You can think what you want about Amazon but I’m not complaining that I have 100’s of options for my phone case, all for 1/5 the price of the previous days buying them at Verizon or Apple.
Edit: would be awesome to hear about Amazon’s pricing practice from an employee
Do you have any source about this? If the costumer is already willing to pay a price there would be no point in lowering the price just because you automated the process. Or better said, theres no point in investing in machines if your profit margin is not going to get wider.
And yes, most of our history is full of examples of newer technologies lowering cost, that's kind of the whole reason that or civilization is more advanced (materially) than it was in the past.
I think with Amazon building out their delivery and subscription options, they can hold back a lot of pressure to share the savings from automation with consumers.
A profit-maximizing firm sets prices that maximize its expected profit. This seems tautological, but it's important and I think it's implications aren't appreciated.
If your prices are already beating the competition, and you already have a solid reputation for low prices, there is no incentive to continue lowering prices, even as you cut costs. This is why monopolies are considered "bad", because they eliminate incentives for firms to care at all about the welfare of consumers.
In undergrad economics classes, you might learn that prices are set equal to marginal cost (including opportunity cost). But that is only true under specific and relatively strong equilibrium conditions, which I don't believe apply to Amazon.
The point I was talking about has to do with the internal labor publicity at Amazon which rarely affects the consumer.
And once adopted by competitors, when everyone's margins have increased, these companies do compete on price.
This process doesn't happen immediately but it does happen.
Can a competitor actually catch up without this data?
And no, I'm not implying that they are a monopoly.
I actually suspect that one big competitor to Amazon will not be another online store, but local stores providing free or cheap local delivery, and by extension services like Postmates.
Yes there is. Lower prices means that consumers will buy more.
Unless you are going to argue that the elasticity of demand is perfectly inelastic. Such cases are rare.
If they could reach many more customers by lowering prices, even a monopoly could potentially find it profitable to continue lowering prices as they cut costs.
A monopoly could also continue to cut costs to head off the threat of antitrust litigation.
I dont see why they would ever sacrifice this, when they can easily keep growing by taking this same mindset into new industries (groceries, cloud computing, pharmacies).
Your margins is someone else opportunity. I believe Jeff said something similar along the line. By having a economy of scale in Warehouses, Automation, Transportation and consistently lower margin Amazon achieve a moat that can not be easily replicated even with billions of dollars.
But, on the other hand, if there are little to no competition, like a monopoly, then Amazon is obviously free to just keep their prices and increase their margins.
Better attribution of cost means more margin to play with and cost savings that can be pushed onto customers in a fairer sense - especially if your pricing is automated.
Interestingly Kiva may then selectively reduce the costs associated with bulky goods as they're probably better at moving big stuff and travel faster/shorter.
The mort apt comparison is the cost of the phone case when packed with human labor vs. packed by robots.
I also think that the full extent of this conversation, that consumer interest is currently in opposition with our responsibilities as a society, is rarely considered by the mainstream media as well.