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Comment by tuna-piano | Hacker News Reader

First of all, people like to complain about Amazon owned brands. But this is just retailing 101, nothing new here. Walk around a Costco and try and find a non Costco branded product in a variety of categories. People seem to love Costco's Kirkland brand and (personally) I also enjoy the AmazonBasics brand. Why have I never heard a peep about Costco?

You can make an argument that Amazon's market power has enabled it to gain success in some aspects of online retail.

But to the proponents of the "market power has helped Amazon strangle so many industries", you have to answer - how did market power help:

-Amazon grow Whole Foods?

-AWS become the most popular cloud service?

-Kindle become the most popular ereader?

It seems to me a much better explanation than "market power abuse" is that Amazon's culture and people have enabled it to dominate a variety of unconnected industries.

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The argument I’m familiar with goes as follows: Stores choose all their goods, bazaars provide stalls for merchants. People don’t like when one tries to masquerade as the other, or, be both.

Costco, being a store, can choose foods or goods that have been rebranded or independently sourced and no one really cares — they are still fully autonomous. They have always taken ownership of the product, so a change in supply seems to be completely within the store’s wheelhouse.

On the other hand, Amazon is a bazaar. Merchants line up, trying to get you to purchase from their stall using various tactics. Merchants get unhappy when they see that the bazaar’s guard uses their ledger to inform the head of the bazaar which merchants he could kick out. Not literally kick out, but be put in a worse position so that the bazaar’s own products are now the first ones people see.

This conflict of interest is in direct opposition of the merchants and may be in opposition of the consumers.

I personally really like Amazon Basics, as it tends to remove the brand cost. However, there’s a reason brands became popular in the first place — and the Amazon Basic brand is not one I associate with “quality”. I think the best part of the Amazon Basic brand is that it establishes a minimum bar of quality that Amazon generally needs. I know if so want the cheapest I go to them, otherwise I do my research or rely on brand reputation like I did before.

This is becoming more of the case with Whole Foods, which I’ve started to avoid. They were a quality store and that quality (seems to) have gone down. The issue with the Whole Foods purchase is that there are lower quality grocery stores already, so I’d be interested in how they’re doing with that market.

I think it is more a problem of reach\scale. If a store has a reach just like a bazaar, we need to worry about how the store operates behind the scene just like the bazaar.

Amazon seems to have only recently moved ahead of Walmart in revenue[0], so I find it hard to support the store inherently has a smaller reach than a bazaar. Am I misunderstanding your position or the nuances therein?

I think my initial post agrees with your conclusion, though, which is that trying to be both is an area that is not as defined and is part of what is causing issues.

[0] https://www.forbes.com/sites/laurendebter/2019/05/15/worlds-...

Amazon is fundamentally a store. Third party sellers on Amazon are the equivalent of Girl Scouts: the store lets them sell cookies on the premises but that’s not what the store is there for. IMO third-party sellers are close to a dark pattern since it’s so hard to distinguish them from actual sold-by-Amazon product listings.

Costco does similar things—both my ladder and my blender were things I purchased at Costco under the influence from third-party sellers demonstrating products there. Sure, the stocking and checkout were via Costco, but the same is true for Amazon.

Have you been on Amazon recently? Third party sellers dominate it.

Amazon is fundamentally a bazaar that does a good job of pretending to be a store, but the mask is starting to slip.

I’ve noticed this when shopping for certain things and I don’t like it. But honestly they were a store first and they still own the entire consumer experience. Whenever a third party seller from Amazon contacts me, I am usually surprised because in my mind, I’m buying from Amazon and not from them.

Third party sellers who use FBA in particular are more like suppliers to whom Amazon can outsource part of their job to. In that case I’d say Amazon is a store, with infinite shelf space, and a very permissive policy about letting suppliers stock some of that infinite shelf space themselves sometimes.

We’re in agreement about all the basic premises, I think the key points I’d push back with are:

(1) I can’t “easily” register as a seller with Costco, but I can with Amazon (Or so I believe)

(2) The ease with which non-company merchants can enter is a key property of the bazaar vs store dichotomy. Easier to enter, more bazaar-like

(3) Given (2) and (1), it seems like Amazon wants to be both a store and a bazaar, which my initial post articulated as a “problematic” state, at the least. Even if only problematic through novelty

This doesn’t make Amazon good or bad, I can just see where it leads to new discussion

Sure, but I think it’s somewhat dubious to be immediately suspicious of any successful business model that changes the basic assumptions. Once you start enshrining “this is how we’ve always done it” into law and policy you basically outlaw innovation and start operating in a prohibited-unless-explicitly-allowed rather than allowed-unless-explicitly-prohibited mode.

Interesting point.

The bazaar part of amazon is the worst part for me. It’s purely noise. I hate it and do whatever I can to filter it out. I just want the store part of amazon and like their basics brand stuff.

In certain parts of the world supermarkets are built to be two stories or more so that the ground floor may be rented out to small vendors. I don't see anybody object to that.

Most people prefer to pay a fixed fair price instead of potentially being ripped off because they don't personally know the seller. Haggling constantly is an awful waste of time

I think haggling is a big sign of an immature market. But I’m not sure that really touches on parent’s point that there can be both.

And I’m not sure parent really touches on my point that the bazaar part of amazon is just noise.

It’s worse than unreliable junk. A vendor is showing up and dropping their orange painted lemons onto amazon’s orange display.

That's by design. You can't know whether a product legitimately came from the original manufacturer or was sent to an amazon warehouse by a third party seller. Therefore AmazonBasics is the only "trust worthy" brand on Amazon and the only reason it is trust worthy is that there is targeted campaign (by letting fraud happen) against every other brand that isn't AmazonBasicsbrand.

This distinction is not hard and fast even in the physical world. Just go to original department stores in Paris. They have a mix of stalls for merchants and the general store.

Also many landlords (airports, arenas, etc...) charge a percentage of sales instead of a fixed rate (and even fixed rates can be adjusted based on perceived revenue).

Amazon is basically the Internet version of WalMart. WalMart used its power to force suppliers' margins to near nothing thus lowering prices for consumers and making the WalMart heirs some of the richest people in the world. Amazon uses its power to improve the consumer experience overall thus making Bezos the richest person in the world.

The complaints leveraged at Amazon have analogues to those leveraged at WalMart. Also, WalMart has copied Amazon's online strategy including being a store/bazaar hybrid.

This area would seem to be very hard to legislate. I suspect that most of the tech giants are now partly competing with each other and partly with the next big innovations. Amazon became WalMart's competition with the rise of the Internet.

> This distinction is not hard and fast even in the physical world. Just go to original department stores in Paris.

Or you can go to department stores, gas stations, or grocery stores in the US, where the “store within a store” model is also very common.

Stores also sell on consignment and force companies to take back unsold goods. It’s especially the case for media like magazines and back in the day CDs.

But target / walmart / your bookstore can often return product for full refund to the folks making it within a time period (usually within a year).

Kirkland products are actually white label versions of the products they copy, produced by the company they are copying - so it’s an entirely different situation - ie Costco is paying brands for their products (albeit at a lower price), not stealing.

Previous discussion: https://news.ycombinator.com/item?id=23912991

Do you think Amazon is making its own sunblock? I'm sure many of their self-branded products are being manufactured by name brands as well.

Amazon doesn't manufacture their own Amazon Basics goods. They pay for it, albeit at a lower price.

This is common with many white label products and not at all unique to Costco. For example, I know which craft brewery white labels one of Trader Joe's brand beers (each type of beer might be made by a different brewery). Same production line, just different bottles.

I think you're right that Amazon has come to dominate a lot of markets on merit. But it's still the case that having overly dominant players in a market is bad for... well everyone except the dominant player. It doesn't matter why or how it came to be.

This is not universally true. It's bad if the dominant player uses their dominance to deliver sub-par quality at high prices. But so far Amazon doesn't seem to be doing that, at least in my user experience of it.

It is bad that they might one day be able to parlay their dominance into harming consumers, but the dominance itself is not necessarily a bad thing, IMO.

I completely disagree, the quality of products on Amazon has gone downhill over the past 5 years. You may attribute this to influx of bad merchants but it really comes down to Amazon not having the same incentives to properly rank items and remove bad actors. Instead it created Amazon Basics brand and steers users towards it. The influx of misc brand names and items that look exactly like each other just helps confuse consumers and make them lean towards Amazon Basics.

Amazon has always been the more expensive online shop in my experience. You should expect to get overcharged by up to 20%.

Kindle definitely became the most popular ereader through a type of market power. The difference is that Amazon didn't win that market power, they were gifted it by publishers that insisted on DRM that would lock users into the Amazon ecosystem.

Honestly it’s a dumb hill to choose to die on for the simple reason it is so obviously pro consumer as to be politically and legally untenable as a status quo antitrust matter.

On Costco, it’s not a marketplace for third party sellers to ship to customers. Sure it’s closer to us to make analogies with traditional brands, but Amazon’s position is nothing similar.

Then, the difference between business as usual and market power abuse is the extent to which you do something. The same way annoying someone and bullying is a matter of degree. Here being in a dominant position Is what makes it different.

> On Costco, it’s not a marketplace for third party sellers to ship to customers. Sure it’s closer to us to make analogies with traditional brands, but Amazon’s position is nothing similar.

Is it not? I mean, some of the details are different, but fundamentally Costco sells third party products. I don't really see how the distinction here is relevant to the issue at hand.

Amazon doesn’t buy the third party products to resell to the client, nor does it pass delivery and production contracts with volume orders and quality checks etc.

It’s a completely different business that has a different relationship with its sellers. In particular Amazon guarantees nothing and the seller is fully responsible for delivering the goods and satisfying the client. Going through Amazon’s warehouses is still a different case, but if I’m not mistaken it’s just a shipping agreement and nothing more.

In specific cases Amazon might actually buy the goods from the seller first, but it’s the exception more than the rule.

This is more like a landlord evicting a restaurant and then opening a copy of that restaurant in the same location

If the landlord can run the restaurant as profitably as a restaurant operator could, then either the landlord or the restaurant operator was in the wrong business before. Property management and restaurant management are very different businesses that require very different skills, and it's pretty rare to be able to do both very well, which is why landlords normally lease the space to professional restaurateurs.

"Amazon took my idea and did the same thing at lower cost" is basically another way of saying "I wasn't adding any value but was still capturing a bunch of money on all those sales". Maybe there's an argument there that Amazon is freeloading on market research, and we should have some kind of intellectual property protection for market research, but that seems like it'd be a policy disaster. And there are lots of businesses out there already that piggyback off their competitors' market research (for instance, Burger King supposedly just locates anywhere McDonald's can operate profitably).

> "Amazon took my idea and did the same thing at lower cost"

This isn't always the case, as many merchants have pointed it out. Sometimes (I'm sure not all the time), it's more "Amazon took my idea, and all the validation work I did in order to develop and prove it and build a market for it, and is selling it below cost in order to force everyone else out of the market"

I'm not passing judgement on whether that is okay or not; I'm pointing out that Amazon "winning marketshare" does not mean that they're doing it in a better way, or at a lower cost. Sometimes it just means that Amazon is able to spend/risk a whole lot more money than anyone else.

I'm not aware of any evidence that Amazon sells stuff below cost.

And really you're not going to get any direct evidence of this. Amazon is a private company that would have to willingly release this information related to their costs, and obviously won't.

However during congressional testimony last week Bezos was directly asked this in relation to Echo devices. His response was that "at list price" Echo devices "are not below cost", however stated "sometimes when it’s on promotion it may be below cost, yes."

Echo devices (for example) are "on promotion" a significant amount of the time.

Hell during Prime Day last year Amazon was selling Fire tablets for like $12 (although that was widely believed to be a pricing error that was still honored).

> Amazon is a private company

Amazon is a public company.

> however stated "sometimes when it’s on promotion it may be below cost, yes."

Using hardware as a loss leader isn't unusual -- you get a discount on the hardware but on average they make it back on products/services that are complements of the hardware. Keurig and every printer manufacturer do this, too.

Such as what? I literally can’t think of a single Kirkland branded item that doesn’t have a name brand right next to it. Toilet paper, water, dog food, clothing, spices, oil, nuts, etc.

I literally can’t think of a single Kirkland item that was used to run a name brand out of business. And they don’t do any “special placement” either.

Amazon on the other hand....

Not only that, but often times Costco's Kirkland branded item is made by the same supplier as the adjacent name brand.

> often times Costco's Kirkland branded item is made by the same supplier as the adjacent name brand.

That's true for basically all store brands including Amazon Basics.

Amazon basic is never quality just cheap and not complete crap that will break immediately, especially not within the return window. It's only viable because there are currently so many counterfeit goods and downright awful products on Amazon in any category where the item is less than 100 bucks and especially under fifty. If I buy an Amazon basic usb cord I know it will transfer at the rate it says, unlike dozens of other cords on their site, but I still expect it to fray or break in some other way I wouldn't expect from paying a couple dollars more for anker.

Kirkland usually is not a top of a brand category, except when they are putting out marketing to let you know how good their vodka is, but they are never competing at the bottom either.

Why would you think AmazonBasics are not the same thing?

The construction company my dad worked for was hired to redo the concrete flooring in the factory sockets were made. He told me how the sockets would come down the conveyor belt and then get pushed down different paths. At the end of the different paths, the sockets were stamped with Husky, Craftsman, etc. Different company names, same socket.

I hate doing this, but just want to point out the humor of people downvoting the comment without a SINGLE example to counter my point. Either you've never shopped at Costco or you're just pissed that Amazon is 100% NOT equivalent to Costco despite the really poor analogy.

And how could they be? Costco makes their money off membership fees - Amazon is attempting to make their money on driving their competitors out of business through what can only be described as monopolistic practices. Costco isn't an open bazaar that tracks goods sold and enters markets where they see "vendors" being successful. They sell a small number of items at a fair price - and don't intentionally screw their suppliers.

Because the point they are making is irrelevant. It doesn't matter to the discussion whether or not Kirkland brand items have other name brands next to them

It absolutely does, the claim was that Kirkland does what Amazon does and it's patently false. Kirkland doesn't stock name brand items, figure out what customers are buying the most of, then build a competitor while giving priority to their own brand which was the accusation.

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