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Comment by mrraj | Hacker News Reader

From the Bloomberg article :

"Chuck Gregorich, who sells fire pits and outdoor furniture, says turning a profit on Amazon is getting harder. One of his popular fire pits costs $200, of which Amazon takes $112 for its commission, warehouse storage, delivery and advertising. That leaves him with $88 to pay the manufacturer, ship the product in from China and cover his overhead."

I have a hard time sympathizing here. They farm out manufacturing to China and logistics/warehousing to Amazon, and then also lend brand to a marketplace they don't own. Assuming this is how FBA selling works on Amazon, it sounds like the low profits they make are just a byproduct of them not actually doing much work.

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You make a good point, but I think the parent point is true as well. You still have people actually producing work, unable to compete on these platforms where Amazon will literally make a copy of their product at a lower price.

This is the result of commoditizing 'starting a business' to the point of near-worthlessness in the bottom 50%+. Like you say, I don't value the businesses that simply re-sell re-labeled products without ever interacting with anything very much. But let's not confuse the 'spam' of the problem with the squashing of actual business that this is historically known to cause.

Is drop shopping the kind of business to fight for supporting? That’s all this is.

Dude needs to learn how to weld his own fire pits, teach some new employees, rinse repeat

Yeah all for < $200 shipped!

Dude needs to learn how to build his own fully automated robotic fire pit factory.

The complaint here is that someone cannot offer a comparable product for as low cost as their competitor?

For all of history we've known that this would lead the least competitive to liquidation.

Dude needs to educate an audience on why they should buy a domestically built $400 fire pit.

Dude needs to raise the wages of people who can't even afford a $200 fire pit.

Yeah, but if you search and replaced the part where the $88 is to pay the manufacturer, and instead say it is to pay they employees and the cost of materials, it's not like that suddenly looks like a viable business.

And saying just don't use FBA is no solution either. Shipping large heavy stuff is expensive, and I best Amazon has much better rates negotiated with the carriers.

Storage plus shipping through FBA isn’t cheap. The problem isn’t that FBA is expensive, the problem is that selling on Amazon but not via FBA is heavily punished with placement and appearance leading to poor conversion rates.

Yes this is the issue for consumers as well. The first 16 pages of every search are nearly identical low quality fba products. Need a search layer to find the small sellers!

I don't even buy from small sellers on Amazon mainly due to terrible resilts. That's what ebay is good for.

Yea, but be honest, you really only want to buy from FBA because that's the one that will arrive tomorrow

This means Amazon has the most efficient pipeline to consumers. Where is the harm? It seems like a benefit to consumers.

And that hopefully will be the basis of any anticompetitive action. Sounds like logistics and commerce might need to be broken up.

Why? This doesn't make any sense. Why would a vertically integrated business that provides the most efficient outcome for the consumer need to be broken up?

Why do you need to sell on Amazon at all? Surely that is where the problem is?

Except it has been for decades. In traditional retail, the split is 60% store, 40% seller. So your same $200 product would be $80 to the seller, not $88. And manufacturers have been operating with that split for a long time.

You're talking about gross margin/mark up, and there really isn't a "traditional retail margin". It varies a lot by product, but, as an example, the typical mark up for grocery stores is 15%. I used to do retail sales for appliances, including BBQs. The markup could get as high as 50%, even more for high end BBQs that sell in the $800+ range, but was generally more like 30%... and discount outlets or online retailers, it was much more like the grocery store mark up. A $200 BBQ with a markup of 150% like you're describing is not a thing I ever saw.

Are talking about markup from cost of goods? The manufacturer costs usually take into account their overhead; assembly line, warehousing, transport, running the business, profit etc. Amazon is taking over some of those things for sellers, so yes they take a bigger percentage than a normal retail store.

Comparing to retail is not apples to apples. The overall margins on Amazon tend to be lower across the board. So, yes, there's a problem with comparing directly with retail in general. Amazon is taking on distributor costs, but they aren't really doing anything to reduce manufacturer costs. Manufacturers still need an assembly line, warehousing, shipping (to get it to Amazon), & running their business... maybe they're not getting any profit, but that's the problem we're talking about.

While amazon is covering their own warehouse & fulfillment shipping costs, that's really that different from costs normally borne by retailers who have warehouses and handle delivery to their retail outlets.

Should be: "that's NOT really that different from costs normally borne by retailers"

Yes. Curation is valuable.

I have done a bit of shopping on Taobao which is basically buy direct from manufacturers and yes, curation is valuable. Both of quality and design.

Whoa buddy.

That’s a hell of an assumption.

1. Manufacturing does not happen in America anymore.

2. The proliferation of counterfeiters does not allow dropshippers to scale to a meaningful size. Everyone is game to Alibaba.

Within our industry of paper goods, our manufacturers have to get their parts and raw materials from overseas.

The larger FBA mom and pops will design and market their products here in the US using American workers and have them manufactured overseas completely or in-part.

The impact of Amazon’s monopoly power on American online product businesses is less jobs that pay well.

- Less accounting and bookkeeping jobs

- less marketing jobs

- less design jobs

- less seller fulfilled packing and logistics jobs

Nothing you mentioned harms consumers. To me it sounds like the situation is as follows:

- Amazon offers a marketplace to sellers, which happens to be the largest marketplace with the most potential buyers.

- Amazon charges a fee to list on their site.

- Amazon doesn't let buyers sell their products for lower on a site that isn't Amazon. (Makes sense; they want to be paid for attracting consumers.)

- Buyers are cost sensitive and buy the cheapest product.

The outcome seems to be the most favorable condition for consumers. The complaint here seems to be that Amazon is so efficient that people would prefer to buy from them.

Consumers without jobs can’t consume.

They will get other jobs. The competing helps to efficiently allocate capital.

There's a reason for struggling artists: nobody demands their product, so they end up in different occupations that actually provide value.

Cept the part about Amazon not letting you sell your goods cheaper elsewhere. That keeps the price inflated and is anti-competitive since it squashes competition from other marketplaces, not because their platform is better, mind you, but because they have all the power.

Amazon only controls their market. You play by their rules if you sell with them, and that is totally valid. You can sell your product for any price you want so long as you don't use Amazon or don't undercut them if you choose to use them.

That is totally valid. Amazon provides the eyes; they don't want to provide a service for free. Think of all the people that go to best buy to feel a product and then buy it online. Amazon doesn't want that to happen to them.

That's the point. They are by far the largest player in the game, and can ( and do) use their size to squash competition. You don't have to use their marketplace but as a small business you don't have many options that can compete.

Hell, they're even extremely anti-competitive with their employees. Their NDAs are very restrictive and have threatened non-senior employees with them, even ones that they let go.

The thing is, an importer adds real value to their clients by selecting the products, taking the risk of moving the goods, etc.

You are right that the current state of dropshipping is an abomination, and there's not much left to save of that job. But the reason for that is that more and more of the job and benefits from that business are being taken by Amazon, and the sellers are left with that doesn't really justify their position.

What they're left with - being a plausible scapegoat and discovering new products - is not their choice, it's the part that is not profitable to Amazon.

"This is the result of commoditizing 'starting a business' to the point of near-worthlessness in the bottom 50%+."

Is this not just a market effect of saturating the market with competition because suddenly running a business is comparatively easy (communications technology, platforms and existing logistics and production networks) to any other era.

I can probably start a company drop shipping crap on Amazon in a short amount of time with a smartphone from my bedroom. The barrier to entry has dropped, rather quickly.

Very similar to the music industry, where technology has made producing music so easy the market is growing by tens of millions of new songs every year.

The slices of pie are getting very thin indeed. Especially when there are only a few pie delivery services to choose from and they take their slice first.

In efficient market every business must have razor-thin margins, otherwise competitors squeeze into it.

Good fat margins are a result of an ineffective market.

So Amazon making good fat margins on every small business that sells on Amazon is demonstration of an ineffective market. And hence why the FTC are stepping in.

Comparing to Apple, Amazon margins are thin.

You’re basically comparing despots though.

What? Amazon is offering lower prices to consumers, which is why they're winning business.

If other competitors could get their costs as low or lower than Amazon's, then they could enjoy those margins themselves.

I cannot speak for every location, but Amazon isn’t the cheapest in the UK. I would say it is about average.

Where Amazon wins is the range of stock and its next day deliveries. Which means most people default to Amazon because it’s quicker and easier than shopping around. But you can definitely get cheaper if you were to shop around.

Also by Amazon owning the whole pipeline, from stock to delivery, they can squeeze costs down and thus improve their margins. For example, I guarantee you that other online retailers are paying more to ship their products than Amazon are.

I agree fully, but Amazon is still the "cheapest" when you consider the all in price of cost_of_goods+cost_of_delivery|want_goods_in_fewer_than_two_days.

Amazon has the most efficient business, which allows them to survive on lower margins and attract buyers because of the vertically integrated pipeline they've created.

Your example of other companies selling the same product at cheaper prices helps to illuminate the fact that there isn't any real impact from the supposed anti-competitive behavior to the consumer. Cheaper prices still exist! Amazon hasn't become the sole provider.

> I agree fully, but Amazon is still the "cheapest" when you consider the all in price of cost_of_goods+cost_of_delivery|want_goods_in_fewer_than_two_days.

Why say you agree when you only go on to disagree with me?

I've bought plenty of things cheaper on other sites. Delivery included. There have been things that were cheaper on Amazon as well. This is why I said it's about average. But there are so many variables at play here (location, items you're looking to purchase, etc) that it might just be easier to agree to disagree.

> Amazon has the most efficient business, which allows them to survive on lower margins and attract buyers because of the vertically integrated pipeline they've created.

Those vertically integrated pipelines come with significant cost savings though. That's why they do it. And because it saves them $$$, it then also increases their margins.

> Your example of other companies selling the same product at cheaper prices helps to illuminate the fact that there isn't any real impact from the supposed anti-competitive behavior to the consumer. Cheaper prices still exist! Amazon hasn't become the sole provider.

Those two arguments aren't mutually inclusive. Other companies might be offering cheaper prices but making a loss in the hope that loyalty will win customers in the long run. Or other corners might get cut that could ultimately lead to that businesses demise, such as not hiring skilled staff, not following health and safety or other local laws, etc. And even if none of the aforementioned is true, it still doesn't mean that Amazon aren't being anti-competitive.

Also "anti-competitive behaviour" applies to how they block other businesses from competing. You cannot be "anti-competitive to the consumer"

Yeah, that’s really the anti-competitive part. The vertical integration is so incredibly difficult to compete against.

At some point you have no choice but to give them a slice of your revenue and some control of your product, lest your access to customers is severely limited.

Kinda like app stores.

Amazon inflating rates after capturing the market, permitting counterfeits, and penalizing sellers offering lower prices off-Amazon, has nothing to do with market efficiency or commoditization.

Not saying it’s right but this has been their business model from day one back when it was just books

There should be some tough laws against selling counterfeits, with harsh penalties.

Simultaneously, there must be harsh penalties for abusing that system. See Samsung's use of a patent on display technology to label third party displays as counterfeits, despite not using that patent nor misrepresenting themselves as Samsung screens.

https://www.youtube.com/watch?v=A002AesVaFk

> and penalizing sellers offering lower prices off-Amazon

Why shouldn't they be allowed to do this? If you want to sell on their market, you promise not to undercut them.

Amazon exists as a discovery tool for consumers. They don't want third party sellers to get free advertising. That isn't anticompetitive.

You've explained what gives Amazon the leverage to set such terms, and why they'd want to set such terms, but you haven't explained why preventing other platforms/sellers from competing on price isn't anti-competitive - you merely asserted that it is so.

It's not anticompetitive because they aren't restricting competition off their platform. They are simply stating that to participate in their marketplace you must adhere to a set of rules.

It is no different than Nike, who requires no discounts on specific products, etc. Amazon isn't prohibiting selling on non-Amazon platforms. Amazon is prohibiting undercutting them if you choose to sell with them.

How is that anti-competitive?

> It's not anticompetitive because they aren't restricting competition off their platform.

Yes, they are. They are using their influence and market power to prevent others from competing on price, using the threat of economic retribution on their platform. If this isn't anti-competitive, then nothing short of sending assassins on your competitors is.

Nonsense. They are only able to influence your behavior if you use them. It is completely self selected.

It is the exact same thing as is argued by social media companies: they have the right to moderate the content posted on their platforms because it's their platforms. You can do whatever you want on your own site.

> They are only able to influence your behavior if you use them.

Yes, companies cannot influence behavior of people or businesses that have no business relationship with them, direct or indirect. In other words, you are saying that indeed, the only anti-competitive action is sending armed thugs to sabotage your competition. Everything else, every contractual condition, is fair game.

> the only anti-competitive action is sending armed thugs to sabotage your competition

I'm saying that entering a voluntary transaction knowing the terms of the trade does not amount to anti-competitive behavior. Nobody forced you into the trade. Nobody prohibited you from entering the trade.

Entering the trade with clear conditions is voluntary. You could easily just not do business with that partner. Here that would be not using Amazon's marketplace.

> I'm saying that entering a voluntary transaction knowing the terms of the trade does not amount to anti-competitive behavior.

You do realize that, by this definition, nothing short of fraud or forcing someone into a contract at gunpoint, could qualify as anti-competitive?

Yes. I am a free market enthusiast.

Running a business being easy is limited to these low-value drop-ship businesses. Running an actual business is hard. What they’re doing is just arbitrage: buying in bulk from Ali Baba and selling individually on Amazon. No value would be lost if these companies went away. Compare that to a bookstore or cafe being closed in your town.

Amazon is basically allowing sellers to carry all the risk while product testing and marketing a product.

If it does well enough, Amazon can use the same manufacturer and release a branded "Amazon Basics" version that pops up in the same search for the same product but cheaper as Amazon doesn't have to pay someone else $112 for the listing and warehousing, and the original seller that did all of the actual "work" (as far as making it a profitable venture) is SOL.

Throw in a few dozen word salad named drop shippers who undercut Amazon in exchange for increased shipping times and the originator is wedged out of the market or cut to razor thin margins for years of effort.

Rinse and repeat.

What’s the problem here? If you don’t have a durable competitive advantage then you’re going to get eaten up. First movers should not get a license to continue to reap a profit in a competitive market absent real innovation, which would come in the form of reputation (trademark) or technology (patent). Drop shippers who can be displaced by Amazon in the way you discuss have neither. They already made a profit on the front end, so don’t feel bad for them just because they can’t continue to rent-seek.

The anti-competitive bit is they have all the sales information that would typically be a trade secret for a company.

Go ahead, call up your local 7-11 and ask them what their sales were for the quarter. They'll tell you to fuck off.

But Amazon is the 7-11 (and more)! It is the customer facing part of the business that houses and delivers the beef jerky to the ultimate customer. 7-11 sees that jerky sells, that lots of brands can sell jerky, that consumers don’t seem to care about the brand of jerky as long as it says teriyaki, and so 7-11 now sells 7-11 basics teriyaki jerky.

The FBA middlemen are more like traveling salesmen - they take an order, send it in to HQ, and HQ ships it to the 7-11. They don’t do anything but take orders. They are Tom Smykowski - they take the plans to the engineers!

You’re complaining that the storefront that the goods are sold through has its own sales information. The amount of sales you have through Amazon may be a trade secret, but it is not a trade secret from Amazon.

But should barr them from selling a line of similar products.

If we're coming up with brick and mortar analogies, it's got to be grocery stores and generic branded items. Kraft Mac vs Great Value.

It's hard for me to say Amazon shouldn't be able to do it while every grocery store can, but there seems to be a quantitative difference because of the ridiculous number of options online vs the finite shelf space of a brick and mortar.

All the same economic games are played. Items are placed on specific shelves to drive specific sales, etc. Sale numbers are known by the store and they get their cut.

The distinguisher is supposed to be in the quality. Premium vs generic. That doesn't seem to play out healthily in Amazon's marketplace.

Maybe one difference is the consumable nature of the grocery products vs what one typically buys online (Amazon batteries as opposed to an animal carrier). Or maybe we have given up too much with the consolidation of grocery chains the last few decades and that is equally problematic.

I think that a lot of the same problems exist in generic brands at supermarkets. Supermarkets already have a lot of ways to pressure suppliers, and “own brand” products are weaponised extensively.

I’m all in favor of suppliers competing with each other, as that’s in the best interests of society overall. But when the platforms/marketplaces themselves participate in that competition they have tremendous advantages, which is anti-competitive, and it benefits no one but themselves.

But Amazon refuses to be the actual seller taking the risk in the first place. They aren’t buying jerky from anybody and then selling it. Until they decide to make their own based on the actual seller’s data.

Your local grocery store has store brands that compete with the name brands. Your local grocery store also charges for shelf placement.

Amazon is actually more open than other stores about this information, giving product rankings so that you could decide to knock off popular products too.

Also, in direct response to the Gp, grocery stores buy sales data that contains their sales + their direct competitors down to the product level. It is anonymoized but freely available.

Edit: Also companies like Google scan emails for information. Amazon stopped including prices in their emails because Google was getting a direction stream of sales data with full costing info.

Except that overlooks Amazons intentionally messed up search function. Amazon, unlike grocery stores, doesn't really put all of the items into the same location.

On amazon, if you want to browse "electric bike tires with motors" you will have to browse through dozens of full electric bikes, electric scooters, hoverboards, tires without motors, tricycles, and all sorts of close but not quite what you're looking for items to find 1 that you might be interested in.

Want to price shop them? Good luck finding others to compare with.

It would be like looking for a 5 lb bag of white sugar in the grocery store so you go to the sugar isle and finding 1 half pound bag of brown sugar amongst all of the flour and seasonings and honey and agave nectar and sweet n low in the first 100 feet.

Any grocery store organized like that would fail and be replaced by a company with decent organizational flow.

But amazon makes money by charging the vendors on its market for visibility, in addition to listing fees, storage fees, and whatever else.

Amazon has a perverse incentive to not show you, the customer, what you are looking for when there is anything else close enough to what you are looking for that they will make more money for selling to you.

There isn't a better word than evil for this, even if it is the benign sort of evil that only added to the chaos and misery of the world without directly harming anyone.

The problem is being both the platform and a competitor.

They have an inside advantage that no one else on the planet outside of ebay and Alibaba (and its ilk) have.

It entrenches them and enriches them unjustly. They make profit off of their competitors and have the option of destroying anyone who rubs them the wrong way without repercussion. The capitalistic market cannot speak on the matter as there is a monoposonistic gatekeeper on the market path.

They started out as the competitor. They have always been that. They opened up their capabilities to competitors. They didn't have to.

They didn't open their capabilities to competitors. That is completely false.

No one who sells on Amazon is a competitor. If you are selling on Amazon you are a customer, and every once in a while, Amazon comes in and starts selling your goods for less than you can because they decided they would make more money without you in the picture.

For a little proof, try to find Ammoon products on Amazon. They used to be everywhere. And the information isn't exactly public but there was a falling out between Ammoon and Amazon and now you can't buy Ammoon products on Amazon, but you can find Lekato and Sumimma and Joyo and Cuvave knock offs of the exact same products, and not long after this happened, Amazon started selling cheap guitar pedals under their Amazon Basics brand.

You may say, sure, whatever, but the primary product Ammoon sold was the cheapest ($35) looper pedal on the market.

Amazon undercut that price (to $26.50) and also booted their closest competitor and biggest customer in the guitar pedal looper segment.

Who would defend that kind of scummy action?

In an enormous number of cases Amazon both sells products and the same exact product from a different supplier, and they sold the product before opening up the store to others. That's the definition of a competitor.

The fact that they didn't sell every single product on planet earth doesn't mean they aren't a competitor. They are practically in the "easy to manufacture by a third party in china consumer products" market. If a company adds so little value that Amazon's 5th rate people (The best minds at Amazon aren't sitting up at night worrying about the guitar pedal looper market) can beat them, they aren't adding value. And, one single distribution channel (the amazon website) doesn't define a market (with almost zero exceptions, amazon's website not being one).

> And, one single distribution channel (the amazon website) doesn't define a market (with almost zero exceptions, amazon's website not being one).

if amazon captures a large ratio of people buying goods online, i would certainly consider amazon itself a market. But unless they also control some other aspect of the online market, it would be hard to claim they're a monopoly tbh.

_Anyone_ can setup an e-commerce site and sell online. Amazon doesn't quite fully control the hosting, IP and backend servers completely!

Where's the harm for consumers here? All I see is that I can now buy guitar pedals for a fraction of the price. Isn't consumer harm the point of anti trust?

Shortsightedness is the harm.

How many companies will not enter the market because of Amazon's monopoly? How many products will never get invented because of the awareness of the system?

And even with this, with a monopoly it is not a race to the bottom. Once the monopoly is in place, you can raise the costs to whatever you want and the market has no choice but to grin and bear it or go without.

Monopolies are never good for the consumer.

To me this sounds like competition driving down prices, which is great for consumers.

They aren't being eaten because of innovation, they are being eaten because of monopolization.

The person you are responding to was saying that dropshippers are being eaten because the products they are selling lack innovation.

For example, Amazon cannot swoop in and sell a cheaper Amazon Basics version of a product to which you own a critical patent.

I'm aware.

They are really saying, though, that without barriers to entry and in a competitive market, players that don't innovate don't survive.

>First movers should not get a license to continue to reap a profit in a competitive market absent real innovation, which would come in the form of reputation (trademark) or technology (patent).

The problem with that is that this is not a competitive market, so the player that wins is not innovating, they just have market power because of their size.

But that is definitionly winning the competitive market. Amazon has a competitive advantage because they have the largest inventory and almost always the cheapest prices, or at least speedy delivery for a marginally increased cost.

That is the definition of winning a competitive market. The consumers win.

The FTC is arguing that Amazon is actually raising prices, so no, consumers don't win.

You don't need to have lower prices long term if you control the market.

But if you raise the products now you have the opportunity for others to re-enter the market since there is arbitrage room.

I get the argument, but it's a grim reaper strategy taught in econ 101. It's a well known strategy and completely valid.

Consumers win in the short term but lose in the long term. Except they can just consume different products or wait for someone to re-enter the market.

But they do, right? At the very least they turn a blind eye to the countless counterfeiters.

Amazon is the rent seeker here.

Yes, but the argument is that drop-shippers aren’t really producing any value.

It’s not like they’re putting banners over their product pics saying “hey, you know you can buy this exact same product for like half the price on alibaba if you’re willing to wait a couple more weeks for it right?”.

I don’t like Amazon consolidating this much power either but if they can push you out of your business that easily you weren’t the critical component of it.

Show me a business that Amazon couldn't destroy just for kicks.

Also, it's not like you have any choices. If you manufacture your products yourself, you have to fund a massive venture to handle the workload. If you outsource the products, then the companies you pay to manufacture your stuff can easily make knockoffs and then let drop shippers undercut you with inferior versions of your own products.

Look at a lot of the stuff for sale on Temu for instance. There are hundreds if not thousands of products that were invented, tested, and designed by Western companies that you can now buy a reasonable facsimile of on Temu for a quarter of the price.

This includes art work, enamel pins, battery packs, woodworking tools.

You're on a hard path either way, but if you make it to the point where you have a standout product knowing that at the final step Amazon can easily step in and price you out of existence, even if they had to take a loss on it just to destroy you, they could and there's not a damn thing you can do about it.

That should be broken up. Monopolies are bad. Monopsonies are bad. They are bad for the country, bad for the people, and bad for the flow of money.

I hope we see record fines against them and that everyone affected by this gets to be part of an earth shattering nuclear verdict.

Apple Iphone, airpods, ipad, macbook. Google search. Coke. Boeing. Caterpillar. Goldman Sachs. AirBnB. Exxon. AutoDesk. BlackRock. CME. Costco. JP Morgan Chase. Mastercard, Visa, Nike, TSMC and a thousand others.

They started out as a retailer, and opened up a bunch of their infrastructure to competitors. The idea that they'd make it easy for competitors using their infrastructure to beat them makes zero sense.

Those are good ones but i was thinking of local stuff like grocery (which they tried and are currently failing) and gas (not that i use it). Also, real services like plumbing, electric, vehicle maint. ... Angies list got that corner ;)

The list is extremely long as you say. Amazon isn't good at much except cheap third party stuff made by contract manufacturers in china, books, and AWS.

How did Goldman Sachs '[start] out as a retailer, and opened up a bunch of their infrastructure to competitors'? Or am I misunderstanding you?

The 'they' here is Amazon. This is how it should be read: "Amazon started out as a retailer, and opened up a bunch of their infrastructure to competitors. The idea that they'd make it easy for competitors using their infrastructure to beat them makes zero sense.

Bad use of pronouns on my part. As another comment pointed out, I should have written "Amazon".

OK, that makes a lot more sense. Thanks.

Most people responded by providing a logical response to my argument while discarding the semantics.

Semantically, what company that (Relies on Amazon to operate) couldn't they destroy on a whim?

That's pretty circular. To the extent any company, A, relies on company B to operate, A can be destroyed by B, according the definition of "rely".

So the logical response wasn't to assume you were being circular. The logical response was to assume you were inferring Amazon is big enough and capable enough to squash any business.

And yet it is obvious in retrospect that I didn't mean entirely independent multi-billion dollar empires, but that is the response everyone went with.

It clearly wasn't obvious to most given the responses.

Maybe not to you

It’s not connecting for me how breaking up monopolies is going to stop Chinese clones of Western products from winning price wars. It might change how the margin gets carved up between the people who make the clones and various middlemen but how would it stop the overall trend of cloned products?

We should encourage more price wars. They are good for customers.

Except once the price war is over, the consolidation of market share to one or a few players means that there is a good chance of monopoly pricing.

Unless, if the price wars are never over.

> Except once the price war is over, the consolidation of market share to one or a few players means that there is a good chance of monopoly pricing.

Almost never happens like that.

It always happen like that. That's why there are anti-dump rules on international trades.

Heh, a couple of years ago (maybe true still?) Canada had a 99%! tariff on aluminum extrusion from China. And it was still cheaper than domestically sourced material at twice the price.

Alas, no. Just because there are certain rules, and just because people say that those rules are for a specific reason, doesn't imply any actual causality between the reasons given and the rule existing.

Especially anti-dumping rules are most often just exploited as a tool to get a competitor in trouble.

It's all about discoverability, you wouldn't find them, tree falling in the woods, no one is around. Does it make a sound?

I would expect if Amazon disappeared, since people can’t go there to search for products to buy anymore, they’d use Google instead, or some other product search aggregator sites. They’d presumably still list the cheap sellers first (or whoever pays for an ad slot). That would be a huge change in the e-commerce industry, FTC can argue it benefits consumers because the prices of everything will be cheaper without Amazon’s fees, but I’m not seeing how to reduces the prevalence of cloned products.

I don't think Amazon could destroy apple or Walmart just for kicks.

Aramco? Air Canada? Samsung? Memory Express? Digikey? McMaster Carr? McDonald's? The Big R? Cantillion? Texas Instruments?

"Show me a business" is quite vague

Why not McMaster Carr or even Digikey?

I’m sure Amazon has put a sizable dent in their sales without even really trying.

Amazon now has special search tools for buying fasteners that make it easier to find exactly what you need.

Prices are cheap, risk is high, but prices are cheap.

> Amazon now has special search tools for buying fasteners that make it easier to find exactly what you need

Easier but they are no McMaster, by a long shot.

I have a lot of friends in the manufacturing business that range from self-employed to military-backed conglomerates. None of them use this tool. Are they all Luddite idiots, or is this Amazon search tool, backed by their swiss-cheese supply chain, just not that useful?

I think it's the same as the overall enshitification of all products and product quality. Consumers now value cheap fast shipping and low prices over everything else. Amazon delivers that, with the tradeoffs in product quality, support, etc. Other things are low quality too, like the product listings themselves. Often, for example, the listed dimensions or other specs (thread type, grade strength, etc) are missing or just wrong. That's much less true for sites like McMaster. But nobody values that anymore.

I used the Amazon tool recently to get a very particular type of screw. It was really easy to find exactly what I wanted.

Then I still got the wrong part delivered. It doesn’t matter how great the selection tool is, the rule is always: garbage in, garbage out.

Every cent Digikey looses they loose by being Digikey. Of all large suppliers, they are by country miles the worst and we try everything to avoid them. Farnell, Mouser, LCSC beat them handily. And their pages are already bad.

Wow! I have had nothing but amazing experiences with DK over the last 20 years, especially compared to everyone else. Maybe it has to do with being in Canada, though. The DK warehouse is just across the border and when you order DDP I think they bring your stuff over by truck and then distribute it. Have not once ever had a surprise customs charge from them, while other suppliers have all screwed me in one way or another (lol always great when one order gets split into three boxes and UPS charges brokerage fees separately on each one)

According to Amazon's rebuttal to the charges, 80% of all retail is still brick-and-mortar. Amazon has tried it a few times, but remains essentially an online only service.

If your business depends on potential competitors for it's existence, then being eventually forced out seems like a pretty natural conclusion.

We're reaching the point in the economy where racing to the lowest cost, such as Temu, comes with great damage to the world. It's spyware that collects data on the american consumer across applications, and the products are made with illegal forced labor.

If people keep choosing to reward dishonest cheaters and criminals just to get something for lower cost, we are not in a good place. And either cheating or disguising the true nature of your company is becoming the easiest way to stand out in a commoditized world.

More important than how you vote is how you buy.

> if they can push you out of your business that easily you weren’t the critical component of it.

Alternative suggestion: modern monopolistic corporations are disproportionately powerful. If they can topple a country to sell bananas cheaper, they sure as hell can kill a small business, no matter how relevant that business is.

These aren’t drop shippers. They are importing the product and paying to store that product before a sale is made. The shop is taking on a risk that the inventory won’t sell, and the customer gets the product far faster.

The whole Amazon Basics thing, cannibalizing sellers, should be illegal. It just victimizes people trying to make a living in a crap job market where online sales are closing street shops.

How does it victimize people?

Sellers are offering a generic product without barriers to entry like trademark, patents. Somebody else notices and contracts the same manufacturer to produce it or finds someone else who will (or makes it themselves). The new entrant sells it for cheaper.

All I see is basic economics. Business cannot stay afloat if their marginal cost exceeds marginal revenue. This is the best outcome for consumers.

Are business owners not people?

Clearly I included one too many words:

How does it victimize?

The business takes a risk in developing and acquiring a product and Amazon uses the sales data and its platform to pick out winning products and undercut the price. The business is the victim.

The business should protect their product with a patent or other trademark then. Nobody is forcing people to provide Amazon data by selling products on Amazon.

There is no victimhood if the business voluntarily transacts.

Yes - some of the complaints seem legitimate (e.g. burying search results really far low - that hurts me as a buyer, and hurts the seller).

But complaining that you need to use Amazon's warehouses to be part of Prime? That's rather obvious! You can always sell as non-Prime. Many do and are successful at it!

Basically, Amazon allowed many businesses to exist by creating a very convenient way to sell. Chances are a lot of businesses selling on Prime who are complaining would not have been able to exist at all.

(Source: I'm a former FBA seller).

Seller Fulfilled Prime is also a thing: https://sell.amazon.com/programs/seller-fulfilled-prime

Did not know about it - is it new?

Wonder what additional fees are associated with it.

Launched 2015 (but I think launched with literally 3 fulfillers, then expanded).

It's not new, but admission to the program has been unofficially paused for years. They just announced in the last few weeks that they're relaunching the program.

They farm out manufacturing to China, but if they designed the products, this isn’t very different from having Foxconn assemble iPhones. But of course, now the Chinese manufacturer could sell their design directly and undercut them, since they aren’t Apple.

If they are using a design from the manufacturer, I have no sympathy for them. They are just trying to make money by adding some marketing and connecting dots together.

https://www.amazon.com/stores/page/DA1BA85C-60B5-4150-B030-A...

a quick google search turns up this store. whether they designed these firepits themselves or it's a catalog design from a chinese seller, i don't think it's really fair to compare it to an iPhone. and given the sheer number of designs in his store, i think it's a fairly safe bet that they're reselling catalog products from chinese sellers.

alibaba link for exact product(same images/title/description etc.)

https://www.alibaba.com/product-detail/Black-Crossweave-Larg...

alibaba unit price(list): $40.00 amazon seller price: $199

Not really a straight comparison. That one on alibaba has a 100 unit minimum. But yeah, for some extra money, the dudes on alibaba will slap your logo and print your packaging.

Either they are selling someone else’s design, or someone else is also selling their design.

I'm not sure most of these sellers are actually designing their products.

There's an increasing trend of foreign manufacturers copying (or even simply producing unlabelled variants) popular products then white labelling them. You see this all over Amazon where there are dozens of brands selling the exact same product with their name stamped on it. Those products are always some slight variation of a bit name.

* Solo Stove - dozens of identical knock-offs

* Power screwdrivers - Nearly limitless variations of the popular brands

* Theragun/Hypervolt - Literally dozens of knock-offs with slight variations in packaging.

This continues for nearly every single category.

Ding ding ding. Middlemen get squeezed and are mad about it would be equally fair headline here.

Amazon is also the middlemen.

They serve more of a purpose than the dropshippers at least. Common market place, guarantees, etc.

Yeah, but they created a moat and became sticky. Netflix knew they were a middleman too so they started to produce their own content years before the streaming wars. I worked for one near the border that bought American industrial parts and sold it to Mexican factories. I helped build their quoting and ERP software, but the boss wanted to build a platform for him and his competition to try to become sticky and build a moat. Middlemen should always be finding ways to stay in the process.

But Amazon adds real value. They built out a huge logistics and PoS system. They have warehouses everywhere. They have millions of subscribers for Prime which gets people to buy large amounts of stuff on the site.

Any business owner is free to build their own website, set up payments, set up accounts with FedEx and UPS, and rent some warehouse space. That’s a tough row to hoe!

And if someone manages to squeeze Amazon out, good for them!

Ok but that is just one example. If the guy they chose for the example happened to make his own firepits he'd also be getting squeezed.

Considering they have to pay 56% of their revenue to Amazon, how do you expect them to be able to afford locally manufactured products?

Do the fees and commissions scale linearly with product price? Are any of them flat fees or capped?

Perhaps selling a higher priced product would find a lower share going to Amazon?

I don't know myself

It wouldn’t matter if they could, Amazon can still acquire and sell them for less regardless.

The only viable business here would be a product you’re self-manufacturing or having made bespoke, and even then you better hope you can get some recognition behind your trademark before the chaps out in Shenzhen get a hold of it.

They don't have to. They could get their own distribution channel. Distribution is a thing, you can't just complain that you don't have it for free.

That's literally the meaning of being a monopoly: There are no other distribution channels that can compete with Amazon. They are a distribution monopoly.

There is no monopoly in distribution. The vast majority of items are bought offline. Walmart, Costco, Target, Kroger and on and on and on and on.

The world wide web + google and facebook make finding eyeballs open for all. Fedex, UPS and USPS make shipping products open to all. Stripe makes accepting payments open to all. Cheap 3rd party manufacturing makes making things open to all.

We've probably never been further from a monopoly in any of the areas in question. The reason it's so damn hard to make any money selling random products is that there is just so much competition.

Huh? That's just totally incorrect. Consider FedEx, UPS, DHL, even USPS.

? Sure there is

Newegg Best Buy Walmart Home Depot bh photo wayfair webpage that takes you to shoppay or something else

Most things aren't bought on Amazon, but if you're a middleman droppshipping stuff from China, Amazon is an easy way to get in front of a lot of eyeballs.

It's not clear to me why droppshippers deserve special care and treatment by the FTC.

The chair of the FTC is Lina Khan. As a law student, she wrote this article [1] for the Yale Law Journal. It attracted so much attention in the antitrust law community that it led to her becoming the youngest FTC chair in history.

She has literally been building this case against Amazon since she was a student. It’s not just about dropshippers. It’s also about how Amazon uses automated price controls, guided by scraping of competitors, to engage in dumping [2] and predatory pricing [3] to wipe out competing e-commerce sites. Since everything is automated, prices can change in a matter of seconds, so once competitors are destroyed, prices go back up automatically.

[1] https://www.yalelawjournal.org/pdf/e.710.Khan.805_zuvfyyeh.p...

[2] https://en.wikipedia.org/wiki/Dumping_(pricing_policy)?wprov...

[3] https://en.wikipedia.org/wiki/Predatory_pricing?wprov=sfti1

Nice! I remember her argument regarding Amazon.

From what I recall, the reason why her argument was recognized is because it solved a thorny problem of US anti trust law, proving harm.

Currently, in the US what matters is showing that consumer welfare was harmed. AINAL but proving harm is not easy - Amazon in particular reduces prices to the end customer, increases choices and makes sales easier.

This is where most arguments died, however her approach had enough merit to pursue.

However, it seems her approach and argument has changed, and is more couched in terms of current legalese - more focused on showing consumer harm than applying a new legal approach.

> Since everything is automated, prices can change in a matter of seconds, so once competitors are destroyed, prices go back up automatically.

How is this different than a grim reaper strategy taught in econ 101?

The existence of Shopify seems to contradict this. There are tons of successful Shopify stores that use non-Amazon distribution services.

Distribution channels are endless, and as large as Amazon is, they are only one amongst many, albeit with plenty of vertically integrated advantages.

In the case of a firepit, local consumer channels would likely be speciality shops, hardware and big box with probably a couple of layers of distribution and logistics in between. That market however is more likely to offer $500-$1000 firepits, because that's the way it WAS before Amazon, ALi, etc etc opened up new digital channels to drive down volume, manufacturing and up quantity (which eventually results in either greater margins or lower prices).

Those same non Amazon channels will also sell Joe FBA's $200 firepit as well, perhaps for $400 using those other channels.

To access and operate a business around those traditional / other channels however is nowhere near as simple as "order 50 of these on Ali" + "sell these as FBA on Amazon" = $profit.

It's a lot of work. I wouldn't necessary call Amazon a shortcut, but it's a path to market that is easier, but at a cost.

I know that there's the "5x rule" -- BOM cost is supposed to be 5x less than retail.

Is there such a rule for fulfillment and delivery?

Of course, 56% seems monstrously high to me, but then again, so did 5x BOM cost before I had that explained.

Food cost in restaurants in similarly shocking. They operate on metrics similar to BOM. Might shock you to find out how much that $40 pizza cost in dough, sauce, cheese and toppings. (Probably just a couple bucks).

And yet a 10% profit margin in the restaurant business is considered high.

This is a tangent but the consumerism that leads to people spending $200 instead of digging a hole in the ground for a fire pit is part of the issue.

I'm a $5m+ Amazon seller here, so many wrong assumptions in the comments, hard to know where to begin...

- Firstly, not every Amazon seller is a drop shipper, or private label products. In fact most of the successful ones I know all design and brand their own unique products. We ourselves design everything in-house and own multiple design and utility patents on ALL of our products, you won't find these products on Alibaba. Yes, we manufacture in China, but it is really cost prohibitive and uncompetitive to do so almost anywhere else.

- Yes, Amazon's policies hurt us and is completely unethical. The biggest one being losing the "buy box" (ability for customer to buy from your brand) when a lower priced product from your brand is found on a competing website such as Target, Walmart, Shopify, etc. They essentially force you to have the best price possible on Amazon at all times or get severely punished. Why this is terrible... let me explain, let's say Walmart stores offer your product as a holiday sale item in their stores, or let's say a particular color variation of your product isn't doing well so they offer it as a clearance item. Now someone can buy that product at a discount, sell it back on a Target or Walmart online marketplace at a slightly lower price and guess what, your Amazon listing is now practically worthless. You lose the "buy box" and all your sales because another site has it listed for cheaper. This happens ALL THE TIME. And sometimes, there's almost nothing you can do about it.

- They practically force you to use Prime fulfillment. Technically you don't HAVE to use it, all you have to do is again, be uncompetitive with products that do offer Prime and lose half your sales. Same with Marketing, PPC, adwords, etc. They've created an ecosystem where all of these options aren't really options because there's no way to compete otherwise.

- Amazon basics and Amazon using private sales data to find out which products sell the best and compete with those brands directly. It's just really evil. They have all the info, all the data, and they know exactly which products to target to offer a cheaper version at a discounted price and steal all the sales...

I'll be the first to say that I owe Amazon a lot for allowing small businesses the opportunity to be making millions. But at the same time, some of the criticisms are valid, and with a few changes, the platform could be truly great for small business owners.

The issue is that Amazon is taking over more and more parts of the process from manufacturing to delivery to the end user.

What you don't seem to understand is that they "let" Amazon handle warehousing and logistics because Amazon has in many ways forced this.

Not Amazon directly but indirectly with customer expectations, you want to have it tomorrow now, instead of waiting for few weeks

I agree but I also don't want to punish legit businesses that are also impacted just because this guy sounds like a pointless middleman and I don't feel bad for him specifically. Seems like a real problem and he's just a bad spokesperson

There’s maybe a chicken/egg scenario here. Perhaps, knowing the cut they would have to give to Amazon, they had no option but to manufacture in China?

Human labor has little value in the age of chatgpt and onlyfans. Did you know there are teenage girls selling bottles of their dirty bathwater for more money than the average blue collar worker makes in a month. As time goes on, its starting to look like this whole free market thing isnt such a good idea anymore.

What is not free market about teenage girls offering dirty bathwater? Are you upset that there is demand for this product?

The girls here actually have a competitive advantage! They have a time limited product (beauty, youth) that is not easily replicable.

Exactly! In whichever market that you can sell dirty bathwater, I think they may have an advantage over my sales of "Smelly Old Nerd dirty bath water".

I'll either find a better channel, price point or give up on my dream of dirty bath water money. Point being the actual value is the packaging and selling of said bathwater.

Agreed. It’s a net positive for society if the entire CSFC (Cheap Shit From China) economy is slowly collapsing.

Is the "cheap shit from china" any different than the "slightly more expensive shit from america" that probably isn't even from america?

Yup. Everything thinks the other person is greedy while they themselves are made of pure virtue.

I'm not supporting Amazon here, but I'd love to know what Chuck thinks his costs would be when he brings this all in house?

It seems like he's expecting some sort of crazy margins selling a commodity.

As far as I know, the device I’m writing this on is also made in China. And I don’t even have to specify the brand.

> They farm out manufacturing to China and logistics/warehousing to Amazon

You miss the key distinction. The former part of that equation is competitive, the latter part isn't. A guy who sells firepits can't be expected to create a competitor to Amazon. Amazon has complete monopolistic pricing power. Whenever a company is in that position, they will abuse it.

No telhey can distribute in Walmart Home Depot or Lowe's or equivalent. Amazon is just a more convenient way to distribute and will probably charge you less than the others :-)

https://www.aboutamazon.com/news/company-news/amazon-ftc-ant...

fwiw retail taking >50% of the final price is the norm

You have a hard time sympathizing?

Say what you will about their means of getting it, but this person did 100% of the leg work of getting that sale. That sale doesn't exists without them.

And Amazon gets the MAJORITY of the revenue cut for that?

I sympathize with the idea that China should get more of that, but make no mistake: Amazon's logistics and warehousing were not an option here. They were the cost of doing business. And Amazon took more for that service than this person who actually made that market happen.

> this person did 100% of the leg work of getting that sale. That sale doesn't exists without them.

I don't really see it that way. The sale wouldn't exist without anyone in the pipeline (Amazon, manufacturer in China, shipping merchant, etc.)

>The sale wouldn't exist without anyone in the pipeline (Amazon, manufacturer in China, shipping merchant, etc.)

I think it's actually worse than that. The merchant is the only party that is not needed.

In fact, calling a lot of these folks "merchants" at this point is probably a little too generous. Amazon is the merchant. Many of these other guys are sourcing and marketing "partners" for Amazon and the manufacturers.

Yes -- They even ship the products directly from China to Amazon, who handles all the logistics of importing.

https://www.sellerapp.com/blog/how-to-get-your-shipments-fro...

>100% of the leg work of getting that sale.

What leg work? Customer acquisition? They paid amazon for that. Delivery? They paid amazon for that. Manufacturing? They paid China for that.

I want to understand your perspective so I have a personal question: what is your professional discipline/area of training/educational degree?

By this logic, a car salesperson should get the majority of the proceeds from selling you a car. So from a $30k car, $15k goes to the salesperson, $5k to the dealership, $9k to the manufacturer, and $1k to the shipper. You really think this makes any sense?

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