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Comment by bravura | Hacker News Reader

A colleague of mine commented that he would not sell volume through Amazon, and instead creates his own ecommerce sites. Why? Because, he argued, Amazon uses volume sellers to discover new products to sell, and then Amazon undercuts large sellers after the sellers have done all the market validation.

I don't know if this is true or not, but if it is it's bloody brilliant.

So this seems like a great strategy to improve market discovery for Amazon.

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Amazon used that strategy to figure out which furniture manufacturers to carry. Drop-ship selling of furniture was quite big a few years back and when Amazon realized that they invited furniture retailers to join the marketplace. Once they had an idea of which items sold well, the return rates on those items, margins, etc. they formed relationships with the manufacturers and undercut the retailers by selling the same items themselves at lower prices. So it is both brilliant and very true.

On the other hand, he's piggybacking on Amazon's marketing clout, branding, and large customer base to sell his products if he's going through Amazon. The thing about going it on your own is that no one knows about you and your products. It takes lots of marketing to build up your site.

I've seen this myself. I was a seller last year and whenever I found a product to sell with a good profit margin, Amazon would eventually come along and undercut me.

Since they can buy in much higher volumes than I, they win.

I recommend that nobody ever sell their products on Amazon. Yes, it's a great market and you will get sales. However, all of their seller support is automated and if their automated scripts somehow think you are violating one of their rules, you get kicked off forever.

I was kicked off after selling for 8 months with a near 100% track record and great customer service. Why? Amazon couldn't tell me.

Their answer was: "Due to the proprietary nature of our business, we can't disclose the reason". They held over $5000 of my money for 90 days. It's lucky I had savings or I would have been in trouble.

The customer is also king. I had multiple scammers order over $100 in items, file a claim and get their money back without ever sending the item back to me. Amazon (unlike Ebay) doesn't allow you to ban a scamming user nor do they care.

I made them thousands of dollars in my time there and they couldn't even give me the decency of a person to talk to. I'm disgusted by their business practices.

>So this seems like a great strategy to improve market discovery for Amazon.

I am guessing if walmart does something similar, it is not brilliant, but in fact evil. I don't understand the enthusiasm for things like this if it is a brand that we like.

Remember walmart tried to open its own bank, guess what happened?

I think that "great" should be interpreted as "great-for-Amazon".

Remember Circuit City? They were the biggest victim that fell to the same Amazon practice.

This is true. I read online a retailer saying the same thing, but I can't remember where.

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