1) under price to get market dominance,
2) then increase prices higher than competition
3) before customers realize they're actually more expensive than the competition.
I stopped trusting Amazon at step 3 and only shop there if they actually have the cheapest option. They act like grocery stores: advertise a low price on one item to get you in the door, but profit off the other items.
On the other hand, they've made me care more about counterfeit goods. I've received a few this year already. What's scary is that on some health items - like vitamins - if you're ordering for the first time, how would you even know what the real thing is supposed to look like?
I now try to order items directly from the manufacturer or authorized distributor whenever possible, simply to avoid counterfeit risk. Kohl's for clothing and LifeExtension for vitamins. Ironically I have more faith in these retailers because their traditional single-source supply chains are less efficient than Amazon's crowd-sourced/FBA model. Less efficient and therefore more trustworthy. Maybe this is one of the few ways David can beat Goliath.
There also seems to be broader opportunities in this area around supply chain integrity that's transparent to and verifiable by end consumers.
This is the best way to trigger the suspension of a fraudulent seller and the review of an ASIN.
This is the one that's starting to really surprise me. You generally expect there to be counterfeit versions of items that are expensive or easy to replicate, but I've now received counterfeit:
* Burts Bees face wipes
* 3M command strips
* Curad alcohol prep pads
... and quite a few others. The alcohol prep pads were the most unexpected, but also the easiest to spot because I buy them all the time at Costco and other stores.
That doesn't mean they are always the cheapest option, but they aren't messing with prices to gain customers and then making a profit, since they aren't pricing things to make a profit in the first place.
It sounds like Costco also makes a profit of Kirkland Signature sales, though. I suppose if you didn’t like generic drugs you could apply a similar argument here.
Costco’s loss leaders (e.g. the hot dogs) are also arguably instances of “messing with prices to gain customers.”
https://www.investopedia.com/articles/investing/070715/costc...
Except the article was a bit confusing on this point:
The biggest Costco loss leaders in America right now are rotisserie chicken, the hot dog & soda combo and gas. A Bloomberg article has calculated that Costco earns only $14 million in profit a year on its sale of 70 million chickens.
However, as a consumer, I do agree with you in principle that they are messing with things, including pricing and placement of products, mostly to get people to buy more (possibly even to get customers in the doors), just to a lesser degree.
OTOH, the magnitude of that lesser degree is so great that it makes a difference. I know I'm not always getting the best deal if I buy any particular item at Costco, but I can be reasonably confident I'm not paying a huge markup.
In fact, I find Costco so reliable for fair pricing, I consider them my benchmark for seeing if other stores' discounts are really deals or just borderline scams like doubling the base price but offering an evergreen "sale" that's around 50% off. (Mostly only relevant to items with widely fluctuating prices or ones I buy so infrequently inflation is a factor).
CostCo doesn't do weird pricing scheming, but they have higher-profit items and getting people in the stores with memberships does get people to buy more stuff there, even stuff people might have not bought at all otherwise.
Don't get me wrong, CostCo does a better ethical and consumer-respecting business than most, but they DO profit on sales, it's just slim enough profit that they couldn't get by well without the member fees.
You're wrong.
> Through two quarters of its fiscal 2017, Costco has reported $1.06 billion in income (profit). That number is slightly smaller than the $1.26 billion it collected in membership fees.
> If you examine the company's sales, it brought in $56.59 billion in net sales with a merchandise cost of $50.21 billion and sales expenses of $5.92 billion. That's a small loss when it comes to actually selling goods,
https://www.fool.com/investing/2017/05/05/how-costco-wholesa...
I always laugh when people say “It’s cheaper!” somewhere else and then it turns out it’s only by like 4 bucks.
I'll shop at wholefoods, but goodeggs is also about the same price (post delivery) and is better quality.
I guess it seems strange, but that’s quite a lot of money to some people. Totally justifiable that you wouldn’t find it worth the time... but some have to economize or came from a background where they have to count every penny.
If someone says they chose a particular supplier because it was 4USD cheaper, that’s a reasonable decision and not reason to ridicule them.
Read the story of Henry Dow about how price dumping can fail.
https://www.investopedia.com/ask/answers/09/dow-chemical-bro...
Amazon isn't actually monopoly in any industry, yet, but it's difficult to see how this is different to the approach a monopolist takes in entering a new market.
Quote from the Washington Post[0]:
“while Winn-Dixie and Harvey’s are far from mom-and-pops, a number of those stores slated for closure are in areas where it’s a 15- or 20-minute drive to the next-closest grocery store.”
[0] https://www.washingtonpost.com/news/wonk/wp/2018/03/22/the-a...
Edit: typo
This should be the default whenever/wherever possible.
4) Pollute the world over with cardboard boxes and single serving deliveries
2) Find online retailers that focus solely on the item categories you need, and shop those specifically. I find General Stores (aka Amazon) have less breadth of selection than online retailers who focus on a single domain.
3) Buy in bulk from Costco. I describe Costco's product sourcing as providing 90% of the items that 90% of the population needs for daily living. The rest can be purchased from specialty stores. And since Costco prices items to break even, you have a pretty good indication that you're not getting "screwed" on most of your purchases.
Seriously, the idea that capitalism = choice is bullshit, as is the idea full stores is a capitalist quality or that the problems with Venezuela are all caused by being non-capitalist (implied that Venezuela is the inevitable outcome of any non-capitalist approach).
Amazon underprices and offers a better service like Prime with 2-day delivery. Competitors start freaking out and begin launching responses to tackle this. Industry changes for the better.
So yes. Capitalism at its finest. Offer a better price or a better product to compete in a marketplace.
Without Amazon, the brick & mortars would have never begun to think about such things like a better online experience, online-to-store pickup, etc.
Amazon certainly engages in price discrimination, but I’d bet its algorithms weigh race much less than the incumbents.
Also, the studies I’ve seen suggest amazon charges rich people more, which is a lot less slimy than systematically overcharging poor minority groups.
Kroger isn't a monopoly. If Kroger was truly price gouging as you're alleging, then any other company can just sweep into that neighborhood and take all of Kroger's business.
As Black economist Thomas Sowell notes: "despite higher markups in prices in low-income neighborhoods, there is a lower than average rate of return for businesses there — one of the reasons why businesses tend to avoid such neighborhoods."
In other words, the cost of doing business in poor neighborhoods is higher. You can attribute this to higher taxes in urban areas, higher cost of transporting goods to the area (increased traffic leading to longer duration supply routes, higher insurance requirements for transporters), higher cost of securing the business due to higher crime levels.
The most ludicrous thing is people falling for the Prime membership. Why lock yourself in their system? It only encourages abuse.
Are Prime memberships valuable for Amazon? Certainly.
Do they lock you in? Not really; that’s assuming you could have spent less without a Prime membership, which might be true for many people but is certainly not true for all people.
Is it “the most ludicrous thing”? Not at all.
Most websites either have free shipping and higher prices, or non-free shipping and lower prices. Take your pick. But with Amazon, you're giving an extra $120 per year for the privilege of paying a higher price for that "free" shipping.
You’re making a lot of uncharitable assumptions about other people.
It's a bit inaccurate to talk about "lock in" when a consumer can choose a modestly more expensive month-to-month membership.
For me (plus two roommates), Prime Video adds enough additional content on top of Netflix and Hulu that it would justify the ~$10/mo all on its own.