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Comment by vsskanth | Hacker News Reader

This looks like a retail goods analogy for SWIFT type system for connecting different retail marketplaces to one another.

I always thought the economics of drop shipping would never work but looks like it is profitable even with a processing middleman.

I am curious to know what kind of inefficiency is being exploited here, because this seems to be from one online retailer to another (unlike ebay). I have a couple of guesses but I would like to know if there are others:

* information gap on the customer side (doesn't want to cross shop)

* product won't ship to target market through competitors website

* competitor's website wont accept user's preferred mode of payment

* wants a competitor's house-brand product on amazon

* some kind of customs loophole

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Back when I originally started using Amazon it got me in the habit of not checking prices elsewhere because Amazon was usually the cheapest, and that was also before I started having to pay my states sales tax. Nowadays, I find the prices are generally not very good, not to mention all the other issues Amazon has, so I do compare prices with other sites before making any purchases. However, I imagine a lot of customers never broke their habit of just purchasing without checking elsewhere which has likely contributed to this.

I find that many other sites, surprisingly, don't have anything close to the variety available for many specialty items.

I recently needed some 2 part epoxy glue in larger containers. Amazon has dozens of different brands and quantities, mostly at competitive prices.

I checked walmart.com and only found a few options from 3rd party sellers that was way overpriced. I even tried a few specialty sites. But no one else was even close. Kind of a sad state of affairs.

I think one of the things that stands out to me from this article is how little the actual cost of physical goods account for the in the price of commodity consumer goods.

I think one of the reason why this system works is the different costs of financing inventory different players enjoy, and the relative time constraints they have for holding inventory.

> * information gap on the customer side (doesn't want to cross shop)

From the article:

> Amazon has made buying stuff so frictionless and habitual, delivery so fast — and for Prime members, free — that many shoppers don’t bother checking prices anywhere else.

I do cross shop for most things. I usually check Ebay, Newegg, etc. But the majority of the time I end up buying from Amazon due to straight up better prices, or only slightly higher prices plus more convenience. I think there are enough of us that do that to keep Amazon's prices competitive.

I would add...

* Supplier relies on middleman because they can't write convincing sales pitch in the target market's language.

* Supplier relies on middleman so they can get into (and out of) business more quickly; don't need an end-to-end plan to get started.

Those are all great guesses, and I bet all of them come into play.

I wonder how many externalities aren't being accounted for yet in the process, like the new landfill Roundup will need to construct to handle all the excess packaging being disposed of.

I think a lot about how tech companies talk about being green, when underneath them is devices that go in the trash after two years because they aren't supported anymore or the amount of packaging and shipping and fuel waste that happens to provide you a perfect one-day shipping experience.

I wonder how different Amazon and the like would seem from an oil company in terms of environmental impact, when all is taken into account.

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