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Comment by chatmasta | Hacker News Reader

Watchya gonna do about it? Amazon makes merchants an "offer they can't refuse." Fear of Amazon cloning your product (whether physical via Amazon Basics, or virtual via AWS) is not enough reason to avoid selling on Amazon altogether.

If your product is easily cloned by Amazon, and you cannot afford to sell it for less than Amazon, then you do not deserve to have the dominant market position.

A good, sustainable product is more than just marketing and engineering. It must also be defensible, meaning you need to have an advantage in either product-development (patents, expertise, first-mover advantages) or supply-chain (exclusive manufacturing contracts, access to greater economies of scale). It's almost impossible to beat Amazon in the supply-chain economics, unless you have a highly specialized product and deals with the manufacturer, so you are left to compete in product development. Your product needs to be sufficiently innovative and defensible in order to avoid Amazon cloning it.

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> It's almost impossible to beat Amazon in the supply-chain economics, unless you have a highly specialized product and deals with the manufacturer

Yeah. And the opposite of a highly specialized product is exactly the example the article gave--a piece of metal to hold up your laptop. I don't think there's anything we stand to lose from this happening to products so simple and generic. Or is there?

I think the consumer can only gain from such entries into the market. AmazonBasic products are often just a standardization of a simple product in a market with too many options. Consumers trust Amazon to deliver on their promises and when confronted with a choice between 800+ USB hubs, I'll choose the cheapest option that is guaranteed to work. There is almost 0 utility for the consumer in choosing a "better" USB hub than AmazonBasic's offering but the downside of choosing a "no-name" hub is measurably significant.

The genius in AmazonBasic concept was in realizing that building the better mousetrap doesn't always mean building the best mousetrap, it means building the best mousetrap for the price. There are so many goods with a market that falls into just two categories, ones that work and ones that don't. Whichever brand is able to gain consumers trust in knowing their offering will work will quickly rise to dominate such a market.

It's like the Walmart-ization of main street - except in the digital realm. Great for cost-cutting consumers today, bad in the long run.

Personally for the product pictured - the Amazon version is gaudy - I don't want to see more AMZN branding on my stuff.

I'm curious how you know what's good for consumers more than they do. Would you mind explaining why it's bad for cost-cutting consumers in the long run?

Seems like amazon is content to run razor thin margins, and if they jack up the price after competitors go out of business, that move would recreate a market for item X and burn some Amazon good will.

I also find the Amazon branding on that laptop stand to be really tacky, though!

Ostensibly this kind of obvious copying is the sort of thing that design patents are supposed to thwart.

Re: why - It's really basic monopoly theory - squeeze out competition, then raise prices. Are you certain that Amazon will always be content to run razor thin margins? At some point Amazon will have subsumed the buying habits of the consumers long after Rain is dead and buried. Will someone new really come along?

I have one of these at work (and my colleague one of the name brand articles) - you don't see the branding on either one 99% of the time, because your laptop is covering it.

Ultimately, it is just a laptop stand, and it's a quality one. I'm just surprised that it took Amazon to come up with a lower priced competitor - I've been looking for something that wasn't $50 for a long time. All of its competitors other than Amazon are overpriced, flimsy pieces of plastic.

There's also a certain amount of acknowledgement that you're not going to get the best or perfect product for the price that you pay Amazon, but you will get better service (that is, replacement/refund) than you're likely to get from TJ's Wholesale Emporium or a random individual seller on Amazon.

> I don't think there's anything we stand to lose from this happening to products so simple and generic. Or is there?

The thing you stand to lose is the original making of that product.

While making the laptop stand is "simple" (and I object to that statement as manufacturing anything is rarely "simple"), getting it in front of people, marketing it, and selling it is not. Amazon sits back and looks for any products that now sell over $X million dollars and then simply walks in.

So, now if I'm a manufacturer, I will do several things:

1) I might avoid Amazon. Ever. Decreasing choice on Amazon certainly hurts the consumer, no?

2) I might make a shitty product specifically for Amazon to sell so it doesn't cannibalize my good product. I hope you like wading through even more crappy products on Amazon. That hurts the consumer, no?

3) I might simply not make the product. If I think that Amazon might clone me, I either might not develop the product or I might artificially restrict the sales if I know that Amazon flags products above "n units sales or $m total revenue".

This is not new. WalMart was the offender last time. http://www.fastcompany.com/54763/man-who-said-no-wal-mart

Note that Snapper got bought by Briggs who then decided that Sears and WalMart were just fine. Quality seems to have suffered, as expected.

> The thing you stand to lose is the original making of that product.

I would argue that Amazon Basics is filling the niche between quality premium and questionable cheap products with reliable products at a fair price.

If you want a Lightning cable for your iPhone what are your choices? A $1 part from an unknown Chinese factory that might work, or the $29.99 cable from Belkin, Griffin or Monster that will work? You know the cheap cable is a roll of the dice but you can't stomach the alternative either. That's where Amazon Basics comes in, it's the Toyota Carolla of whatever it is you're looking for.

It's not like Amazon is edging out anyone, they're offering products in categories that are over saturated with thousands of competing choices and no way for a customer to distinguish a good deal from a rip off.

I feel like a good solution for consumers would be a "certified by Amazon" program.

Still allows small new businesses, provides the user with the "garentee" they want, gives the business advertising, and keeps you on Amazon.

I understand why they went straight to making then themselves, but I can dream!

Would that be handled like most certification processes where the business applies for certification and pays a fee? Or where Amazon randomly selects vendors and tests them, the later seems like it would be more costly than sourcing the products yourself.

IMO the second one would be almost impossibly difficult at Amazon's scale. It would have to be the first. And of course that means setting the price so that they can handle the amount of incoming requests, which means it will eliminate some smaller groups. But i feel like if i were a creator of something, i'd want to pay the money to get it "certified" rather than amazon copy it.

> it's the Toyota Carolla of whatever it is you're looking for.

Corolla, not Carolla.

> it's the Toyota Carolla of whatever it is you're looking for.

What a great comparison, exactly.

First off, "simple" is relative. A laptop stand is relatively simple, that's just what it is.

So, you're saying we stand to lose original making of products that are easy for Amazon to copy. That's exactly what I'm saying isn't that important.

You point 3 is what you should do if your product is not innovative or cannot compete with a generic AmazonBasics version. If it's truly better, or complex enough that it simply won't be copied by Amazon, then make it and you won't have issues.

If Amazon is the only company willing to make a product, that gives them a monopoly by definition. When have consumers benefited when they only have one choice?

In his case 3 there will be no AmazonBasics version either, since there won't be a product for Amazon to analyze and copy.

I actually just bought the Rain stand for my rMBP a week ago, and have to say that I'm impressed with the industrial design. Sure, it's just a laptop stand, but it's solid aluminum and has solid design principles - it's a heavy piece of metal that looks and functions well enough it could have been designed by Apple and Jony Ive himself.

I'm fairly certain the AmazonBasics stand isn't the same quality, but that's not really the market they're going for. They're going for good enough and cheap - AmazonBasics cables are a good example of this - they're not high end, but they're affordable and when you just need an HDMI cable, they work fine.

Honestly, Amazon is in the perfect position to compete with their partners like this, and I don't see the harm. If anything the customer experience is even better because we now have reasonable low-priced options to buy that might not have been there before.

I have the Amazon one, my colleague the Rain version. When your laptop is on it, you can't tell the difference between the two.

Yes, it's steel instead of Aluminum, which means it weighs around 3 lbs instead of the Rain's 2 lbs (it's thick). Otherwise, it functions perfectly well as a laptop stand, which is all I really wanted out of it.

I also bought a different, brand-name stand for my rMBP. I'm one of the people who are willing to pay extra for a product because it looks better. I don't think Amazon is threatening higher-price/lower-quantity products that are truly outstanding (much better looking, much better quality). These make more money off of one sale, and have a smaller market. The more complex the product is, the easier it is for a company to set their version apart from the AmazonBasics one. I think they're only threatening those that are simply "easy enough" to copy without losing functionality and utility. The laptop stand is very close to the "easy enough" part of the spectrum. Things like USB hubs and ethernet cables, even closer.

Same. I'm not swayed by price. It's the build quality and materials that matter most to me. While there might be consumers who are drawn to Amazon's laptop stand, I'm willing to assume that the majority of buyers for Amazon's product would not have purchased the pricier options to begin with.

I have an AmazonBasics bag for my surface. It was cheap and decent quality. I'm really happy with it. It's good enough for me and the price is right.

The biggest risk is that Amazon will act as a monopoly and jack up the prices of the products once it's destroyed competitors.

Honestly, I don't think that's too likely as amazon's business model is built around razor-thin margins.

That isn't going to happen.

See: Walmart's Great Value brand products. Walmart has used it for a long time to hold consumer prices in check. If Nabisco attempts a large price hike, Walmart deploys their Great Value brand right next to said Nabisco product and undercuts them down to a price they regard as reasonable. Despite Walmart's extreme size and market dominance in traditional retail over the last ~20 years, they've never used - at a wide scope - their Great Value brand as an opportunity jack up prices or destroy competitors.

A monopoly on pieces of metal shaped a certain way? I feel like both of your sentences are unnecessarily abstract here.

That's super unlikely to happen. At least with a product like this. Jacking up the price would just encourage other manufacturers to do the same as Amazon: release a cheaper product. What Amazon has done is best for the consumer.

No, the biggest risk is that Amazon will kill innovation by reducing the expected returns to product development expenditures so that investment in product development is reduced.

But there's nothing innovative about the original versions of the AmazonBasics products. That's why they're called AmazonBasics. I'll agree with you when we have an AmazonBasics car or smartwatch, which turn will change the entire paradigm and probably won't happen.

If that was true, that wouldn't need to free ride on other peoples product and market development. Yeah, it's not the flashy big-picture innovation that goes into inventing whole new product categories -- but it has a cost and provides values, and if Amazon is swooping in to eat the returns of other firms investments, they destroy the incentive to make the ivestments, and improvements in the product categories at risk will be impaired.

Apple's done this for years. Most recent case I can recall is that f.lux program on iOS. AFAIK, people kind of mildly call them out on it and then forget about it a week later. It certainly hasn't seemed to actually damage Apple's business at all.

The term for that is Sherlocking, referencing a 3rd party tool they 'integrated' in either OS 8 or OS 9 (sorry, don't remember exactly).

I'd argue the f.lux case is a bit different.

Either way, haven't big retailers (Walmart, BestBuy, etc.) always done this?

For anyone curious: The third-party tool was Karelia's Watson, which was a tool that let you search websites, with the ability to add support for new websites through plug-ins. In OS X 10.2, Apple added the same functionality to their "find file" tool Sherlock (and IMO made the program worse than either Sherlock or Watson were on their own).

They have also done this with Spotlight, taking over functionality of app launchers / utilities like Quicksilver and Alfred.

Funnily enough, Apple also got into competition with Karelia's next product, Sandvox, when they released iWeb. That didn't seem to kill Sandvox the way Sherlock did Watson, though.

To be fair... iWeb was pretty bad. I tried to use it. Nope.

Oh, I thought it was earlier than that. I also couldn't remember if Sherlock was the Apple tool or the 3rd party one.

I didn't come back to the Mac until a hair before 10.4, so I don't have first hand experience.

We expect products to get better and people to learn from public ideas. For customer's it's a good thing.

But this really does burn developers of those original products who were originally brand partners.

I don't think Apple "owes" them anything, but I think they would help themselves by treating it as if they did. Especially where it's obvious that the OS-bundled app will win simply by virtue of being bundled. It's probably a legal issue where if they gave someone anything they'd open the door to being sued for a fortune, but it's horrible PR towards their developers.

In the long run this isn't good for customers because it de-incentivises innovation. Why should I develop a new product when amazon can make a ripoff and use their scale to undercut me?

It de-incentivises innovation that isn't worthy of a patent. Patents (ostensibly, in their original intent) exist in part to allow innovators to know that a competitor can't just go off and clone what they did, but has to license from them or counter-innovate a novel alternative.

In practice this won't stop all possible competitors, specifically those that flaunt patent law, but I don't think Amazon is one of those. Amazon could likely buy a license to the innovation from the patent holder for less than dealing with the courts would cost, in which case the patent system would be working as intended.

Amazon can undercut you whether you sell on their website or not. So can any other major corporation if your product catches their eye. Lastly this particular product was on Amazon for a decade (per article) before Amazon choose to complete. And the answer to your question is develop something you can patent or can compete in other ways that scale and price.

If you sell on Amazon's site, then they know your sales numbers. This is a specific advantage of their position as a distributor.

I run a little side-business, making a hardware gadget. My sales volume data is a sort of first-mover advantage. To compete with me, you have to risk guessing wrong about how many potential customers are out there.

> Why should I develop a new product when amazon can make a ripoff and use their scale to undercut me?

This is what patents are supposed to be used for. You create a truly innovative idea and receive a patent for it. Then some large manufacturer, that has the scale to produce your product far more efficiently than you ever could individually, contacts you asking to license your idea. Together you work out a fair price for the rights, you get money for your invention, they get profit, you both leave happy, and the customer gets the best of both worlds.

The damage would be that fewer people bother developing software for their platform.

Seems very hard to measure. So it's safe to speculate!

Amazon has economy of scale, it can make deals for more units and therefore drive down the cost. It also has negotiating and brand power to coerce suppliers to give a better price much like Wal-mart. Amazon competing with its own retailers is a stupid idea and will cause many of them to pull away. Say you offer 1,000 products. Do you really want Amazon knowing which ones are popular?

Just like everything else is now the case with Amazon. You can't build your own business on someone else's platform.

Hell if they start stealing data from AWS from their competitors I would run like hell away from their services.

What you are going to do about it is run away from Amazon. That's what.

Sure, you can run away from Amazon. But then you lose the marketing, fulfillment, and shipping channels offered by Amazon that you cannot possibly achieve yourself. Many customers will only purchase from Amazon, not some janky online store where they need to enter their credit card number. So you lose those. And you could contract with custom fulfillment centers and achieve two day shipping, but you're not going to be able to offer the shipping for free (prime), and the fulfillment will cost you more than Amazon unless you're moving huge volume.

If you offer 1,000 products, as you say, then you're in the wrong business. Did you develop every one of those products? I highly doubt it. So you are just a store selling thousands of products from different manufacturers. In that sense, you are a competitor to Amazon. How can you possible beat them? You've already lost.

The article is not referring to selling thousands of products, it's referring to developing and selling one single, specialized product, and then getting it "stolen" by Amazon. In this case, you are not originally competing with Amazon, but rather using their platform to sell your product. Once they clone your product, then you are competing with Amazon. At that point, if you have not established defensibility, you deserve to be undercut by Amazon.

There are many ways to establish defensibility: patents (Amazon cannot clone your product without paying a license fee); branding (customers will only buy your product, not some cheap clone); custom development (Amazon cannot clone your product without hiring specialized experts). If you are selling some cheap run-of-the-mill product from China, and all you have for defensibility is branding, then you are going to lose to Amazon. But if you have invested years of experience and engineering talent into a custom product protected by strong patents, and branded it well enough that customers know the product is only good if it comes from you, then you will beat Amazon and you can sell to their customers without worrying about getting cloned.

Your perception will bancrupt 99% of smb's and remove all wellfare for the middle class

Why should consumers pay a tax to keep SMBs alive? If Amazon can offer the same product for cheaper than anyone else, what right does a SMB have to charge consumers more for it?

hmmm, talking about "rights" might not be the way to look at this. talking about systemic effects might be a better way. consumers aren't just consumers after all, they're also usually employees. What are the effects, both positive and negative of having such a large company be able to dominate supply chains so much that they can often bring equivalent quality products to market for cheaper. It's a complicated question, not as easy as the moralizing on either side. Amazon and WalMart bad! Amazon and WalMart good!

Then remove all workforce and automate everything..

No seriously, read this: http://www.theguardian.com/sustainable-business/sustainable-... ,It's why second hand clothing is sold in africa and not given away.

A robust market is in everyone's interest. See: railroads 100 years ago.

SMBs need to add value on either location and convenience, or service. It's something that has been long studied by management experts (see Porter's Competitive Advantage):

https://en.wikipedia.org/wiki/Competitive_advantage

If you want them to compete on Amazon's ground, they will lose.

Do you really think Amazon's proprietary data is that essential?

Even if this product were not sold on Amazon it would be easy to see that pursuing it would be profitable. It's high margin and obviously popular. It's hard to keep those facts secret for long. The fact that the project was originally sold through Amazon is really just a red herring. Companies have been entering competition with high-margin incumbents for centuries.

This is just capitalism at its finest: the world does not owe you a business model, and you cannot expect to capture excess profits on stable product lines for long. Either scale or innovate (preferably both).

What to do about it? One thing might be to not invest in any company that is dependent on a retail sales channel that doesn't have a specific plan to avoid getting Amazoned this way. Amazon's basically found a great way to free ride on other firms product and market development -- which is fine, up until the reduced expected return from those investments dry up capital to invest in those areas for products that might be exposed to Amazon's tactics.

Oh, you mean what for existing firms with business models that are threatened...

> Whatchya gonna do about it?

Break up Amazon a la Bell. It's an abusive monopoly. I'm sure the European Union will get around to doing this before long.

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