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Comment by jnardiello | Hacker News Reader

It's a trap. You, owner of a shop, don't do this.

Amazon will first analyze all your sales data, they will than attach reviews to your shop and finally they will oblige you to play by their rules or die (banned or killed by bad reviews) and either way they will grow thanks to your hard work.

I'm not joking, this is exactly what they have done (and keep doing) with "partners". Amazon is all but transparent and it has been growing like crazy during the last 6-8 years thanks to this exact strategy. Online is not enough anymore, they need to conquer local stores as well. The empire strikes back.

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In other words Amazon is no different than the existing credit card companies (Visa, MC, AmEx, ect...), the existing merchant services, and the retailers themselves who all collect that data for purposes of selling to third parties and use for in house marketing.

Brick and Mortar retailers are concerned about being able to conveniently accept payment and minimizing service charges for the convenience of accepting non-cash payment.

Ideally retailers wouldn't have to accept cards, they would only accept cash, cash = no service charge by a third party. However, that is the whole point of the financial industry to create an economy that permits middle men to take a percent of every transaction (as you say "grow thanks to your hard work"). Why have a store and sell anything when you can have someone else do the work and get a % of every transaction? But Amazon is not the first to do it.

Obviously Amazon is different, because unlike credit card companies they are in the business of competing with small retailers. Particularly when you consider their "your margin is my opportunity" strategy giving this data to them should be a terrifying proposition for any business owner.

But there are so many places that Amazon does not compete with that there is a market for this. Obviously a small book store might not want to do this but what about restaurants, coffee shops, the plumber that comes to fix your toilet (or any service industry), the local tap room, and so on.

Edit: Sorry, the idea of Amazon opening restaurants, coffee shops or tap rooms (which would also mean they start brewing their own beer) reminds me of this scene from Judge Dredd: https://www.youtube.com/watch?v=xFiDoOgRTpk (Now All Restaurants are Taco Bell)

Amazon might not be competing with them right now, but they could be in 5 years time (as ridiculous as that sounds for your examples), and businesses should take the long term view. When it was just books most businesses ignored Amazon, but they've grown to encompass many, many industries now.

You know how ridiculous it would have sounded if I told you 15 years ago that you could specify any address and get a local 360° street view of it... Even in rural austrailia or inside a business. And that comes from a search engine company... That mainly makes money off advertising.

Who knows where amazon will go.

I don't know but Wal-Mart and Home Depot have tried muscling in on small shops multiple times and failed..meaning, opening mom-and-pop size stores. That doesn't mean Amazon will fail, just mentioning that very few people are aware that this is something the retail giants have been trying to do for some time.

The thing about Amazon is that every company who should be their competitor (Barnes & Noble, Borders, Wal-Mart) constantly botches it. They have the money to fend off Amazon. I guess that's what happens when bloated, dumb corporations get real, nimble competition.

It would be like if Amazon decided to take on Comcast selling cable TV. Comcast is huge, wealthy and established, but, and I don't think I would like this, but my money would be on Amazon because Comcast is rich but dumb.

Comcast is dumb, wealthy, established and has a huge reputation for being actively hostile to customers because of geographical monopolies.(possible that they do it because they are dumb but I put my money on the monopoly)

amazon competing would be a win for consumers most likely since they are pretty actively customer focused. It would likely be a loss to the people selling through them though. I like amazon as a consumer for the most part but apparently their tactics and policies toward retailers is less than shining.

Having reviews next to your shop would only be worse for your shop if you aren't a good shop to begin with. I think this is better for the consumer in the end (which is a motto Amazon also preaches), unless they turn evil and use their advantage to squeeze consumers, which isn't all that unlikely since they are a public compnay. But so far they've done a great job of lowering prices for many commodity goods, which most goods are becoming.

  Having reviews next to your shop would only be worse for your shop if you aren't a good shop to begin with.

That doesn't necessarily follow.

How about totally unfair, if not abusive reviews (http://www.modernluxury.com/san-francisco/story/the-toxic-ab...)?

Or a bunch of people ganging up to destroy a restaurant. Even if virtually none of the reviewers has ever set foot into the place? (http://evgrieve.com/2014/05/a-google-glass-feast.html)

A couple of bad reviews can destroy a business. No matter if they are true or not.

Demolition Man not Judge Dredd. --Enhance your calm John Spartan.

Damn... how did I mess that up? My bad.

Well, if it makes you feel better, Wesley Snipes did an AMA on Reddit a few days ago, and someone asked him if there would be a Demolition Man sequel.

He responded politely, but basically said "people need to be allowed to forget that movie". So you are good.

Don't sweat it, obviously you're still traumatized by the three seashells.

Yeah I don't disagree with you here, just pointing out that a small business owner who does compete with Amazon should maybe think twice before being attracted to the competitive rate compared to Square.

Well Amazon have started doing a local services marketplace. If they can become dominant they can start to control the flow of leads to these businesses and therefore control margins and pricing.

Five yrs ago we wouldn't have guessed Amazon would do tablets, its on OS, music service etc. We don't know what they will do five years from now.

It is actually a very interesting point you raise from a legal perspective. Kind of on par with Google's ability to unfairly utilize their internet search data which would have crushed the competition is spaces such as hotel/airline booking, local review websites, ect...

For example, Google is under significant regulations as a result of the DOJ settlement[1], "To prevent abuse of commercially sensitive information, Google will be required to implement firewall restrictions within the company that prevent unauthorized use of competitively sensitive information and data gathered from [flight booking] customers."

While I think jack-r-abbit is accurate about many business not competing with Amazon, if Amazon begins using financial data to unfairly stifle retailer competition, then they are playing with fire, Anti-Trust lawsuits are not cheap.

[1] http://www.justice.gov/opa/pr/2011/April/11-at-445.html

They will learn your habits and then they will promote their store instead of the physical one where you do the first purchase. Pure evil!

There are non negligible costs for accepting cash. Major retailers have to have armored trucks to move cash, cash counts require more trained personnel. Even on a smaller level there is increased risk of theft or skimming from taking cash compared to credit only.

Cash handling is not free either. In many European markets paying by debit card is cheaper than cash for the shop, at least for the larger chains. That's why they offer cash back at the till.

The whole point of credit is to extend purchasing power that you don't have on hand (cash). Merchants would lose money because people wouldn't be able to use a credit line and instead delay purchasing. Credit also allows for financing large purchases over time and the assumption of default risk.

I get your comment and agree with it, but... It's funny how us (the HN/startup/pro disruptive audience) is very pro change (let's get rid off the middle man because we can create software that can do this cheaper and more efficient) and now we are 'rooting' for the brick and mortar business. There is a sociological take away somewhere here.

While I'm for technological progress, I prefer to live in an environment where small entrepreneurs can thrive, which requires me to be skeptical when a giant, borderline-monopolistic company comes along with 'new technology' that's true purpose appears to be to subvert small business owners and take their customers.

Wasn't Amazon exactly this for many years?

You don't get to be the underdog forever. There was a very long period there where people hadn't realized that Apple wasn't the struggling underdog vs. Microsoft anymore as well.

Monopolies are bad, and since all the people on HN are the small business owner (or want to be soon), making people aware of what's going to happen is kind of important.

It's also not new: there are players trying to do this type of thing in every industry. You even see it in medicine.

People welcome change, but they're also weary of too much market power with any one player (see Comcast as an example)

Do you mean weary or wary? I can see that it might easily be both, though...

Oh I meant wary (I'd missed the distinction between those two words until now), thanks!

Amazon is a middleman too, just one that does lots of online shipping.

If they become the only middleman, than the situation gets much worse as there are no longer any market forces to keep Amazon's prices to be close to their costs. The only force at that point is Amazon's good will to not make a profit.

Don't worry. Amazon isn't even the biggest middleman:

"Last year, combined total volume of merchandise handled by Taobao and Tmall surpassed 1 trillion yuan, or about $160 billion, according to Alibaba. That figure was larger than Amazon’s $86 billion, according to RetailNet Group, or eBay’s 67.8 billion"

Some change/progress is good and some is bad and that doesn't seem like a subtle point. I don't know how anyone gets into the mindset of assuming change is inherently good or inherently bad.

Change can be good, but it also matters who is "running" the change.

I agree with the sentiment, but it's more about the data. Amazon wants brick and mortal sales/pricing information so they can undercut you more effectively. They'll probably bundle in some service where you get an online store for cheap/free, which makes you even more dependent on them for inventory management as well.

At that point Amazon controls your cashflow and your products and--in a sense--owns your business.

Yes. And just to add another evilish detail: Controlling your cashflow means also that you are effectively borrowing them 2+ weeks of your income (as far as they will pay you with recurrent wires AFTER you have sold your stuff) at no cost. On a very low level, this is the mechanism that allowed them to survive for years without making profit on their products.

Why do you say Amazon is controlling cashflow? It looks like they offer bank transfers everyday. From the site:

"Fast, reliable deposits. Deposits to your bank account the next business day. Or spend your money at Amazon.com within minutes."

Because that's not how long it takes for money to really clear a credit card when banks are involved.

Well then one business day would be an improvement on cash flow vs a typical bank... or am I an idiot?

Obviously it's hard to compete with Amazon on commodity products, but it seems like they are lowering the barriers to entry for many unique retailers and small businesses.

The argument is that on some unspecified future date when Amazon has a monopoly, they can arbitrarily choose to hold payments for more than a day and screw up a business' cash flow and cause them major headaches.

Anyone who relies on PayPal today already accepts the risk of having their account/funds frozen, and there are already many horror stories of businesses having tens or hundreds of thousands of dollars locked up for a three-month investigation (only to go bankrupt in the interim).

Yes, its this. Its also what Amazon does to its drop ship companies if they don't manufacture their own products. ;)

ITS A TRAP! :P

How is amazon going to undercut my barber or the brewery I go to with this data? It seems like there are plenty of businesses that could benefit from this and not be at risk to the "empire".

Exactly. All the concern trolling above is about boxed product retail, where you're "competing" with stuff Amazon already sells. The majority of local transactions are and have always been in the service economy where Amazon has nothing to offer.

This isn't an Evil Plot, it's just an attempt to leverage their existing payment processing abilities to get themselves a piece of Square's pi, much in the same way that AWS leveraged their existing IT infrastructure.

Could they mistreat retailers who are trying to make a living reselling boxed products? Yeah. But those retailers have mostly been killed off already by Big Box stores. This ship sailed long ago.

And if they do manage to undercut your barber aren't you interested to find out how.

Hair cutting drone perhaps?

If they fly low enough?

I think the compelling case for this is less about shops - most of which (at least in the UK) already have some form card processing - but more about things like tradespeople (plumbers, decorators, electricians etc) or other physical services (e.g. music teachers)

Within a few years cheques will be phased out in the UK. This means the only way to pay a carpenter, or a plumber is in cash or a money transfer. Money transfers to new suppliers always take a bit of faff to setup, and a card payment like this would often be easier.

Cheques are not being phased-out in the UK. From the government FAQ [1] published in 2011:

Are cheques being phased out?

No. The Payments Council announced on 12 July 2011 that cheques will continue for as long as customers need them. A previously announced target for closing the cheque clearing system by 2018 has been cancelled.

[1] https://www.gov.uk/government/news/frequently-asked-question...

"Money transfers to new suppliers always take a bit of faff to setup"

How so? If I want to send money to a UK bank account to which I've not send money before, I:

1. Open my bank's app on my phone

2. Tap 'send money'

3. Type in the amount, the 6-digit sort code, the 8-digit account number, the person's name

4. Hit 'Send'.

It's a little slower than swiping a card, but it also feels safer, as I don't have to give someone physical access to my card.

Who do you bank with? I bank with both Natwest and Barclays and neither of those will let you set up a new payee on their mobile apps. Sure you can send money, but only to payees you have set up online using 2FA.

I think Barclays will be adding the new payee option soon to the mobile app, as they're trying to promote it as the way to do stuff. Plus they have PingIt which basically does the same thing, but is a bit of a faff for the receiver.

First Direct. The iPhone app itself acts as the 2nd factor.

One business type I can see this making sense for is food trucks, as I don't see amazon going into that business anytime soon if ever. Beyond that I tend to agree with you that giving amazon even more data seems like a horrible idea.

A crêpe van is one of the friendly examples they have in the carousel on that page.

Although why anyone would buy their decorative paper from the back of a van is beyond me.

Don't know why you're getting downvoted, I thought it was brilliant.

Amazon has a truck fleet that look almost like Foodtrucks. I've actually seen a retrofitted Foodtruck selling Fire's and the new Amazon Phone by the beach in Santa Monica.

This makes sense for more than just Foodtrucks. The pain of fees is a very real thing for retail startups and if amazon is also going to give us a terminal that can take the place of a $3k+ POS system, then I'd be seriously considering it.

Who actually reads reviews of "partner" shops on Amazon?

Don't get me wrong, I give out 5 stars for every one I deal with. Mostly because I rarely realize I dealt with them. Things arrive on time and as advertised. Does this not happen regularly for some folks?

I automatically check who I'm buying a product from on Amazon, and look at their ratings. It started for me years ago when I noticed it becoming ever more common that products were coming from other parties than Amazon, and also for Prime purposes. I'll often balance price against rating; if something costs $X, I'll pay $X more to buy from a very highly regarded supplier vs. one that isn't.

That said, I'm not sure I was aware there are actual reviews. I just check the scorecard.

Compare 1.75% Per Swipe (till 2016) vs. Square's 2.75%. For most small businesses, that's a huge difference.

Care to back up these wild claims with evidence because I've never seen this happen at Amazon.

Makes me think of how Google Analytics is a trap. Google already knows the organic & ppc traffic it sends you, but if you get plugged in to Analytics (or AdSense, for that matter), then Google gets to see what organic & ppc traffic comes from the other search engines, as well as other advertising, direct linking, etc. Google gets to see the whole picture of how everybody reaches your site ... sure gives the appearance of a conflict of interest, if/when they're also selling you ppc and if/when you're dependent on organic Google traffic, too.

Do you mean to say that Square is different in this approach? Everyone wants your data and it's the price you pay to obtain this technology.

Square is a payment processor, and does not wear the merchant hat. Even if it sells the data, the merchants acquiring the data still needs to pay, bumping up the cost of business.

On the other hand, Amazon is _both_ payment processor and merchant. First it gets transaction fees (due to its volume, I guess it is paying around 1-2% for card transactions) from merchants, not a lot, but I doubt it really cares or plans to earn money from transactions. Second it gets sales analytics, and third, it can adjust its online strategies to match the trends it sees in this data. I would say #2 and #3 would be the whole point of launching this.

Square is not the biggest competition to retailers anywhere, and Amazon has a history of using the sales data of their "partners" (on Amazon.com) to compete with them.

> they will than attach reviews to your shop

They will come and stick reviews on your window or what?

How they will implement reviews for local shops is speculation at this point, but yes. They will allow reviews for local shops and use them to influence buyers choosing where to cut their hairs or where to buy the best cakes.

This is a tragedy of the commons argument. It's a nice sentiment, but Amazon doesn't need all that many merchants to sign up to get their data, so they will get the data on your shop, whether you sign up or not.

If you sign up, it's a 1.25% pay rise for 18 months ... Yes eventually technology will eat your lunch, but that's coming independant of your signing up or no.

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