Amazon, Amid Crackdown on Seller Scams, Fires Employees Over Data Leak
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These days, I feel like I'm in a twilight zone where 'wealth creation' is happening by putting a fresh face on 3rd-world country business models.
First it was Uber with the "hire a random guy off the street to be my driver". Next it was Fiverr/Upwork/ etc, the digital equivalent of rounding up day labourers in the Home Depot parking lot.
Now it's Amazon selling bootleg crap at scale. What's their excuse? Some variant of "move fast, break things", no doubt.
It's not a secret that lots of business models coming out of Silicon Valley are just regulatory workarounds/loopholes. It's a matter of chance that they coincide with some 3rd world country models as the latter's fuels are survival/corruption/perceived lawlessness while over here it's 'disruption'/first-to-market and the drive to become a temporary monopoly on a regulatory loophole.
For example, without the DMCA, neither Twitter nor YouTube would exist.
Sometimes is outpaces legislation (self-driving cars, cryptocurrencies, all the privacy things) but more than often it just finds a vulnerability in the unspecified existing legislation/regulation (see airbnb, uber, lyft).
I'd say "socializing losses, privatizing gains" is the name of the game. Those popular disruptive startups dump plenty of externalities on everyone around them. Don't think for a moment that anyone there is increasing efficiency for the sake of increasing efficiency globally; it's just disrupting the society and hoping money pours through the cracks.
Never seen this formulated as such but I really like it. I was reading a book which tangentially dealt with that [0]. It changed my perspective on how new businesses are increasingly externalizing their costs to the consumers.
[0] https://www.amazon.com/Shadow-Work-Unpaid-Unseen-Jobs/dp/161...
I also have never head it put quite this way, and realize how true it is. One example is American Football stadiums. Get the people to pay for it and charge them to go there.
In an idealized market, costs should be passed onto the consumer. From what I can tell, the book you reference is just complaining that this cost changed from money to labor.
It is also worth noting that, in many cases, this results in a net win for the consumer. Eg, whwn I buy from a full service gas station, I am paying someone to pump my gas, and paying the to sit idle waiting for customers, and paying (in time) to wait for them to finish.
In contrast, in self service, the only cost from above I have is 1 person pumping gas (which switched from being paid with money, to being paid with labor)
E.g. a perfect market would notice the increased quality variance of goods and services and would require the price to go down proportionally so the total cost is the same. But consumers don't all see it at the same time, so every company has a chance to hoodwink every consumer by pushing additional costs onto them without their initial knowledge.
The key innovation of money is the ability to accurately evaluate the value of goods and services; by pushing all of these extra external costs onto the consumer we're basically going back to bartering.
Every additional variable that the consumer is required to consider during a purchase decision is additional cognitive load. That's why people pay so much for free/fixed shipping costs: it reduces the number of variables you have to keep in your head by 1. It's also why I think that adding tax after the listed price (like the US does it) is terrible: it puts more cognitive load on the consumer. Consumers today are attacked with dozens of potential hidden external costs around every corner, it's like a DOS attack on the consumer's brain and inhibits their decision making ability.
--Upton Sinclair
Welcome to The Jungle, baby.
If it's a private entity capturing the state's revenues, that's anything but social. It's the opposite. It should be called what it is: lemon corporatism.
And it's sadly nothing new.
By the same token, but much harder to substantiate, why are people buying property just to rent it out with airbnb?
The negative externalities are there. You just have to know where to look.
the heart and core of each company is just more efficient matching with less regulation and more technology between renters and owners of capital
For one, consider that we attempt to constrain the price of labor upward to cover the cost of living. By having a large workforce that is not necessarily subject to these constraints (minimum wage, employer health plan, payroll taxes, etc.) Uber fails to meet the CoL for a large slice of its workforce, which then has to lean on society to make up the balance.
Pretty lame analysis. There are lots of companies that are in it to do good or actually improve society.
I'd even argue that society is net better off with Lyft (not sure about Uber) even though working there as an employee isn't great. Taxis were awful.
I don't disagree. They rarely get media attention though, and I don't mention them here, because their disruption is a quite different thing from Uber/AirBnB disruption.
For that "lame analysis" part, I'll give you a task: given that you wrote there are lots of such companies, name three. ;).
> I'd even argue that society is net better off with Lyft (not sure about Uber) even though working there as an employee isn't great. Taxis were awful.
Taxis were awful in many places, not everywhere. I'm usually taking people's word for it when they describe how Uber service is better than taxi (though I'm increasingly noticing stories about Uber quality declining). But there are cities, including my home town and the current town I live in, where taxis are almost universally good. And yet, Uber came and attacked taxis everywhere, whether good or bad. You can do things like that when you can freely break the law[0] and get away with it[1], and when you can lose money for longer than all your competitors can stay solvent.
Honestly, Uber story looks pretty much like a typical story of a corporation entering international market and displacing all little local players, except with more disregard for law, and some weird belief people still have that Uber is a startup.
Still, I'll grant Uber that some of the disruption came out for the better, because it allowed more ethical and legal competitors to emerge in this space. And yet:
> working there as an employee isn't great
Here's a thing: do we consider pushing more and more people into wage slavery to be "improving society"?
--
[0] - Not just general "taxi regulations", but also traffic safety (a common story to hear was Uber without valid insurance) and tax laws (in my country, I remember our equivalent of IRS being the most active in hunting down Uber drivers).
[1] - Half of the blame here goes to the municipal governments, who should've punished Uber immediately for breaking local laws. AFAIR only Germany behaved correctly, and started issuing service bans quickly.
Don't forget mandatory rest periods, enforced by technical means. My ex-girlfriend used to drive taxis and if you got caught breaking your mandatory rest period the fines were sky-high. Repeat offenders lose their taxi license.
Contrast that to the nice Uber driver, who has no restrictions on driving you around after a double shift at the widget factory and a couple of double whiskies to drown his sorrows, before picking up passengers as an "independent contractor"
What really seems lost on some of the more libertarian inclined, regulation hating chaps here is that most regulation is actually there for a reason. Among other things like protecting your life and health.
When people here start to delve into the "evil hotel lobby that is so mean to this scrappy AirBnb start-up, which sends all their communication 'with love'" then I usually want to start to gag.
Like who?
It's not a matter of chance. The earlier government regulation was better than no regulation, but had significant downsides. Taxi regulation got corrupt and the market didn't work very well. Uber and company came in with technology that worked better than the old government bureaucracy at cleaning up and regulating the market. I can't attest to how well Fiverr works.
To me, at least, this assertion requires some substantiation.
It seems to me that what Uber has been better at than traditional taxi services is solely the technology. I can only expect to hail a taxi on demand if I'm in a big city, airport, train station, or other transit center; if I'm in a rural area, suburb, or even a smaller city, I'll probably have to call to arrange a pickup and hope it actually arrives. (My personal luck with calling for taxis has been...spotty at best, while for Uber and Lyft so far it's been 100%.)
But "cleaning up and regulating the market?" I don't see how ride-sharing services are doing anything to regulate the market, and "cleaning up" is pretty hard to measure. Ride shares tend to be cheaper than taxis, and I don't doubt that part of the cost of a taxi fare is due to regulation -- but a large part of it comes from the uncomfortable fact that Uber and Lyft are both subsidizing rides with VC money. If they actually charged enough for the ride to make a profit, average ride prices would easily double.
Also, while taxi regulation is pretty corrupt, well, Uber is maybe not the poster child we want for how unregulated companies are gonna do better on that front.
Taxis used to be smelly and dirty. Drivers were quite cavalier in their attitudes towards customers. Hailing a taxi was difficult and chancy. I was scammed by drivers who would take me on indirect routes for more money.
It seems to me that what Uber has been better at than traditional taxi services is solely the technology.
That is precisely the point.
I don't see how ride-sharing services are doing anything to regulate the market, and "cleaning up" is pretty hard to measure.
There are now rapid and technologically mediated consequences for both drivers and riders for behaving badly. Uber drivers are always polite, and riders are always polite. Riders are now strongly motivated to never keep their drivers waiting, which was not the case for taxis. The vehicles smell better! Drivers never scam you by driving a circuitous route.
It's pretty obvious to me that the market is much better regulated through the technology.
Also, while taxi regulation is pretty corrupt, well, Uber is maybe not the poster child we want for how unregulated companies are gonna do better on that front.
The point is that while Uber is far from a poster child -- no argument there -- the technology (read: the rapid flow of accurate information in the market) still has them doing a better job than regulatory mechanisms from the 20th century.
This said, every tragedy of the commons scenario that was previously avoided by regulation happened, the streets of major cities are almost entirely cars for hire, where it's nearly impossible to make a living wage working as a driver on only 40 hours a week. This right here is the cost of neoliberalism, yes more people have jobs, the economy expanded to meet a more desired demand, but the workers in the field are largely worse off than had they all been protected in other industries alongside scarce resources being even more competitive than they were previously.
What are the downsides that regulation avoided, which are now happening?
the streets of major cities are almost entirely cars for hire, where it's nearly impossible to make a living wage working as a driver on only 40 hours a week.
Making a living wage wasn't so great for beginning cab drivers either. They had to rent their cabs from medallion holders, which often meant they had to take a lot of rides before they saw dollar 1.
Then let me invite you to come visit my city, Vancouver, the last major city in North America where ride-share isn't available and taxis are the only game in town.
First, taxi regulations stipulate that taxis get to charge a flat-rate tariff on every ride. They have to/get to charge this. Whatever this tariff was meant to accomplish, it incentivizes taxi drivers to ignore their dispatcher when taxis are in high demand (like on weekend evenings) and only pick up off the street for short hops around downtown. If you need a trip further out (say 5 miles), forget about it - you'll wait for hours before you can get a cab (I have, on multiple occasions).
Second, taxi medallions are crazy-expensive (hundreds of thousands of dollars) and are a cash-cow for municipalities. They're meant to tie taxi cabs to a local city, but they also make elastic cab-supply impossible - you can never have more cabs on the road than you have medallions and because the medallions are so expensive they need to be amortized with constant use. That incentivizes everyone to have far fewer medallions than the industry would need to satisfy demand during peak periods. The most efficient deployment of medallions for a taxi company is to have enough medallions to satisfy minimum, not peak demand.
And don't think that medallions will guarantee good local service - just because a taxi company has a medallion issued by the municipality that you live in doesn't mean that they can pick you up and drive you home. I live in Burnaby (city next to Vancouver) where Bonny's Taxi has a legally-granted monopoly, but if I'm downtown (which is in Vancouver) I can't call Bonny's to pick me up - medallions regulate pick-up, not drop-off.
And even if you manage to flag down a cab on a busy night, they'll quite commonly flat-out refuse to take you anywhere other than downtown. They're barred from doing this, but the industry is self-policing and you can guess how likely it is that a driver would face any consequences for this. Maybe if you film them and post it to social media. But certainly not otherwise. And who can blame them? They have to pay down their medallion-mortgage, and exploiting the flat-rate tariff on short-hop rides downtown is the best way to do that.
Also, carry cash. Many taxi drivers will insist on cash. "Oh, my machine is broken. You need to pay with cash." Again, they're barred from doing this, but again, the industry is self-policing and you can guess how often complaints lead to consequences. It still happens all the time.
And because these are a great bunch of guys, their industry spends millions lobbying the provincial government to stall legislation that would allow ride-share in Vancouver. British Columbia went through a period in the 70's where it was indistinguishable from a Soviet republic with a planned economy, and implemented socialized car insurance. Everyone needs to buy basic liability auto insurance from our govt car insurer (at about twice the market rate in other provinces), and that insurer has simply refused to insure ride-sharers. That's been a far more effective barrier to ride-share than has existed anywhere else that I'm aware of. And the taxi industry spends aggressively to make sure that that doesn't change.
Also, while taxi regulation is pretty corrupt, well, Uber is maybe not the poster child we want for how unregulated companies are gonna do better on that front.
They are exactly that "poster child". Uber at their very very worst is better than the taxi companies and the taxi industry in a city where ride-share isn't available.
Another problem with cabs is that they are not incentivized to use the fastest route. Determining the fee at the start of the journey aligns both the driver's and passenger's interests.
Taxis suck hard.
https://globalnews.ca/news/3907475/taxi-driver-refuses-to-dr...
The British Columbian government recently 'legalized' ride-share. They were elected in 2016 on a promise to legalize ride-share, but taxi-industry money bought a 2 year delay in the legislation. You can't ride-share yet, though, because taxi-industry money also bought an additional 1 year delay in deployment of ride-share-compatible car insurance, which won't be available until late 2019, 3 years after the government promised, and 5 years after the previous government proposed legalizing it. But don't get your hope up yet, though, because
1. we don't know what the ride-share-compatible insurance will look like. In Manitoba, another province with government-owned car insurance monopoly, the ride-share insurance was crafted to make it impossible for Uber and Lyft to enter the market. Ride-share companies quite reasonably want their drivers to be able to get a separate rate between when they are driving privately vs when they are driving for ride-share, just like what they can get from private insurers. Manitoba's government monopoly wasn't willing to give them that, which makes ride-share unworkable.
2. the government's 'legalization' legislation enables a public commission to set supply limits on taxis and ride-share, much like medallions. This almost completely nullifies any benefit ride-share would bring to the city and is a poison-pill that will probably keep Uber out of Vancouver.
So on top of the 5 years we'll have been waiting by fall 2019, figure in another 2 or 3 years for everyone to realize that the legislation is a bust and that we've been suckered by the taxi lobby again.
The taxi-industry's lobbying money has been very well spent.
With a taxi, if you complain about poor service, the driver will remain a taxi driver. Therefore drivers have little cause to care about customers that they will never see again.
With an Uber driver, drivers that fail to get good reviews quickly stop being Uber drivers. The result is that Uber drivers are much better on average than taxi drivers.
Or maybe making those that scale well more accessible and socially accepted in the service economy. Is there maybe some source that you've read, someone who has analyzed that statement (3rd-world country business models = gig economy) in more detail? I don't have much time to dig but if there was a thesis or article about this I'd be super interested in reading it.
I've spend a good amount of time in third-world countries, and my experience aligns with his.
Totally off the main topic here, but I'm also a guy and I've had one ride that was a little hair-raising. I wasn't harassed, mind.
I was riding with two girls (downtown Toronto) in an Uber and the driver was clearly on speed. He was extremely chatty, actually quite friendly, but very frantic. Took many last-second turns, wrong way down one-way streets and driving over curbs to get out of the way of cars on said one-way streets. It was nuts.
That said, all other rides I've had have been just fine. Often better than my experiences with Toronto cabs. There's no cash benefit for them taking the "scenic route" or "making wrong turns" which I've had less-scrupulous cabbies do to drive up the fare. That's a feature I appreciate. But I just make myself deal with transit since removing the app— their privacy measures didn't instill much confidence in me.
I was a little shocked when Uber sent me my stats for last year 1000+ rides.
One pattern I've noticed, taxis honk their horn constantly and obnoxiously. Uber drivers rarely do it. When you hear someone honking their horn for upwards of ten straight seconds, it's a taxi.
So most drivers rent their taxi, often by the day. And since fares are front-loaded (you earn a lot more picking up 100 people for 5 miles, than 1 person for 500 miles) it creates an incentive for taxi drivers to go crazy. Granted that same pressure is ostensibly there for Uber drivers, but I think it's different when your car is your car rather than a temporary asset you just dropped a fair chunk of change to rent for a single day.
Somehow transportation, world wide, always ends up in these sort of scummy monopolistic rackets.
"Race to the bottom."
Fortunately, that bottom is rising, on average. But "first world" systems have taken a lot of abuse, along the way.
In my opinion, abuse that was unnecessary. But we let the shysters in to arbitrage against the disparities, instead of helping other countries to grow for themselves into more well-rounded and autonomous entities. Maybe I'm a fool, but that's how I see it.
Competing with Alibaba. Amazon seems to have decided to increase product variety (through increasing foreign based stores) at the cost of losing quality control.
Try not having Prime. I tried that once, for a short while. The difference in service was striking.
It's not uncommon to sell premium service packages, or restricted shopping (like Costco).
Amazon... I can only speculate what’s going on there. Maybe the resulting price pressure turns the screws on suppliers? And honestly I’ve never gotten a branded product from them that I thought was fake.
This could just be a fulfillment optimization; there are obvious cost savings and efficiencies from commingling, and maybe they’re working on a solution now.
Scammers looking for places to scam, which Amazon provides by relying on customer ratings to police its suppliers, which clearly doesn't work.
Most of the recent SV business models only work in a hypothetical place where everyone is good and altruistic.
Look at self-driving cars. There are thousands of words written about how self-driving cars will create a transportation utopia with clean, efficient transportation for all.
None of the startups address what happens when someone refuses to get out of a self-driving car. Or when a self-driving car arrives at my door and it's full of barf. Or some homeless guy decides to set up camp in there. Or it gets all graffiti tagged.
Think about how people treat current modes of public transportation. Now imagine how miscreants will treat them with more privacy, and no chance of human intervention.
But for real, it's for these reasons that Google et al. place such a high value on systems to identify and deanonymize people. In a world where all of your biometric data can be easily identified and linked back to you, there won't be much room for bad behavior. The real question is who gets to decide what behavior qualifies as "bad."
That's a world that I sure as shit never want to inhabit.
2027 SEPT 19th,
you are being fined
$300 DOLLARS
for improper behavior. Said behavior was
DIGITAL PENETRATION, NASAL
IMPROPER DISPOSAL / DISPERSAL OF BODILY FLUIDS (NASAL)
LEWD OR IMPROPER CONDUCT (NOSE-PICKING)
Fine will be assessed from your credit number on file. Have a nice day."
Perhaps the long play is to intentionally reduce trust in competitors brands (read: anyone who isn't amazon) to push people towards an ever expanding amazon basics line, which are presumably more profitable.
They only want more for less.
The overlap between people who:
* pretend to be upset about ever-shrinking middle class, and
* sort by lowest price and buy an obvious knockoff from an online marketplace third-party seller that takes three weeks to arrive from Shenzhen in order to save 52¢ on an item...
...is almost 100%.
They don't realize that their own cheapassedness caused the shrinking.
You aren't in the twilight zone, 3rd-world business models are creeping into the rest of the world because they worked so well in the 3rd-world.
Except in the 3rd-world the models maximized profit for businesses while consumers had no choice due to pre-existing poverty and in what is left of the non-3rd-world they are maximizing profit for businesses while appealing to rabid cheapassed consumers.
First and smarter are getting more and more taken.
Why does Amazon have to be limited to stores? What if they could put the right near field detection technology into a portable form factor? Like, a blanket spread on the sidewalk?
Should an Uber driver just starve to death because he doesn't fit your specific model of what a worker looks like?
That's a pretty classist elitism viewpoint, and it's completely unwarranted.
I'm coming from the developing world. The lack of regulations and product safety standards, is not some kind of competitive advantage, it is a problem that leads to ever falling living standards. A fire in a clothing factory killed 1300 people in my country, an incident that would have been avoidable if the building owner enforced fire safety standards.
I suppose if you think about things in terms of MR/MC curves, such loss of life is the price of efficiency.
Seems to me Amazon felt they couldn't compete against eBay or AliExpress and still be "low on prices". Essentially they chose that market (including copying sellers products and rebranding them as Essentials) over legitimate sales.
Possibly "sell at 50% discount, thrice"
I have been a reliable Amazon Prime consumer for years, but I have begun making purchases elsewhere because I can not even trust "Ships from and sold by Amazon" any more.
At the very least, quite intermingling stock. And at this point you're going to have to be public about that change and put a guarantee behind it. Your reputation is slipping.
I used to order a lot of our daily household stuff from Amazon: cleaners, dish soap, detergent, etc. So much of that stuff now is priced just horribly. $4 for a bottle from Amazon, but it's just from Prime Pantry so you have to order a bunch of stuff or be stuck with a high shipping cost.
If you go with one of the other sellers, the prices are frequently 2-3x normal retail, I guess preying on the fact that people don't realize they're getting ripped off.
And as a result, I've become much more careful about checking prices on Amazon, which can't be good for Amazon overall.
By contrast, when I go to the grocery store, I generally assume the amount I'm paying is more-or-less the same as what I would pay elsewhere. (Likely a poor overall mindset on my part, but good for the store.)
For out-of-print books/toys/games/etc., eBay is usually your best bet. Computer hardware (video cards, RAM, etc.) is often cheaper on either eBay or NewEgg. Et cetera.
Some of these items, like the pasta, are things I'd previously ordered from Amazon for a fraction of the current price. Which, again, has caused me to be much more cautious—every time I reorder something nowadays, I have to check whether the price has changed. How does Amazon expect people to use stuff like the dash button when prices can vary this much?
I have a couple of Dash buttons for Gatorade and pistachios and such. I stopped using them because I couldn't be certain of a reasonable price, or that the products wouldn't be fakes.
Safety > price > convenience, Amazon.
But the products that double in price have made more sensitive to the ones that change by a few dollars, because I'm now on high alert for price changes in general.
I think it all stems from the same thing. Dishonest Amazon sellers know that most Amazon shoppers don't price check, so they can all get away with selling way over market price as long as everyone selling a given item stays the course.
Last week I tried Mercari, and it was... OK. Better selection than Goodwill. The shippers don't seem to be in a hurry to get things out. Both sellers offered excuses when they missed Mercari's three day window. But the stuff finally got here.
Can anyone recommend another marketplace? Something not Alibaba or DX.com?
It was for that reason I started buying my household stuff at Amazon — because I could save a buck or two, per item, which adds up.
Then — as you pointed out — stuff got weird. Amazon's prices became consistently higher than the supermarkets.
Then the third-party sellers started using "AI" pricing, so that a package of soap bars that is $3.59 at Safeway is $61 on Amazon.
Then the counterfeits arrived, and now my family has a policy of not buying anything from Amazon that goes on, or in, our bodies.
These days there are bargains to be had through Amazon, but only through the two-hour shipping from Whole Foods. At least in my market. (A particular cheese that is $15/pound at Kroger is $5/pound when I get it delivered from my local Whole Foods.)
It's not too late to Amazon to regain trust. But it's not going to be a quick or easy process.
It was likely they were fakes and if they provide electrical power they may be a fire hazard.
Amazon seemed to realize how big of a problem this was (or Apple took them aside and made it a problem for them) because they just announced they are taking action: https://motherboard.vice.com/en_us/article/bjexb5/amazon-is-...
Basically we pay Amazon $1 or 15% of sale (whichever is higher + ~$2.50 for shipping before anything else, so after margins and what not that's a minimum of $4 going to Amazon for marketing and logistics. That's why low dollar 1-pack items feel like price gouging -- there's been years of A/B testing on the marketplace that shows a $4.99+free ship item is way more attractive than $1.99+$3 shipping.
Amazon itself sells stuff direct from manufacturer at a loss or breakeven-ish cost for items under $3 because they can, but even those prices aren't hugely sustainable and they play around with algorithmic pricing themselves over time.
Retail logistics for low dollar items is a Hard problem. :|
https://www.amazon.com/Formula-409-Purpose-Cleaner-Bottles/d...
You can get the normal retail prices on all this stuff and still shop online. You just can't do that on Amazon any more.
https://money.cnn.com/2018/05/23/investing/target-earnings/i...
It's a weird story but I ordered a kids plate from Amazon. I ordered 2 that were totally fine but when I ordered a 3rd one, it was completely different quality, seemed to be a different material, and had a weird smell to it. It was "Prime" but almost immediately, you could tell it was a different product.
This has happened to me a bunch and I've heard crazier stories about people ordering supplements/vitamins and getting fake bottles :(
I don't trust Amazon as much either outside of a few products I trust + majority of common electronics. I wouldn't buy an HDD from Amazon for instance due to their crazy shipping shit.
Also, their shipping is so fucking unreliable. I get delays on my packages at least twice a month, and they've lost packages before :(
I stopped buying anything electronic from Amazon because one power to USB adapter burned up, tripped a circuit breaker, and it broke my fridge. Luckily, that was the only other thing I had plugged into that circuit at the time.
Another big issue was my friend bought an Apple power adapter that started smoking after a few hours of it being plugged into the wall.
Scary stuff, especially when you consider anything that goes on or in your body could be counterfeit too.
Last I heard, it was ~50% of their revenue. And they take a 15% cut of the price, plus a per-transaction fee, for the cost of maintaining a product catalog (which they already do).
Not a chance they'll drop it.
AMZN's ridiculous P/E ratios aren't really ridiculous when you think about it. Everybody knows Amazon pumps most of its free cash flow back into the business, which increases their growth rates at the expense of current earnings. The prices they are getting for the stock are just the result of a market betting on the future profit potential of Amazon when the growth stops or slows to normal levels. High prices imply that investors see huge amounts of growth potential, and if you extrapolate out what that P/E means, it shows that AMZN investors see Amazon growing 10x larger (or more) than it currently is.
But now Amazon has this huge liability of the Marketplace, and in order to cut it out they have to cut back their revenues by a substantial amount. And a revenue slowdown or decline signals to investors that growth is slowing. Needless to say, the anticipated future value of Amazon will cut quite drastically with a hit to revenues.
Compounding the problem is the fact that so much of their compensation comes in the form of RSUs, which are new issues. This is a great growth strategy, because it reduces their dependence on free cash flow for compensation, allowing it to be used for investment. BUT, any hit to their stock price will require drastic increases in RSU grants in order to maintain personnel, further exacerbating a drop in stock prices through dilution.
I don't envy the person who has to solve this problem.
Probably wait for something to be announced like "Prime Plus" for premium brands as they try to figure out how to differentiate products in the market, or watch them continue to expand into new types of markets altogether... there's very little for them else to do.
Amazon has the data from Amazon Marketplace to know the top selling products, and Amazon has the scale to arrange manufacturing deals with perhaps the same overseas factories Amazon Marketplace sellers are using to economically produce private label brands for Amazon, thereby decreasing the market share of Amazon Marketplace sellers. Amazon could also make their Amazon Basics more visible to consumers by default, and have more control over the QA of the items.
With growing negative feedback about the quality-side of Amazon's Marketplace items/sellers, there is an opportunity to accelerate into private-label territory with more control over manufacturing oversight/customer service while using the Amazon Marketplace as the "proving grounds" to determine which products are most profitable for Amazon to private-label. Sure AMZN's earnings are doing well, but the real secret sauce for Bezos isn't just logistics - it's holding control over a market.
Right now, Amazon's quality-gatekeeping on their platform is the equivalent of Mac doing an "ocular pat down" on entrants. If there is monetary incentive to stray away from this, Amazon would be more willing to flip the switch on the marketplace. And thus we come one step closer towards living in an Amazon corporate town buying Amazon-branded items from the Amazon general store.
But for many things I shop for, that would be extremely inconvenient for me. For example, I needed to buy replacement fuses for a Fluke multimeter. Amazon itself didn't sell it but a 3rd-party marketplace seller did. If the marketplace was shut down, I'd have to go through the hassle of registering a new account on yet another ecommerce website just to buy that fuse. In this day and age of customer databases getting hacked, I'd rather not create any new accounts unless absolutely necessary.
Yes, I get the danger of counterfeit items. I did get bit by that with fake eclipse glasses from China last year but nevertheless, the 3rd-party marketplace has been a net positive for my shopping experience. I just pay attention to the seller ratings and make sure they're better than 98%.
Maybe I'm just extremely cynical, but you don't feel those are somehow gamed? For parts that you've described, I've actually moved to eBay as my first stop.
I think the reviews for products are gamed but I don't think the seller feedback ratings are.
I used to sell used books as a Amazon marketplace seller and I once sold a book that was damaged and put that condition in the description. The buyer bought and gave me 1 star rating for it and described the damage that I already put in the description. The buyer just didn't bother to read the description before he bought it. I couldn't get Amazon to remove that unfair rating.
If there's a way to game the seller feedback in a sustainable way across thousands of ratings, I'd like to know how. Sure, sellers could offer refunds to bribe customers to change their seller rating from 1 star to 5 stars (not sure if that's even possible) but eventually, the seller will run out of money with that scheme. On the other hand, product reviews are easier to hack.
This is why I'm a software engineer and not a retail tycoon ;-).
For example Mercado Libre. Originally from Argentina (I think) but it's all over Latin America now. They used to have auctions but at least in Mexico it's mostly a marketplace.
And I haven't even been bitten by the Amazon commingling fraud yet, just bitten by egregiously craptastic products bought off of Amazon. I can't trust the reviews without carefully parsing them to figure out which ones are likely factory-generated. I can't trust the pricing without looking through various historical price add-ons. At that point, the cognitive load between using Amazon and choosing alternative channels is pretty meh, and I'd rather just go "straight to the source", ordering direct from the manufacturer and finding the manufacturer by looking up forum discussions.
For renewing household goods, I'm finding myself shopping at my local grocery chain, Target and WalMart a lot more these days. Once Amazon pricing for the same household item shows it is more than these other sources (and often by a surprisingly large delta), Amazon doesn't get a crack at that spend for another year, as it isn't worth the cognitive bandwidth to comparison shop each time I go to the grocery store, or if Target/WalMart deliver the best price, they get the subscription for the year. I use a credit card number generator for subscriptions, so we have to renew the configuration each year.
Amazon is losing its convenience value proposition, and I find taking their eye off of that ball very odd for a B2C context, but what do I know.
That's a drop in the ocean. But it's not reviews and brushing, the real issue is fraudulent and counterfeit products. I don't even trust Amazon to buy books anymore.
Just like craigslist, facebook, and countless other things, once something gets to be too big, it gets co-opted by bad actors and the risks outweigh the benefits.
edit: highly recommend this Reply All episode about Amazon, brushing, and counterfeit goods: https://www.gimletmedia.com/reply-all/124
checking for likely-fake 5-star reviews before making an expensive purchase is a good idea.
I wasn't comfortable with that kind of interaction, so I informed Amazon. Lots of copious apologies from Amazon, and I assume the company was "fired". But the company just changed their name slightly and are still selling the same items.
I did send amazon fraud dept a detailed email about my experiences and the new company selling the exact same items.
Amazon needs to have a vastly larger fraud department staffed with actual humans, instead of automated systems that people can game very easily.
Or offer bounties to customers for successful fraud removals. Although people would probably game that too.
Check if their seller name is trademarked with the USPTO.
Trademarks take 9 months to get, and aren't necessary to sell on Amazon, but a real business will usually trademark its name.
I'm not a crypto-fanatic, but I would have pushed the seller to send money to a crypto wallet address, and then I would have immediately withdrawn it to a bank account. Then still posted the bad review of the seller anyways.
> The tactics include pummeling rivals’ listings with overly positive or negative reviews, and repeatedly clicking on links to products they want boosted to trick Amazon’s algorithm into ranking them higher in search results
Amazon is seemingly coming to this realization very late. The downfall of many search engines has been the inability to deal with the tricks that subvert their ranking systems. If you take any external signal as an indication of popularity, it will be manipulated.
The overly positive reviews is an interesting spin on this manipulation; it creates seeds of doubt when a product looks like it's been overly reviewed. The "fake review" is easy to pick out.
[edit: formatting]
I further contend there really is no solution. It's a war of escalation. We've seen it play out with SEO and search engines over the years. You can still "game" Google, but it's a lot harder to do it, the barrier to entry is a lot harder than it used to be when you could just list your site with a link farm. I am guessing that Amazon is in a similar war.
Amazon issued I refund but when I looked into it further I found reviews from others who got crap from them as well, but those reviews were well buried. Because I'd requested a refund I wasn't allowed to post a review that warned others about them. That felt to me like Amazon was shielding the vendor from negative reviews.
As a result of how this was handled I've not bought anything from Amazon this year and I canceled our "Prime" membership this month when it expired.
This "crackdown" feels like too little too late, and it will be a long time before I go back there, if ever.
And if it's simply stealing content, why aren't companies suing outline into oblivion like they did with Napster?
Obviously this would lead to a lot of sellers mysteriously relocating to other countries, and there would be a lot of patsies set up to take the credit score hit, but it's all about defense-in-depth right?
Chinese high-speed rail carries more than a billion passengers per year ( http://en.people.cn/n3/2017/1110/c90000-9291147.html ).
If vastly fewer than 1% of rides are affected by the so-called social credit blacklist, is it a real thing?
Personally I have been disappointed that the commentators are making the "Black Mirror" comparisons without carrying the reference further back to Cory Doctorow's "Whuffie".
With the exception of items from Amazon Global, I've already bought all of my gifts from brick-and-mortar stores because I can no longer trust that Amazon won't ship me fakes.
Maybe next year.
Across one axis, this is better for the consumer and better for Amazon: customers get better results, and Amazon can charge for the (still limited) high priority space much more than a typical retailer could charge a CPG manufacturer for visibility.
Across another axis, this is much worse for Amazon: they cede a significant amount of control over a highly valuable asset, which also greatly impacts customer experience. All of the inputs they build their system on can be faked or gamed, and now they have the added responsibility of distinguishing real vs fake, and managing those inputs.
I don't really have any answers, but I think it is an interesting thought exercise to consider how the old paradigm had some advantages, even if those advantages are likely unable to scale.
That just seems like a recipe for disaster, as seen here...
I've got no clue who to trust in the review space. I tend to trust comments I find in niche subreddits more than I should. They're probably 50% astroturfed or driven by poor incentives, but overall it tends to push towards higher end established brands rather than cheap knockoff garbage. At least going towards the former isn't an electrocution risk, I guess..
If don’t have to have a FB account.