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Comment by txcwpalpha | Hacker News Reader

>This is different from the service offered by traditional grocery stores which offer many different products, but are not arranging those products in relation to a particular request.

Grocery stores (and all other brick-and-mortars) spend tons and tons of money and effort specifically arranging their stores to influence which products you will buy. It's done on the scale of which aisle certain products are on, all the way down to the scale of specifically which shelf (and even exact inches away from eye level) certain products are on.

Every single time you walk into a store, the first product you see (maybe in front of the entryway, maybe it's a big banner hanging from the ceiling, or maybe it's the design of the shelf near the cash register) is all meticulously planned.

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>Grocery stores (and all other brick-and-mortars) spend tons and tons of money and effort specifically arranging their stores

And if I don't like Tesco I can go to Asda. If Tesco won't sell my product I can try and sell it to Sainsbury's or Waitrose.

The equivalent with Amazon is "If I don't like Walmart, there is some guy with a market stall selling fish, another with apples, a store 5 miles away that has carrots...". Or even, "Tescos won't buy my carrots so I will just drive them to every person myself".

I have said it a few times, you can't be the marketplace and sell through that marketplace. Imagine finding the NYSE were trading shares, and were giving themselves 30ms advantage over everyone else (if you can't imagine, have a browse of the Cryptocurrency markets). Imagine a commodities market who own 90% of the oil themselves, and price themselves into every order (maybe onions...).

Financial market is regulated and hence you dont that conflict of interest. They are also there to prevent anything catastrophic from happening. Selling Commodities in Retail isn't the same.

Where do you draw the line between "marketplace" and "retail store?" For the NYSE it seems fairly clear, but in retail it seems less so. Nearly every widespread retail store I know of either sells primary a multitude of other company's products but also has some store brand options, or primarily sells their own branded items but also sells other company's products in areas where they don't have a first-party offering.

If you don't like Amazon you can try Walmart.com. And hey--if I click on "Household Essentials" on Walmart.com, there's a "Brands We Love" section, with the first brand being Great Value, the Walmart store brand.

Not sure if you realized how ironic your NYSE comment was given semi recent news...

https://www.cbsnews.com/news/nyse-jeffrey-c-sprecher-kelly-l...

> you can’t be the marketplace and sell through that marketplace

To be competitive, you can and you should.

Amazon is a platform company. Platforms commoditize the complements. They didn’t have toys, so partner Toys’R’Us, didn’t have shoes, so partner Zappos, etc.

As the platform, platforms observe transactions, such that through time, they can value complements and decide to co-exist, acquire, or compete.

This is by now a well-known strategy.

Rabbit hole: https://www.gwern.net/Complement

Just as long as, being Zappos, if you sell through Amazon, expect Amazon branded shoes a couple months to years down the road.

Manufacturers pay chain supermarkets "slotting fees" for prime shelf space so while isle layout may be meticulously planned, the actual product placement per category is often up to how much suppliers are willing to pay. That's one of the reasons why branded products continue to do well against their generic equivalents.

Sure, and it probably helps sell those things, but there are several differences between those to that makes them extremely different in practice.

1. There's limited space at the front of a brick and mortar store. It's not practical to put most of the items at the front, so anyone who's not just there for a bag of chips ends up looking through the aisles anyways.

2. Brick-and-mortar stores usually only sell a few forms of same product. If I want olive oil, there's some store brand, some italian-looking brand, and maybe a brand that advertises some sort of magical health benefits. There might be a few variations for the level of refinement/virginity. It's easy for me to look at all the options and compare them. When I look at a search page on Amazon, there's often 100's of hits, and it's often pretty unclear if there's any difference between them that I'd care about (see https://www.amazon.com/s?k=olive+oil).

Theoretically Amazon has infinite shelf space, but in reality, no one really scrolls past the first few pages.

So in reality, if your product is on page 5, it is perhaps as good as not being on Amazon anyway for that particular query.

If you look at it this way, the space constraint isn't much different than brick and mortar.

It's more different than you think because there are many permutations of search terms. There are products that rank really well for odd phrasings of a product search term but not well for the most popular variations. There is also virtual shelf space for weird, niche items with additional features that are not that popular. Amazon aggregates hundreds of thousands of small businesses globally and also tailors search results to FBA warehouse availability. So for example if the warehouses near you are well stocked with product A and not product B you will see product A ranked relatively higher than product B would if you are a prime subscriber, but you will get neutral results when logged out or a non-prime subscriber.

Then you throw in Amazon Shopping ads (aka Sponsored Products) and the shelf space metaphor gets muddled further, because it's like as if every store visitor saw unique and different endcap displays and shelving ordering. There is less individual tailoring to search results than you might expect on Amazon (especially compared to information search engines like GoogleBingBingGo) but it is still a factor.

Then there is the factor of endemic counterfeiting in some categories, so the sketchier the listings are the more likely you are to just buy a counterfeit product, which would never happen in a typical brick and mortar retail shop.

IMO Amazon's private labels are so minor and make up such a small portion of store sales that it ranks very low on the scale of things that Amazon does that are morally/legally questionable.

>1. There's limited space at the front of a brick and mortar store. It's not practical to put most of the items at the front, so anyone who's not just there for a bag of chips ends up looking through the aisles anyways.

There's limited space on the frontpage of Amazon.com, too. If I go to Amazon looking for chips, I won't see it on the front page so I'm going to end up going to the Chips section of the site. If you're just at the store for a bag of chips, you go the chips aisle, which is also meticulously planned to specifically influence which brand of chips you will buy. I fail to see how this is any different than going to the Chips section of Amazon and seeing a specially arranged selection of chips.

>2. Brick-and-mortar stores usually only sell a few forms of same product. If I want olive oil, there's some store brand, some italian-looking brand, and maybe a brand that advertises some sort of magical health benefits. There might be a few variations for the level of refinement/virginity. It's easy for me to look at all the options and compare them. When I look at a search page on Amazon, there's often 100's of hits, and it's often pretty unclear if there's any difference between them that I'd care about (see https://www.amazon.com/s?k=olive+oil).

I don't really see what this has to do with the topic at hand. Can you clarify your point?

You're agreeing with the comment you responded to. They're saying amazons value is that they don't do that, showing the best products for you instead of the highest margin ones. Not sure I agree with them considering the top products are ads though.

Yes, they do. That's why I said they "are not arranging those products in relation to a particular request." We are all in the same store, and that store must arrange itself in a way that will serve all customers. Amazon's business model is premised on the idea that they provide a better service than that.

> That's why I said they "are not arranging those products in relation to a particular request."

But they are, which is what you're missing. Again, these stores spend millions and millions of dollars collecting these requests and arranging their store in response. They collect feedback and rearrange the shelves nearly every day based on requests (which can be actual verbal/written requests on their website or to store workers, or derived from things like sales numbers).

You can think of it in this way: each time someone goes to the "Chips" aisle, that is a implicit "request" from the customer that they want to buy chips, and the store has arranged their aisle in such a way that influences which chips you buy, just as Amazon arranges their search results page.

I'm with you as far as generic categories go. Going to the cheese and dairy section in a supermarket is very similar to going to the Amazon cheese and dairy (and eggs) section[1].

Stores maximizing the revenue they receive from their average customer, which they do quite aggressively as you note, feels very different from what Amazon is doing.

>the store has arranged their aisle in such a way that influences which chips you buy, just as Amazon arranges their search results page.

To make a somewhat silly comparison that illustrates how this is is not "just" like Amazon - I have never been in a grocery store that places their brand of chips on both ends of the chips aisle. I might find my chips before I see their brand. Amazon, on the other hand, can rearrange their shelves for every customer, and so their ability to manipulate the consumer experience is much greater.

Ultimately the arranging of physical displays, no matter the amount of zeal or data involved, seems categorically different to me than stores which can arranged differently not only for every customer, but every customer request. I think you're saying they're basically the same thing - in which case we'll just have to agree to disagree.

[1] https://www.amazon.com/s/ref=lp_16310101_nr_n_6?fst=as%3Aoff...

How often have you been in a pharmacy and seen the generic CVS brand on both ends of the aisle before seeing the pharma brand? There's a lot of people working on making that 100% without violating their contracts with their suppliers

Or signs next to their house-branded products that basically say "Buy $FAMOUS_BRAND $X if you like but if you look at the ingredients you'll see we're the exact same thing and we're cheaper."

You're basically saying that because Amazon has better agility, and can effectively rearrange their "shelves" faster than Target can (Amazon can rearrange them between every customer, whereas Target can only do it maybe once a day), Amazon should be punished for that? I just don't really see why or how that makes a difference.

To extend it again to the grocery store example, if I walk into a Target and ask the customer service person for their recommendation for some crackers, and they walk over to the Cracker aisle and point directly at the Target brand crackers instead of the Nabisco ones, are you saying that's problematic?

Yes, stores that push the products made by them over other alternatives are worse for the customer and harmful to the market.

I don't think there's anything wrong with stores recommending something in general. For instance, I don't think there's anything wrong with the "amazon's choice" label that Amazon uses.

This feels different to me, because as I said originally, this isn't Amazon recommending their brand. Amazon still ranks search results based on some combination of popularity and (probably) profitability.

To return to the in-store scenario: let's say you asked someone in Target to recommend crackers. The employee has a recommendation, but to hear it you first need to be shown the Target brand crackers, and then the employee will give you their recommendation.

Brands pay for placement. Promoting a store brand over another brand that paid for placement, not one that is necessarily better, is not a problem IMO. It is good business. You're gonna lose advertising dollars, but that's a business decision. To survive, some brands will need to find a way to cut out the middleman - Amazon

I'd like to believe stores were setup in that fashion, but we've known for a long time that isn't true. It benefits the store, not serve customers. A good example from Costco: https://www.businessinsider.com/costco-store-layouts-are-con...

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