Genuinely asking, why is this bad (for either example)?
1. It hinders competition. You can't really provide a marketplace thay competes with Amazon by having lower prices (for example by taking a smaller cut from sellers), because sellers aren't allowed to list lower prices on your marketplace. Or alternatively, you can't compete by selling directly from you website, because you can't offer a lower price than on Amazon.
2. It means even if you buy directly from the seller, you have to pay a higher price because it is listed on Amazon. In effect people who bu directly are subsidizing a lower price for people who buy on Amazon. This applies to the credit card case as well.
Also, the only reason we want competition is because it should get lower prices for consumers. Competition isn't a good in and of itself, it's just a means to an end. So if more competition means higher prices for the same goods, then who needs it?
I don't quite get your second point: if the consumer is paying the same price, why do they care whether 100% goes to the supplier, or 99% or 0.01? If an item costs me 10USD, I don't care who get's that money, I just care that I don't get to keep it right
That is not the only reason free market capitalists want competition. Competition should also promote a variety of choice, innovation, and dynamism in other services to consumers, not just low product prices.
If another marketplace takes a lower cut, allowing the seller to set a lower price while keeping margins, they can’t do so under this arrangement without taking a hit on Amazon sales.
The market should be encouraging finding the lowest-margin distribution path, not artificially propping up prices elsewhere to match Amazon’s margins.
But you care if it costs you $10 instead of $9. My point is that Amazon's rules means the price is higher for everyone, in order to cover Amazon's fees. Without them, if you are willing to buy from somewhere less convenient than amazon, you can get a better price.
Just imagine I want to by a widget, and there are many manufacturers. I can search on Amazon, and get all of the prices for all the manufacturers right in one place, and I know that each price I see is the cheapest. I don’t have to search for 10 different manufacturer websites and check each price. I can just sort by it, and then one click buy.
I understand the anticompetitive concerns, but there is also a big advantage for consumers to be able to have a single market that has the lowest prices available and easy ordering.
If I am a widget manufacturer, selling on Amazon means I am no longer competing for your purchase with just my market peers. On some level, I am now competing against all listings in that category, including grey market resellers because Amazon doesn’t police for shit.
No one is forcing you to comparison shop. You're trying to take freedom from others so you can financially justify being lazy.
> I understand the anticompetitive concerns, but there is also a big advantage for consumers to be able to have a single market that has the lowest prices available and easy ordering.
Not when that "lowest price available" is now inflated from what it would have been. Consumers lose because now they pay higher prices than they otherwise would have.
Yeah, but it isn't. I suggest you at least check the price on eBay before you buy from Amazon, if not Froogle and Walmart.
Amazon's anti-competitive behavior here ONLY applies to a single seller, NOT to a manufacturer or a specific product. So while "Steve's Discount Stereo" can't sell that stereo for a lower price outside of Amazon, "Dave's Discount Stereo" certainly can.
Maybe they both outsource inventory and order processing to the parent company only having distinct sales and marketing.
For example, you are selling a Widget for $20. Amazon says "we'll take $10 of that ourselves". You can sell your Widget elsewhere at lower overhead, but you can't pass those savings on to the buyer, which means the buyer has no incentive to shop elsewhere, which means there are no market forces encouraging Amazon to reduce their cut.
There are also no market forces preventing Amazon from increasing their cut. Tomorrow, they'll want $15 of that $20.
If an item is 100$, seller gets 95.
Ok their own website, noone takes a cut, all money goes to seller.
In this case they might want to sell for 98$, and then both customer and seller wins.
They use the ad money to give five percent cash back on purchases.
Manufacturer advertises "effectively pay 5% more on our web site or Amazon will club a baby seal (or worse)!"
The advertising campaign falls flat.
Consumers are killed/maimed by a counterfeit item they bought on Amazon.
Manufacturer costs go up 10% (spent on lawyers and training customer support as emergency response workers).
Amazon begins production of a higher-margin, but less expensive and non-deadly knock off, and promotes it above the original product.
Repeat.
But the reality is they are a store that dwarfs every other in customer reach making it difficult for small businesses to grow without utilizing Amazon as one of their sales channel. Hence, Amazon's 15% commission gets baked into everything even if it's not sold on Amazon. I think the law needs to evolve in a way to recognize scenarios like this where there is massive asymmetry - not necessarily a monopoly - between one dominant market player and others which is harming the consumer.
Amazon's response of course would be "no fair; you're using us for product discovery but then giving the sale to the brand owner". Which has some validity. If you took away the commission, then they would be relegated to a search engine that relies on ad revenue only. But that would mean lower prices so consumers would win in the end.
Almost as bad as someone walking into a brick and mortar store and then going to some big website to actually buy the TV. No fair indeed.
If I'm at the store and i can put something in my cart and buy it then I'm not going to order it online and wait for delivery to save $5. Also delivery is extremely unreliable these days...
From watching other people at stores, it's maybe 15%? For goods that need to be installed or carefully handled, it's less common. Headphones? Pricecheck. Mechanical Keyboard? Pricecheck. Washer and Dryer? Most people pricecheck even though it seems like something they wouldn't. Turns out that most people shop around for those, so internet pricechecking is part of it. Food items that seem too expensive? Pricecheck. You can save a bunch on dry/bottled goods. Amazon Prime feels like a Costco membership. You have to make sure you use it, to justify it.
No they are not. They are setting the price on their platform to be the minimum price. That's very different and bad for consumers.
No, they are making sure they get the biggest cut
They'd also still be a major corporation / quasi-monopoly that powers like 80%+ of the internet and is wildly profitable. I see no problem with taking a small cut of their revenue away that they only have due to shady business practices. But Wall Street would cry Won't anyone think of the shareholders?
I wouldn't give a shit if that caused Jeff's net worth to drop 5% or 10% - the guy would still have more money than the rest of the world save for 4 or 5 people rather than just 1 or 2 people.
Play around with this (and don't enter 0 for shipping, because they have a divide by zero error):
https://sellercentral.amazon.com/hz/fba/profitabilitycalcula...
The higher margin on the left is what amazon charges for fulfillment (which can be quite a lot).