let original manufacturers bleed or kick them out if they compete on price with you - wait for another batch of sellers to identify next hot item - repeat

tl;dr: little guy takes the risk, big guy takes the profit

And this will work as long as Amazon retains their dominant market position. As soon as there is a viable alternative, all that pent up ill will they have generated will come back to haunt them 10 fold.

Ah yes, the dream of the free market. Create a product that is successful, only to be driven out of business by a monstrously large corporate entity that can take advantage of economies of scale better than you can. Ignore the fact that the majority of companies cant actually compete with that behavior.

    > In theory though, if Amazon is making a superior 
    > product that's cheaper, isn't that what competition 
    > is supposed to achieve?

Yes and no. It's the age-old question, right?

If it's too easy to rip off somebody else's idea, you stifle innovation.

But if you go too far in the other direction, innovation gets stifled that way as well.

Yup, and they've (as far as I've heard -- could be wrong) threatened to blacklist sellers who move to upstarts like Jet or even if they sell more prominently on eBay.

Perhaps I don't know the definition of anticompetitive, but I feel like this fits the bill.

I haven't heard that. They have a rule that you can't sell items elsewhere for less than you're selling them on Amazon for, but otherwise there's no restrictions.

The Jet threat came to a friend of mine, but I think you're right regarding selling items for less. There are a few mitigations for that specific restriction which have allowed some sellers to continue selling on multiple channels, but though some are likely obvious, I'm pretty sure I signed my right away to talk about said mitigations in public.

If not, I'll reply back with more. Will have to check.

> They have a rule that you can't sell items elsewhere

That's a pretty anti-competitive rule if true.

Essentially it means you cannot sell on Jet.com because of how Jet.com's pricing is calculacted (any product COULD be cheaper on there if you stack enough of them).

You can limit the quantity on Jet, and you can put the price high enough that even with stacking it comes at to parity with Amazon. Or you could have similar stacking discounts by creating multipacks on Amazon.

See https://www.amazon.com/gp/help/customer/display.html?nodeId=... near the end.

Form a Nevada-based LLC specifically for selling on Jet for $500; ignore Amazon.

Sure, as long as they aren't the same name, and you have a way to ship those orders separately from Amazon ones.

But then don't complain if Amazon finds out and bans you.

Usual stuff when dealing with Amazon - never use the same browser/IP address/geographical location with two different accounts. Use different VPNs for different accounts/companies. Doable. Only the paranoid survive.

> and you have a way to ship those orders separately from Amazon ones

What do you mean by this? How likely would it be for a seller to even be in a position to ship orders from multiple websites in the same box? And how would Amazon find out without buying things on competitor websites and checking return addresses?

>How likely would it be for a seller to even be in a position to ship orders from multiple websites in the same box? And how would Amazon find out without buying things on competitor websites and checking return addresses?

Well firstly if you do something stupid like FBA multi-channel fulfilment, AZ may catch on. I don't mean shipping different orders together, I mean shipping from the same warehouse.

If the value is significant, I wouldn't put it past amazon to place a test order. Probably unlikely, but when you're breaking your business agreements, do it properly.

I have heard horror stories of people doing well selling some product buying from the manufacturer, and Amazon went to the manufacturer and bought on condition they don't sell the product to anyone else.

> If you complain to Amazon

About what, exactly? Amazon isn't in the business of deciding trademark/copyright/patent disputes. If a clone of a product is violating IP, then you need to handle it legally. If there is no IP to protect, then you made a mistake.

Sure, but we all know costs of a litigation which most sellers on Amazon can't afford - Amazon takes most of the profit, 15% default fees leave very little to normal sellers, usually under 5% as the (re-)pricing competition is now algorithmic, resembling HFT. Then if you want to have your product featured on Amazon (meaning your offer will be the default one even if it is more expensive than somebody else's), you need to contact the category manager and it's up to their discretion to decide (which reeks of a high potential of corruption/profit sharing etc). On one hand it's pretty cool you can automate price responses and very beneficial to the customer, on the other the game has an increasing risk of being rigged.

> Sure, but we all know costs of a litigation which most sellers on Amazon can't afford

That's an excellent argument for changing how patent litigation works, but that has nothing to do with Amazon.

> Amazon takes most of the profit, 15% default fees leave very little to normal sellers

The trade-off being potentially billions of eyes on your product. Again, that has nothing to do with IP.

No. If Amazon is willfully allowing clones that violate IP or other rights, then it is 100% in their interest to take action on that.

It's only a clone if they're violating a brand or other trademark. Otherwise, folks are just upset that their product has now turned into a commodity.

It's not Amazon's job to determine if clones violate IP. That's the purpose of our court system. Amazon will, without a doubt, remove the product given an order to do so. But they aren't going to make a legal determination on whether or not IP laws are being violated.

Expecting them to do that is absurd.

Generally, people want to abolish IP and copyright (or any law, for that matter) except when it's in their own interest. Human nature.

Not much talk of the fact that I, as a consumer, can now get an identical product for cheaper. Not identical? Then what is the concern?

How is this different than the private labels of major grocery stores?

Private label products are generally made by the same manufacturer as premium label.

So if Amazon contracted with same manufacturer and just took some of the margin for distribution, that'd be OK (or at least less bad)?

Yeah, most manufacturers would be happy with that deal. It isn't what Amazon is doing though.

When I sell to CostCo, I'm very happy to manufacture their house-branded vitamin C in exchange for them carrying my premium name brand vitamin C in stores as well. I make money on both products. (Heck, I as the manufacturer pay money out of my own pocket to advertise that CostCo branded vitamin C.)

How do we know that this isn't what Amazon is doing? Maybe they're not doing it with the specific product in the original post, but they're not directly manufacturing all the products under their brand. They're going to some supplier/manufacturer.

Private label manufacturing deals are as secretive as possible so the owner of the market (in this case, Amazon) can change the supplier when it suits them giving them leverage in the negotiation. I'd bet you can find that exact AmazonBasics cable you just bought from the same supplier with a different name on Amazon, too.

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