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Comment by AMZNCommentary | Hacker News Reader

The pricing system was more archaic and manually driven than I expected. Vendor Managers were asked to review pending major price drops and raises. Later, a team in India/Pakistan would be the first line of defense, then the VM would be asked to review in edge cases.

We could easily manually lower the price, however raising it was very difficult and required managerial approval.

One thing I felt was anti-competitive was price matching Costco at the "each." This would result in absurd 2-day shipping prices that could not possibly be profitable. e.g Costco sells a 24 pack of soap for $1 per soap bar. We would price match the individual soap bar such that it was a $1 delivered to the customer's door.

France caught on to this "pro" customer behaviour and is implementing laws requiring minimum shipping charges so that E-commerce platforms can't use "free" shipping in a predatory pricing manner.

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Requiring companies to charge more for shipping doesn't seem very pro-consumer to me.

Predatory pricing is classic anti competitive behavior.

The soap will no longer be $1 when competitors are driven out of business.

How exactly are you planning to drive out all competitors in the market for soap?

If it makes you happy we can add in ".. except for soaps" in the ruling... /s

For a real life example, the major grocery chain in Australia (Woolworths) did this with milk, selling their brand for $1 a litre, where everyone else had to do $2+ just to break even.

Effectively selling it at a loss so that they get market dominance. They make up the loss on other products in their big chain.

I think there needs to be a break-up between "the retailer" and their home brand being sold there, because it means the profits made on selling the competition works to the home brand advantage.

And in Australia today is Woolworths a monopoly, or are there still other companies in the market selling milk?

I think I can guess.

The consumer protection body got involved as well as a lot of negative media attention.

They had to raise their prices so they don't become a monopoly.

Did you guess "there needs to be market regulation and monitoring?" Because: Bingo! You got it!

Really? Because the reporting I found says that the competition authority cleared the market participants of any wrongdoing in the "milk wars".

>[Chairman of the Australian Competition and Consumer Commission] Samuel said the major impact of discounted milk prices appears to have been a reduction in the supermarkets’ profit margins on house brand milk, rather than a gain.

https://www.smartcompany.com.au/startupsmart/advice/startups...

How is that different to what I said?

> "Effectively selling it at a loss"

Sure, maybe it wasn't a total loss, just less profit.

>The consumer protection body got involved as well as a lot of negative media attention.

>They had to raise their prices so they don't become a monopoly.

You seemed to be suggesting that what was happening with milk was anticompetitive and the consumer protection body got involved to stop it. I pointed out that what actually happened is that the body determined that there wasn't anything anticompetitive going on and that the companies ceased the "milk wars" on their own because they were losing money (which is exactly what I was alluding would happen with soap if one company tried to drive competitors out of the market).

Seems like a big difference to me.

Huh, kinda like the App Store sparing Apple/Google of fees while all their competitors eat 30% cut to their revenue

When your competitors are dumping, can’t you just buy their goods and resell them at cost until they go broke?

That is exactly what Dow Chemical did at the beginning of the 20th century to break the German bromine cartel.

https://en.wikipedia.org/wiki/Herbert_Henry_Dow#Breaking_a_m...

No government intervention necessary!

Not without potentially creating a scandal.

“IGA coordinates anti-consumer buyout of Woolworths milk”

“Why is IGA skimming your milk?”

“Woolworths vs IGA — Calf scalps bull’s milk”

Every retailer has loss leaders.

Illegal in California...

Three conditions must be met.

https://www.upcounsel.com/lectl-california-antitrust-law

> Loss Leader Sales

> The Act also bars "loss leader" sales, defined as sales (1) below cost, (2) to induce, promote or encourage the purchase of other merchandise, and (3) with the intent to injure competitors or destroy competition. Business and Professions Code 17044.

If that were not the case, cell carriers couldn’t sell phones below cost to sell service plans and the entire “razor vs razor blades” model would be illegal.

That also means that game console sales would be illegal.

how would you prove intent to injure a competitor? wouldn't all attempts to outcompete a competitor be considered an attempt to injure them?

there is no way Costco isn't losing money on their $4.99 chickens or $1.50 hot dog and drink. and I assume the point is to get you in the door so you will buy other stuff from them and not Amazon or Walmart.

You mean legislators pass laws that are only for show and have no basis in reality? I’m shocked!

Loss leaders are illegal in several countries

Well since this a US lawsuit…

By selling soap for a loss for longer than the competitors can stomach. If you have 10 businesses making $100M/yr, you can lose $1B/yr on soap (by selling a $2 bar for $1) and get a ton of customers who buy your cheaper soap. Eventually, other basic soap sellers will either need to match your prices and take their own losses to match, or hold steady hoping you'll fold.

Eventually, they are either sold to Amazon or fold, and Amazon can increase the price to $2.20/bar and mint another $100M/year for the next industry to attack with $1.1B. Rinse & repeat and eventually the customer is charged some percentage more for the same product once the competition is kowtowed.

When they raise prices again to cover for the losses, another soap company appears.

"Predatory" pricing is not sustainable.

It is possible that large scale soap companies will be deterred due to previous anticompetitive behavior

That is surely a vast simplification. By sheer operating scale Amazon can ship items at a cost far lower than any brand new “soap company” could. There’s no way you could be competitive on such a low priced item.

If you sell 100 soaps for a loss of $1 each, you lose $100. If Amazon competes by selling 10,000 soaps for a loss of $1 each, Amazon loses $10,000.

This is a losing proposition for Amazon.

Spread that over its product line, and it is not sustainable.

And still countless competitors do exist. They must find some other ways to compete, because your point is valid. It's almost like the human ingenuity knows no bounds...

Yeah, it might be easier to crash the price of Unilever and then buy it.

1. https://en.wikipedia.org/wiki/Unilever

> It is the largest producer of soap in the world,[3] and its products are available in over 190 countries.[4]

I believe the general strategy for this kind of product is to drive CX conversion. Amazon usually offers auto repurchase too, so if you are going to buy once and Amazon is cheaper, the second time too..., by the third you might actually decide to setup a auto purchase from time to time. if they discount 5 cents from the best competitor initially and in the long run they start to price 10 above, they use this to finance similar strategy to convert more CX and then they keep a more strong market position. In the end you don't push your competitors out of the market, but consolidate a very strong consumer base.

"CX" ?

In this context, "customer".

https://devblogs.microsoft.com/oldnewthing/20120119-00/?p=85...

https://www.abbreviations.com/term/1424467/customer

(Confusingly, most of the search results I found point at "customer experience" which doesn't fit as well here. I've definitely seen support write about "the CX has an issue with ..." so I'm pretty sure this is a standard term.)

Yes, because Amazon is going to drive out every single competitor including those who physically sell commodity goods in stores out of business - including the much larger Walmart.

Is everyone forgetting just how small Amazon is when you consider all of retail?

> Is everyone forgetting just how small Amazon is when you consider all of retail?

https://www.statista.com/statistics/274255/market-share-of-t...

June 2022, 37.8% of all ecommerce market share.

Not sure why you're comparing to physical retail considering the antitrust practices alleged are in the ecommerce space. And even if we were to compare all retail in the US, Amazon is likely to overtake Walmart across all retail come next year. https://www.ascentialedge.com/press/ecommerce-shakes-top-5-r...

Since when was 37.8 percent a monopoly?

And it was also predicted by analysts that Windows Phone would overtake the iPhone by 2017

https://www.computerworld.com/article/2473666/windows-phone-...

> Since when was 37.8 percent a monopoly?

https://www.law.cornell.edu/wex/monopoly "For instance, the term monopoly may be referring to instances where: [...] There are many buyers or sellers, but one actor has enough market share to dictate prices (near monopolies)"

> And it was also predicted by analysts that Windows Phone would overtake the iPhone by 2017

https://en.wikipedia.org/wiki/Straw_man

It’s not a straw man. It’s showing you that “what analysts predict” is completely irrelevant.

And is Amazon raising prices?

And how is 1/3 of the market enough to dictate prices?

Of course it’s a straw man. Suggesting that every single “analyst prediction” has the same value is plainly silly.

What “value” do you think it has? Do you think it would be probative in a court? Have you looked at the track record of the prediction?

It’s “plain silly” to cite a prediction as evidence.

Coincidentally OPEC is 38% of oil product based on a hasty google search. Their decisions have a massive influence on oil prices.

The FTC doesn't get to determine the relevant antitrust market. Part of Amazon's defense will be pointing out that consumers buy soap on Amazon and in physical stores alike. It will be up to a judge to decide.

And the government has lost every single case it brought against BigTech in the last 4-5 years

Neither is abusing monopoly power. So there’s trade offs.

The “good for consumers” test is not encoded in law in the US, it’s just a framework that has been recently used to evaluate whether an action is sufficiently anti-competitive to warrant intervention.

It’s also very short sighted.

at best it's requiring people who don't care about the shipping time to subsidize those who do.

The problem with pricing things below cost is you lose a lot of money.

It's probably worth noting that France has recently allowed again to sell fuel below cost (at least temporarily)... which I guess isn't particularly surprising, since it has had been led for 6 years now by one of these far-right neoliberals.

Which I guess is a great example of the unidimensional labeling being ridiculous in politics : the anti-government, pro-monopoly, anti-free-market top right being radically different from the pro-free-market, anti-monopoly bottom right.

(IIRC Marx said that the bottom right were useful idiots for the top right ? But this is probably his failure at seeing history as something cyclical, I very much doubt that both the current situation can continue for long and that it spells doom for capitalism in general.)

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