One thing everyone is getting hung up on is the fact that Amazon isn't wholesaling the dongle. The contract isn't a wholesale deal, meaning if your widget doesn't sell, it's sitting on your balance sheet, not on Amazon's balance sheet. It would be like if Costco instead of buying 1000 legos, just stocked legos in it's warehouse, then paid Lego company everytime a single unit sold.
Then they figured out how to make their own legos through a different supplier, they fixed the original Lego price $5 more expensive then the store brand legos. Now Legos sell for $30 a box and Kirkland Legos sell for $25 a box, same exact product, just a few bucks cheaper. Oh and lego couldn't drop the price from 30 to 20 to compete....
That's what Amazon has done. Price fixing and control of the competitors inventory. Damn bastards.
> It would be like if Costco instead of buying 1000 legos, just stocked legos in it's warehouse, then paid Lego company everytime a single unit sold.
For some reason I was under the impression that this is exactly how it works at some physical retailers? Can someone confirm that this is not the case? Does Costco/Walmart/CVS/etc. eat the cost if the items don’t sell?
It is exactly how it works for physical retailers. In most cases, they even delay payment for a few months to account for returns and the cost of returning unsold products.
Costco, to my knowledge, is actually one of the more strict retailers with IIRC 6 month delay between a product sale and the vendor being played. Mostly due to their generous return policy.
I don't know of any large retailer that eats the cost of unsold goods. It's typically the retailers who pressure the supplier/brand into offering discounts and coupons in order to keep product moving.
I’ve never worked in large consumer goods retail, but smaller retail outlets, food, clothing, etc. do not commonly operate like this. Most don’t have the storage to pre-buy even two months worth of merchandise. In food, purveyors won’t hesitate to ask for cash up front if you’ve been late a couple of times or have a bit of an outstanding balance. The places you describe sound like they act as both distributors and retailers and are large enough to have leverage in their negotiations with suppliers.
I think it's certainly a matter of leverage, and could also be why smaller retailers struggle to survive. For suppliers, getting involved with one of the big retailers is a calculated risk. The retailers work their suppliers against one another, and if you don't play along, you vanish from the shelves. I worked with one of those suppliers long ago.
It's interesting that food is an exception, perhaps because it's perishable, and if you don't pay for a delivery of ingredients... no soup for you. And restaurants may actually be competing for access to high quality materials. Of course the larger chains can manage their supply chains differently, partly by using less perishable ingredients in the first place.
Food isn't an exception— it's just the example I used because I'm most familiar with it. Restaurant purveyors are particularly strict because a restaurant with a 1% or 2% profit margin is considered pretty successful, and that's why 60% of restaurants fail in the first year, and 80% fail by the fifth. But my non-restaurant experience suggests any retailer not required to own their inventory is the exception.
I personally have been a chef and a manager in retail food businesses from movie theaters to coffee shops. I have a friend who owns an upscale boutique that sells many types of products, another that sells products through her salon, several more that own vintage stores (admittedly entirely different supply chain,) a friend who discussed his well-researched, in-depth business plans to open a gun accessories retail shop, another who sells wood crafts and other products direct to customers, a couple full-time artists who sell their art either through galleries or from the walls of businesses, and several food purveyors that only sell to businesses for resale.
In that entire pool, only the artists selling their art through galleries and coffee shop walls, and one of the vintage shops that does consignment sales, differ from the norm of retailers owning their inventory. Some wholesalers or manufacturers will afford well-behaved businesses lines of credit— but that's not the same thing as not owning your inventory. You can't just return it if you don't sell it. Once you sign that delivery sheet, it's pretty much yours.
I've heard of retailers selling new products on manufacturer consignment. I wouldn't be surprised if some specific industries operate like that as a norm. Maybe phone vendors? Maybe software/computer game stores, possibly, because the content is license-based and the material cost is relatively small compared to the price? (Amusingly, as a long-time software developer and someone with a lot of experience in the retail end of business, I have no idea how retail software sales work.) But there's no way Nordstrom is going to order a skid of this spring's collection from major brands and designers and be like "sorry, we decided to give the floor space to other items, so either mark these down to bargain rack prices or we're not paying for them." If that were the way it worked, nobody would sell them anything.
I get the sense that the original commenter just extrapolated based their understanding of business practices that weren't as common as they thought.
I don't know if JC Penneys counts as a large retailer anymore or if petsmart ever did, but both of those stores do eat the cost of unsold goods to my knowledge. Lowes does as well, except for certain types of products such as live plants from certain suppliers. Clearance is almost always the store trying to recoup any money from a product that they can't sell and is taking up shelf space. That certain suppliers take on the cost if unsold product is why you won't see Bonnie Plants tomato plants on clearance at the end of the year. The supplier eats the cost if the product isn't sold.
Edited to make it clear that I'm saying the retailers I'm well-acquainted with do not get reimbursed for unsold items except from a few specific suppliers.
I was under the impression unsold plants were taken out back and destroyed and evidence returned to the vendor (usually a photo and the UPCs). When I worked at a store that sold books and magazines we would rip the covers off and send those back, the rest going into the trash.
Plants and produce work differently. If you buy a farmers crops you dont get to send the rotten food back to them and ask for a refund. Only very large sellers even offer that to begin with.
Also "return it back" doesnt mean the company got the same value. Some companies only give credits for the returns and sometimes those credits are less than MSRP.
If you ever see something on clearance it means A) they cant return it to get credit or B) the credit amount they will get is less than what the clearance price they are offering is
Depends on the contract and what the supplier can do. I know of a greenhouse that did take the plants back, then put them on sale there. I don't know if that is normal for plants though, or just how that one operated. Plants can also be composed to make better soil. Or they might need a few to come back which they grow for next year's seed?
For books some can go to half priced books type stores, but if there are a lot unsold it probably isn't worth the shipping.
I honestly don't know the details of what happens to the physical plants. I can't imagine they're worth the shipping to physically send back, especially for dead plants which the company was also reimbursed for. They were likely destroyed. Generally, part of the deal with the supplier reimbursing the retailer for unsold product is that the retailer then needs to prove they didn't sell the product.
> In most cases, they even delay payment for a few months to account for returns and the cost of returning unsold products.
You may be conflating payment terms of trade with sales/revenue recognition.
In general for consumer goods (unless it's a consignment model), revenue is recognized by the manufacturer the day products are billed and shipped to the retailer. In other words Store inventory is usually on the retailers balance sheet.
The retailer may actually pay the manufacturer 30/60/90 days later (I've never heard of 6 months but it's possible) and that's subject to negotiation. But that's cash/working capital management, not P&L.
I worked for a manufacturer of outdoor product with a short season. We didn't have warehouse space to hold an entire season of product and we did not have manufacturing capacity to build as needed so we used 180 day terms to let our customers buy throughout the year. It smoothed out the demand curve and was a win for everyone.
Yeah, even I was under this impression. OP should cite a source if they know otherwise as from their comment it seems like Amazon is the only one abusing their position like this.
Fry's at the end went consignment model and none of the big brands would do it so their shelves were empty. So highly doubt Target or Walmart are using consignment model for the majority of their goods.
There are a few different models. What you're describing (stocking a product owned by another entity and giving them a cut of the sale price) is frequently known as consignment. It has minimal risk for the retailer, and typically involves non-perishable goods (clothes, electronics, etc).
Other retailers purchase the product at a discounted price from another entity and then sell it at their location for a higher price. This is the wholesale model where a producer is selling so much product to a retailer that they'll give them a discount on the price.
Wholesaling comes in 2 main forms: As described above, or "buyback". With a buyback contract, risk is shifted back onto the producer, as any unsold stock at the end of the contract term is "bought back" by the producer, typically at price they sold it to the retailer (possibly minus stocking/shipping fees).
I have no idea how the specific places you mentioned run their shops, but having been involved with several companies that produce physical goods for market, it's VERY common to sell to major retailers, and not just run consignment contracts (in fact, we ran VERY quickly away from anyone offering such deals because we would have to tie up inventory on their shelves that we may never be paid for).
That was how it worked in the US with software retailers back in the days when most of us got our consumer software from the local Egghead, CompUSA, etc or from mail order companies like PC Warehouse, CDW, etc.
The stores were really more like real estate companies and payment processors than what most people think of when they think "retailer". They rented shelf space to manufacturers/distributors and handled the money when someone bought something. (For the catalog companies, replace "shelf space" with "page space").
This was why when after you decided in late 1995 to upgrade to something better than Windows 3.1 and walked into Egghead to buy a new OS you'd see Windows 95 somewhere prominent visible from the door, probably with banners touting how great it is, and OS/2 Warp would be on the bottom row of some shelf in the back of the store with poor lighting and enough dust to suggest that not even the person who is supposed to vacuum bothers to go back there.
Microsoft paid for prime real estate in the store and in-store advertising for Windows 95. IBM did the minimum possible that would get OS/2 Warp to be somewhere in the store.
I worked a route at Frito Lay. The store bought the goods, but was rebated on anything that didn't sell. We bit the bullet on product that didn't move.
But merchandising and stocking the shelves was also 100% our responsibility.
It's somewhat similar in books IIRC, if the books don't sell you send back covers of the books and get reimbursed? (based on info from 20 years ago, pretty static industry so probably still the same)
on edit: of course book stores don't compete with publishers.
Not all industries have buybacks, and many producers won't take on contracts that involve them.
(Fun Fact for anyone not familiar with this practice: in publishing the covers were shipped back as the proof because whole books are heavy/costly to ship and take up a lot of space/costly to warehouse so the retailer with them on hand would just have the rest of the book pulped).
I used to love browsing through books at the local flea market that were $0.25, had the cover ripped off, and of course the notice “don’t buy this book if the cover is ripped off!”
Enjoyed a lot of cheap sci-fi and fantasy that way.
I would expect it's pretty uncommon sure, I mean how would you do buybacks of canned goods. It works because of the many historical features of publishing, and the physical realities of books (removing cover to send back) and doesn't seem like it could work in most industries.
Peel off the label and send that back. As for destruction, there's the easy option of making the expiration untradable (marker or alcohol) so anyone opening it doesn't know what's inside or if it's good, and the more time consuming option of puncturing it (this option would work on most food items). Working at a grocery store, if the outer packaging of an item is damaged by a tear or even a dent, nobody will buy it unless it's the only one left and they're desperate, even if the contents are in a stronger inside container (microwave meals, cereal, multipacks, etc). I was asked to replace an item for someone once because the package coloring was off. Cosmetically damaged product sits on the shelf until it gets scanned out, and customers only touch it to move it so they can get the item behind.
Most products in stores today that aren't sold in bulk have a bar code on the packaging, which can be sent back as symbolic proof the item was "destroyed" (about as meaningful as the; for smaller objects, send back the entire front of the package.
I'm not saying this is a good idea. (I think this is a terrible idea, and that we create too much waste already) I'm just saying it's entirely possible.
It is. Fun fact: when Harry Potter 7 was published in the United Kingdom, the publisher didn't allow this, so bookstores had to purchased the stocks from the publisher. This wasn't that bad because most people preordered it, but independendt bookshop had to took the risks to order a few extra copies.
I don’t think that they are really in the consignment business. Its more that they do small orders in test markets and measure turnover carefully, negotiate suppliers down HARD, and cut them off if sales don't happen. They may have a return clause in their contract too, but usually the sale is final… hence markdowns/closeouts.
Many times, yes. "MSRP" stands for "Manufacturer's Suggested Retail Price".
Now, not all products come with MSRPs, and unless there is a contract between producer and retailer on a pricing floor, the retailer is free to set the price of a product as high or low as they want.
But, there is a key difference here. Let's use your supermarket as our example. A supermarket sells both Rao's Pasta sauce (7.99) and MarketBrand Pasta Sauce (2.99). The difference is that the store has paid Rao's 2 dollars to purchase their sauce which they then mark up to 7.99, and had their store band produced for them at a purchase price of 1.25. Both manufacturers have been compensated for their products.
Instead, what Amazon does is take a shipment from Rao's with the promise that they will be compensated 2 dollars for each bottle that is sold (which requires Raos to tie up inventory/money) and then undercuts their price with a product that they produce themselves and list on their page much more prominently, after using Rao's product previously to demonstrate market demand for that type of good in their store.
Depends. Most of the merchant decides. However for "premium" brands the manufacture sets the price and won't let you go below it.
Weber grills rarely go on sale or clearance because you need permission to do so. Menards near me often has 11% rebate on everything sales - they do not sell Weber grills. Home Depot matches Menards 11% rebate on everything, except things Weber grills where they are not allowed to discount.
I know of one case where a golf store threw in a free hat with the full price purchase of an expensive putter. The customer was an undercover agent for the putter company and the store no longer got more product from that company.
I know there are a lot more examples, but I don't know them.
Vendors will do rebates so they do have some control over price. Like new cars when a dealers sells at their cost, there is a large rebate the customer doesn't see.
Yes merchants/retailers almost always decide prices. In fact some variant of "pricing is at the sole discretion of the retailer" is a standard email signature and PPT/Doc footnotes of many sales people in most manufacturers.
Amazon didn't invent this, they are copying from B&M retail. So they're all bastards. It's unfair to single out Amazon.
Some of the stores do this because they have the market reach and leverage to do so. Some of them switch to this out of desperation. Two recent and famous examples that I can think of are Fry's and Toys "R" Us. Now they didn't do it as a proactive strategy, but still. I believe Best Buy is an example of a successful retailer using this sales model.
In case others were as confused as i was about this
"While they’re often confused, Sold by Amazon and Fulfilled by Amazon are two different things.
With SBA, Amazon prices your products and owns any transactions that take place. When an item sells, they pass the proceeds on to you for allowing them to sell your product.
With FBA, you price your products and own the transactions. It is a service where Amazon handles the order fulfillment process for your products."
I'm extra confused, as I'd interpreted "Ships from and sold by Amazon" as "Amazon supplied the goods and will vouch for their validity", whereas "Sold by ISL" would have meant that ISL was on the ultimate hook should the goods prove to be counterfeit.
To be specific, Amazon co-mingles inventory between Amazon, Sold by Amazon, and its third party sellers that are Fulfilled by Amazon.
It doesn't matter who you buy from. The picker at the warehouse picks from the same box, the actual product could come from any seller, even if it's "Sold by Amazon".
Who you purchase from is purely an accounting thing, unless they manage their own stock and is not part of Prime.
If you would like assurance that the goods you purchased actually us genuine, you have to shop from other retailers.
They don't co-mingle inventory on everything, it varies from product to product (although the majority are indeed co-mingled). While there's no visible way to tell if a product is co-mingled, Amazon support is able to look it up. Whenever I'm buying an item that I would be unhappy with a counterfeit (so anything expensive, electronic, or that goes in my mouth or body) I contact Amazon support by live chat and ask them about that particular item. It generally takes about one minute of my time, spread over half an hour as they chase things down and escalate -- probably ends up costing them a heck of a lot more in support costs than they make on the item, but perhaps if it costs them enough they'll just expose the info?
B&H and Adorama are increasingly my go-tos for anything with microchips. They've both branched out from photography to A/V gear to tech goods generally.
I run my list in the opposite order. Prices are generally just as good and I prefer to support those I trust first. Actually before I get to amazon I will search for small specialized vendors that might be more expensive but the staff actually knows something about their product, and so the web recommendations are good (they will of course recommend what they sell over an equally good brand they don't, but they are selling the good brands)
Alot of people outside of news/tech circles do trust Amazon. They're literally the most popular retailer, of course people trust them. Anecdotes are everywhere about inventory co-mingling being such a mega problem, but I think opinions are getting repeated and amplified by a vocal minority.
Beyond that, trust is irrelevant when returns/refunds are dead simple. It's wasteful, for sure, but I guess that's capitalism.
I trust Amazon to the extent that I am okay with them storing my card information. Their security practices in that regard are pretty damn good. (I do not trust Google with my payment card info. I do not want them to have anything on file they could trigger charges against, either by accident or through their many dark patterns.)
I do not trust Amazon when it comes to vendor or marketplace management. They have an enormous fake review problem, and the probability for counterfeits is, in some categories, unacceptably high.
Meaning: I don't buy any big ticket items from them. I'm still happily doing mostly recurring purchases from Amazon, for product categories where the chance of getting mislabelled junk is practically zero.
Well, I think people do trust amazon, they don't trust all the other companies on amazon. But unless I'm misunderstanding, this move means that people can't buy from amazon any longer. They have to buy everything from all the other vendors on amazon. The problem being, of course, that these other sellers may or may not scam you. (I'm not 100% about that interpretation of this move, but that's what it sounds like? Lawyers may want to chime in.)
So under these conditions, I would strongly urge people not to purchase from amazon's site, because it's gonna be essentially 100% potential scams. They should move to target or walmart. At least until those stores are also obliged to do the same thing. (Since they have the same fulfillment business models I'm assuming they'd be next? But they should be safe for now.) After the law gets to them too, people may want to limit online shopping only to small ticket items that won't cause too much disappointment if you get scammed. Because online shopping will become the wild west with every transaction being backed only by caveat emptor.
Oh Amazon has been selling garbage for years, but only for “commodity” items that the average user can’t test for quality.
Example: All coin cells (regardless of brand/seller) on Amazon are fake. These cells last 2-4 months (long enough that most people won’t bother to contact support) when the same model from an electronics distributor like Mouser lasts ~8 years as advertised.
> people may want to limit online shopping only to small ticket items
Oddly enough, I’ve had much better luck with big ticket items on Amazon since they’re much harder to fake and because they get special treatment (brand registration) from Amazon. But for small stuff Amazon is just AliExpress with faster shipping.
Thanks for the heads-up. I've always accepted that Ethernet cables do what they say on the wire, but now that you mention it, it seems ruthlessly easy to print whatever on the cable and give you something that will only transfer at a fraction of the bandwidth.
I'm slowly collecting a list of things that I need to buy only from genuine suppliers.
“Co-mingling” doesn’t somehow make counterfeiting easier - Amazon uses chaotic storage such that more than one sku-receipt will never go into the same pickface (co-mingling isn’t talking about mixing the same SKUs together, it’s mixing all SKUs together but tracking them by location).
Amazon can still locate all products of a particular SKU received from vendor X on a particular date, or know what receipt your sale was from.
Amazon may be able to determine the source of stickerless comingled inventory like this, but stickerless comingled inventory is treated as interchangeable on the fulfillment side. So if I order an item "Sold by ACME, Fufilled by Amazon" I may receive a copy that was shipped in by "Cyberdyne".
Amazon's tracking will internally tell them I got an item that was sent in by Cyberdyne, but they don't tell me about that.
This as a customer means I can order an item from ACME, that I know is extremely careful about not selling counterfeits, but end up getting a counterfeit, because Cyberdyne is super sloppy, and the one I got actually came from Cyberdyne. Even though amazon can track this internally, as a customer I have no idea the one I got came from Cyberdyne instead of ACME.
For some products the counterfeits may look the same, and even function the same, but cut a lot of safety corners etc to be cheaper to make, and I might only know that I got a counterfeit after it catches on fire, and burns my house down, possibly losing family in the process.
At this point if I complain Amazon can look it up, and point the finger at Cyberdyne, but it is a bit too late by then.
If ACME instead went with the stickered non-comingled option, I will get one of the items that ACME actually sent in, even though they might need to send it from a further away warehouse, if the closer ones only have the comingled stuff.
Absolutely true - but it's the sales strategy that is 'co-mingled'.
I was just responding to OP's point that implied that this is a side-effect of how the inventory is physically stored, rather than a decision on sales strategy by Amazon.
I'm not GP, but I just ordered from a reputable seller online.
They're closed for several weeks because the warehouse staff is out due to COVID. Who knows when I'll get the several hundred dollars of stuff I ordered. I'd already have it if I had ordered from Amazon.
Ive also heard that they no longer comingle products multiple times so I am not sure what to believe anymore. Lots of people have told me that this is old data (in regards to Ships and Sold by Amazon).
My understanding is that the support is exactly why you'd buy Sold By Amazon - for others, the 3p seller might be the one to negotiate returns, while SBA is returnable no-questions-asked within the due date they list.
There is also this Financial Times article from 2019: https://archive.md/kfABj - quote from Amazon spokesman:
> The system is purposefully designed so that similar products are not placed next to or near each other, and Amazon can also track the original seller of each unit.
I guess the confusion came from the name "commingled inventory" - Amazon seems to have recognized this recently and is now referencing this feature as "virtual tracking" instead (quote from the above help pages):
> Commingling is a term that was sometimes used to refer to virtual tracking. However, virtual tracking is a more accurate term, because we trace the source of eligible products throughout the fulfillment process. Identical items from different suppliers are not stored together.
I may be misunderstanding the links you're providing, but to me they only appear to say that Amazon is aware of the original source of each unit sold. They don't appear to say that a consumer has any control over which bin a product is pulled from. i.e., A consumer may choose to buy a product "sold and shipped by Amazon" and it may get fulfilled from a bin supplied by a third-party. The Financial Times article you linked to seems to confirm this.
> Unfortunately if you really need genuine products you simply cannot buy things off Amazon anymore.
For whatever reason, I have noticed this getting dramatically worse over the past couple of years. Almost all "5-star" reviewed products are filled with top reviews of 1-star reporting fake products. And because of Amazon's overly generous return policy, there's a lot of used products sold as well.
Buying off of Amazon feels like there's a high probability you'll get a used or counterfeit/fake product or both.
I have been reducing what I buy on Amazon because I just don't trust it.
Fakes are definitely more prevalent in certain categories, for sure. Batteries, power adapters, flash drives and SD cards are probably the biggest off the top of my head. Probably because they’re relatively simple devices that are easy to manufacture to a lower quality standard than the genuine item and will usually at least superficially appear to work when received by the average buyer.
> Unfortunately if you really need genuine products you simply cannot buy things off Amazon anymore.
That is a very generalized statement. I have bought hundreds products shipped and sold by Amazon and never had an issue with authenticity. I'm sure it happens, but I'm willing to guess it is pretty rare and Amazon has always been quick to refund products that are shipped and sold by Amazon.
My own experience of counterfeits includes, of all things, water filters. The packaging was perfect, but the filters literally wouldn't fit without modification.
I gave up after the third time and went back to buying from brick-and-mortar, and haven't had a problem since.
Between my experience and reports from others, I'd say that you've been extraordinarily lucky.
And I used to buy SD cards and Mac adapters from Amazon for work and it was about half of them products were fake until I finally stopped and got them from cdw. They would fight me every time I brought it up. It is well know issue glad you never dealt with it.
Batteries (as energy storage devices) are a great example of something I wouldn't want to be counterfeit. A poorly made battery has a better chance of starting a fire. Probably not going to happen with AAAs, but larger cells like 18650s might be worth a worry.
I probably wouldn't care about a mouse trap though, as long as the mechanism doesn't store enough energy to burn my house down.
My friends and I all bought fake Bose headphones from a shady dealer in China (in person), and the $50 knockoffs sounded exactly as good as the real $600 ones. The only way to tell there was anything wrong was by the fact that they all broke down within a few months.
Still, for value conscious people it’s fine. My dad was really into shortwave radio and other stuff in the 80s.
He’d buy “grey market” gear from stores in NYC that were legit, but intended for Latin America or other markets. Sometimes the fit and finish would be interior or connectors would be lower quality, but the price was right and an 80% product is better than nothing.
If I know I’m buying a “Rolox”, that’s one thing. If you sell and price a Rolex that is not, that’s a problem.
I've used Amazon all of once so I don't know anything. What do you mean really need genuine?
Let's say you wanted to buy an iPhone or a Canon SLR camera or a Lenovo laptop. You can't buy these from Amazon? What happens if you try? Will they ship you a block of wood in a box, or a myPhone? And won't refund it?
Consumable goods, eg. Toothpaste are things that you may want to be genuine. Sure it may say "Crest", but did it come from the Crest factory, or did a no-name company drop ship fake crest toothpaste to an amazon warehouse, and now their product is co-mingled with genuine crest?
(this is an example, you can google for real stories)
To add, there are stores of extreme coupons who will products (again, lets use toothpaste) from brick and mortar stores on discount, then sell them on amazon. Or buying returns/expired food products from brick and mortar stores, then selling into amazon.
Again, the issue in all this is co-mingling because any genuine sourced products compete with these less reputable ones.
We are not talking here about laptops or cameras. The usual targets for counterfeiting are things like USB cables or headphones.
They might come without packaging, but then so do the geniune ones sometimes.
They look normal to non-expert eye, but then when you use them they either break quickly, or whilst functiontal are not as effective as a genuine item(worse sound quality, slower charging, slower transfer speed etc.).
Okay I didn't realize that was implied with the context. So you can't use Amazon for buying genuine USB cables, headphones, or toothpaste. But laptops, cameras and phones are okay.
The issue is that there's huge incentives for vendors to counterfeit and few incentives for stores to deeply spot-check their middle-layer resellers or the stories they're told from wholesale sources, many of whom are in another country (with all the associated barriers of communication, documentation, and even good ol' fashioned "playing the foreign sucker for their money"). When nobody is actually getting hurt, the incentives to make sure everyone is playing by the rules are very low (and the benefits for cheating, i.e. making win-win deals that bring costs down while bringing revenue up for the merchant and some counterfeit outfit at the cost of lost potential sales to the brand owner, are high).
My recommendation would be to treat all stores with a long supply chain as sus until proven otherwise.
I’ve been bitten by so much garbage bought on Amazon, including clear counterfeits that I had to charge back on the credit card, that we have a rule in our house to never ever buy anything in that site even if it’s the only site offering it.
> Unfortunately if you really need genuine products you simply cannot buy things off Amazon anymore.
Untrue. Stick to SBA, and it's like any other retail store with customary supply chain integrity.
FBA can be anything because Amazon didn't purchase the goods, they're only warehousing and delivering them.
SBA and each FBA are separate bins by design. The commingling of different SBA/FBA sources at the same ASIN (item on the website the customer buys from) would be a different issue.
Amazon's inventory is co-mingled. So, the warehouse has the widgets sourced by Amazon itself to sell, by the widget maker themselves on their own store on Amazon, by a small chain store in one state to sell, and by random dude who might possibly be importing counterfeits to sell on his fulfilled by Amazon store. All of those widgets are in a big pile and all have the same packaging and barcodes. Whether you buy from random dude or Amazon, you're getting a random one from the pile.
I would strike that from the description. You never really own the transaction when it comes to Amazon. FBA customers are not your customers. You cannot communicate with them and have the kind of relationship you would have with your customers if you "owned" the transaction.
Case in point: Amazon can shut down your FBA account next Monday and you'd have no way to reach "your" customers unless you included some kind of a registration form with your product and they registered on your site.
Source: My wife used to sell on Amazon. Fucking nightmare.
There are zero sellers I want a relationship with on Amazon. Almost all spam and annoyance I get by email is somebody I bought one thing for who wants a relationship with me.
The vast majority of my shopping is transactional, and I want it that way. If I want a relationship with a seller, I can take care of making one
The most frightening part of the Senate bills are that they require Apple, et al to let people communicate with customers outside of the app store.
> There are zero sellers I want a relationship with on Amazon.
I understand. If we are talking about the 350 FBA sellers listing the same avocado peeler they all get from the same factory in China and private label under 350 different brands. Yeah. Could not agree more.
However, there are categories and products where you probably do want a relationship with the seller. Health and beauty products comes to mind as a potentially obvious one. For example, if there are recalls or any important notices pertaining to the products you bought, you would be well served to be on their email list. In addition to this, it is common practice to offer customers discounts for recurring business. This benefits everyone, the buyer gets the same product for less and the seller creates a subscription-based cashflow stream. Everyone wins.
If you look at it from the perspective of the typical mercenary FBA seller who took a $1,000 course to learn how to sell on Amazon, yeah, again, could not agree more. However, there are tons of sellers who honestly want to build a solid, reputable, caring family business that delivers good products. Most of these people work very hard --much harder than they did when they had a 9 to 5 job-- and it can take years before they turn enough of a profit to pay themselves a decent salary. I would caution anyone from seeing all FBA sellers through the same lens, that would not be an accurate assessment.
While I do understand your take, I'm not sure it's a net positive for consumers. Marketing to previous customers is a very effective marketing strategy. If you prevent that, small companies are losing one of the few ways they can compete with bigger operations. Otherwise they have to keep buying ads on Google and Amazon..
Yes, most mail from retailers is spam. But for a handful of small retailers I actually like their newsletters, because they remind me that they exist, so I remember them next time I order something.
That’s why you do FBM. More work on your part. But Amazon doesn’t control anything other than taking their cut. You list it, package it, ship it, initiate refunds and customer questions, etc..
FBM has its own set of nightmare-scenario issues. At the end of the day, Amazon can shut you down any day of the week, at any time. If you've done FBM long enough and have the kind of product that benefits from recurring business, you could survive post-shutdown by reaching directly to those who bought from you in the past. It can work. Sure.
I know a bunch of people who unplugged from the mothership starting by switching to FBM. The truth of the matter is that Amazon has such market dominance that being out there on your own might mean an 80% reduction in business. The exception is if you have very special products that are sole-source and well protected. In that case you could recover nicely to a decent run rate and make money.
I've realized that "Sold by Amazon" must not always be true Amazon when "Sold by Amazon" items could go in and out of stock at a frequency faster than reasonable and wondered if it was the same stock and real seller as "Fulfilled by Amazon".
Another thing Amazon does these days is real-time delivery time arbitraging on top of real-time prices. You may see an item be delivered by some date X, only to see minutes later it is available to be delivered by date X-2. To them it's another lever to pull.
They must have some game theorists/economists working on this.
"Sold by Amazon" should have only been called that if Amazon bought the items and had it in their warehouse. But their business "creativity" knows no bounds.
Former Amazonian here. When i was there, they made us take this antitrust training course that had things like "don't use terms like 'market share' in internal communications", but all along there were people doing this? I mean...
it is because humans use terms colloquially rather than with the utmost precision, and then it gets held up as if the person meant the exact precise legal concept. This is true always, which is why the advice this person got is also commonly given in lots of forms. For example, doctors are often trained in being careful in what they write down for the same reason.
The audit trail is always there no matter what, and this wouldn't change that
> This is true always, which is why the advice this person got is also commonly given in lots of forms. For example, doctors are often trained in being careful in what they write down for the same reason.
Alternative take: it is indeed for the same reason - to avoid incriminating yourself. You carry assumption that the behavior is not incriminating.
Doctors do commit in malpractice. Companies do engage in monopolistic behavior.
If such training were strictly to avoid illegal behavior, wouldn't it be better to train people in what the precise legal concept is, so that they can comply with the law? Or is behaving within the law a secondary concern.
In this case Amazon quite literally got caught by the AG of Washington state for breaking the exact laws their training tells them they shouldn't talk about. Why are you defending this?
Not to defend corporations, but they do. It’s repeatedly drilled down in you to reach out to the legal dept. That said companies care a lot about the legality of things and not necessarily the morality. And they hire people who would “get things done”. Consequently converting the legal training to “how to avoid to getting caught” training.
>That said companies care a lot about the legality of things and not necessarily the morality.
I worked for a fortune 100 company. We are humans, and our customers are humans. We absolutely have morals - at an individual level, and those morals influence how we work
Morals don’t matter when the shareholders sue board members for failing to uphold fiduciary responsibility. Just saying, the law influences how we work
This argument makes no sense to me. Yes some people and companies break the law. That is completely and totally orthogonal to whether the training exists for a given reason or not.
They also train people to not commit insider trading. It still happens. Does that mean the training exists simply to help them figure out how to not get caught insider trading, or to avoid an evidence trail?
You aren’t going to successfully train people en masse in something like antitrust law in the course of a few hours. That’s why law school isn’t a single day.
I’m not defending any illegal behavior here, I’m defending the training that says "please be careful with what you say" does not exist mainly to try to hide some useful evidence trail, which was the claim.
The level of cynicism in all this is impressively high, and the level of knowledge about antitrust is very low
The insider trading training is an excellent example: it does not benefit the company, and is done at an individual level, so the training reflects what the law says and what is not allowed. Individuals may break that.
Say that you are part of the executive team of Amazon, and want to take some illegal behavior like price fixing. Things that actually happened. You know it is illegal and want to avoid getting caught, so your communications only happen in person, and there's not really a paper trail.
Okay, great, you've set that up now. Now it's the day to day business at your company, and all different departments need to do their basic jobs to support that. You're still doing something illegal, and now it's spread across hundreds of people to support your illegal activity. The last thing you want to do is to have them writing e-mails about price fixing and kickbacks etc. How do you avoid this? Train your people not to mention certain words.
And guess what, that's exactly what they do.
Amazon literally committed a crime requiring many people to conspire. How is it cynicism to say that Amazon can conspire to commit crimes?
Your optimism is impressively high.
> Amazon: commits crimes
> OP: lol when I was at Amazon they told us not to talk about crimes
> You: These are completley unrelated! Let's stop this trope!
Could you please stop posting unsubstantive comments to HN? You've done it a lot, unfortunately. We ban accounts that do that, because we're trying for a different quality of discussion here. I don't want to ban you, so if you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.
This is standard procedure among any large company in a market. Ideally, antitrust should be proven by actions and not by “see! Your employees say you dominate the market! Take that!”
This. I’m not qualified to prosecute antitrust law; I’m not even a lawyer. How is it that I can throw the company under the bus just by misusing terms of art that I vaguely understand?
> How is it that I can throw the company under the bus just by misusing terms of art that I vaguely understand?
You cannot. As you've seen the frequency of antitrust judgements is very low, you're really unlikely to harm your company by saying anything. Don't worry about companies being “thrown under the bus”, their are fine, thank you.
The only reason it appears to be low is because newsworthy antitrust filings against big tech are few and far between. You can still be a target of the DOJ even if you're not working FAANG.
It sounds like pretty ordinary corporate training. The idea is that you don’t want ordinary workers saying things that sound bad in discoverable messages, which is very likely if there is the ordinary amount of speculation about things they don’t really know about.
Whether any particular thing actually is an antitrust violation is for the lawyers to decide. I guess they decided wrong?
It reads to me like the sexual harassment trainings.
Those specifically tell you what not to do to limit the legal liability of the company.
Nowhere in any sexual harassment training video have I ever seen anything saying that if you have the urge to sexually harass people to seek a support group or find another, less socially harmful outlet for your energies, not anything.
It's strictly about treating the symptoms and not the disease.
Although, now that I've thought about it, I guess this is more like, "use these methods to prevent yourself from observing sexual harassment so that you can't legally report it" so... yeah.
What are you talking about? A huge chunk of sexual harassment training is about stuff that is perfectly acceptable in non-work environments (asking someone on a date, flirting, etc).
If sexual harassment training was just obvious stuff that needs counseling to fix (e.g. harassing people after having advances declined), then corporations likely wouldn’t need sexual harassment training at all.
It’s mandatory precisely because it’s a bunch of behavior that is completely normal outside of work. Suggesting people get counseling if they feel the urge to ask someone at work out on a date is ridiculous.
Anti harassment training is mandatory because its a requirement for the Farragher-Ellerth defense. (Absolves corporations from paying damages to victims of harassment.)
> If sexual harassment training was just obvious stuff that needs counseling to fix (e.g. harassing people after having advances declined), then corporations likely wouldn’t need sexual harassment training at all.
[Citation Needed]
I'm pretty sure don't take the team out to a strip club as a work outing is always on the training because people keep taking the team out to a strip club.
Which is the point the person you’re replying to is making: Taking people to a strip club is a normal (personal preferences & judgements aside) and legal thing to do… outside of a professional setting.
The training is “please don’t do these things at work so we can limit our liability to claims” and not “these are completely unacceptable behaviours so please stop doing them”.
Sure, there is a general assumption that you, the person taking the training, aren’t actually a bad person who has urges to do illegal things. Would you like to take training assuming you are capable of these things?
Maybe there are bad people in the class but you can’t assume that.
But I have been in training where they give basic dating advice, like if someone makes an excuse that’s as good as a “no.” If they are interested they’ll find a way to reschedule.
I don’t think there’s anything “ordinary” about antitrust training. I think if’s a safe bet to say that you wouldn’t see that type of training in 99.99% of companies.
This isn't new to Amazon. Leaving written paper trails is often times attempted to be avoided by simple messages like "let's chat about this over the phone" or "let's chat about this over a cup of coffee".
This is also why you viciously respond with a follow up message saying "You would like to "discuss <controversial topic here> in a non-recorded/discoverable medium?"
Yes. I've seen that tactic before, and it is very easy to counter with the pre-message and a post-summary message with CC and BCC. The fun part is dropping in statutory and case law citations. Nobody expects actual well formed legal research, and it makes it more difficult for legal to try to wiggle out of or deflect the awkward questions if litigation ever eventually comes up. This baking in of accountability is a valuable tool to ensure people stay on their best behavior.
When your job is making sure the company operates in a squeaky clean manner, above reproach from all comers, you divest yourself of giving a hoot what your bosses think. This is a crucial part of being a professional. As a free agent in the workforce, you must take ultimate responsibility for what you enable. Your boss delegates and trusts you to handle operational concerns in their stead because no one can be everywhere.
>If you don't want to keep your job, you can just quit, you know?
Nope. I want to work in an ethical marketplace where the biggest scumbags don't set the rules for everyone else. I can also only be in one place at a time; so as a manager and delegator of work, I'm doing my part to be as shining an example to my employees of the level of professionalism I expect them to aspire to in the doing of the work I delegate to them, as I can expect no more from them than I live up to myself. The important part is holding the bar high. If my boss doesn't like the way I do things, that's cool. I regularly loop them in on roadmap, and let them know what I'm up to so they can leverage their right to modify, halt, or start a discussion on an exit; but they have no right to be left unburdened with the eventual consequences and legal compliance risks of their own decision making as allocators of capital. Heavy is the head, as it were, and when it isn't is when things start going to hell real quick.
This is called managing/delegating up, and maintaining your own integrity. Part of this is also being open and plain with superiors about what you're going to do up front, and following through with it to the letter.
It's not even restricted to tech. This kind of thing it is base level legal advice for anyone in any field that faces lots of lawsuits (for example, medicine)
Corporate training is partially about training you.
It's also partially about being able to show that you had the opportunity to learn. So if you act contrarily to the training, you can be fired and/or claimed a rogue actor.
The most interesting part of their training is that they only talk about actions that employees should be taking or not. It never considers the end result: being a monopoly. In other words, being monopolist is just fine, as long as people don't do any action that can be used as evidence against the company.
What you're saying doesn't disprove my point. Obviously they care about external perceptions, but this doesn't mean they think being a monopoly is a problem. In fact they want to achieve this result without the public realizing it.
This isn't about prevention. It's training to avoid recording damning evidence. The bad behavior can continue as long as it isn't written down. Preferably implemented in pieces that lend plausible deniability.
Even companies who are innocent, and don't have any damning evidence because they did nothing wrong, need policies like this. You can be innocent and someone can still sue you, find the suspicious-sounding messages, and use them against you. Proving your innocence may cost money and reputation, not to mention that since the justice system is imperfect, there's always a chance that you can still lose the lawsuit.
This is just the corporate equivalent of "if you're not guilty, you have nothing to hide". You damn well do have something to hide even if you're not guilty, and that's why companies train their employees this way.
You are confused. The "damning evidence" is usually only damning in the court of politics and opinion. That's where it gets used too. You can't prove an antitrust case on the basis of some random set your of 500k employees saying "market share" in an email (unless they are like c level exec). Think how stupid a basis for liability that would be - "we are breaking up your company because a fresh college graduate you hired a month ago said market share in an email". The end result would be to ban email.
This is why these emails get highlighted in press releases mainly. In court, it would have to be email from someone who matters. Look at the level of exec in the emails in the Microsoft case.
Those kinds of execs are often getting regular advice from legal counsel, so usually the lawyers think whatever they are doing is okay. That's also why you also end up with emails from them later. If you have been advised you aren't doing anything wrong, there is no reason to act like you are doing something wrong. They will happily email as a result.
...Unless you are aware fundamentally that the nature of litigation is not set ahead of time, and highly dependent on the receptiveness of a judge/jury at the time of litigation.
The Judiciary is completely free to "interpret statute however it wants in the presence of a reasonable and convincing explanation of why previous case law doesn't fit the bill". This is why even a lawyer's take should be taken with a grain of salt.
Sure, but when you are trying to prove a company did something as a company, particularly as a company, you are usually going to need evidence that someone with sufficient authority to bind the company acted. For something serious like antitrust, arguing the apparent authority of low level employees (vs actual authority of high level ones) has never been a winning strategy.
Data retention training is always about limiting liability. These are the sort of companies that delete emails after 18 months no matter how much that kneecaps the employees. No amount of training will change the behavior of the sociopaths calling the shots. They need their underlings to not ruin everything for them with careless mistakes. Any other story is just a cover because they can't state their true intentions.
Companies tell employees to delete emails after 18 months because there are two alternatives: 1) delete emails after 18 months (or some similar time period), or 2) never delete emails, ever. If your policy is "delete emails based on personal preference", someone can sue you in court and claim that the selective deletions of email is evidence of wrongdoing even if you just happened to have a full hard drive that day. And you don't actually need to be a wrongdoer for someone to claim this.
I worked at two Fortune 250s (both publicly listed) in completely different industries.
Both had antitrust training for all corporate employees not just leadership. I believe —but have no data—that this is common among publicly listed companies.
Is there any big corp that doesn’t do “never use these words” training? “We are going to crush the competition” has been taboo in emails since the mid 1990s. Not to mention a lot of words that should be avoided for sensitivity reasons.
> Is there any big corp that doesn’t do “never use these words” training?
As I stated I've never seen it, in the context of anti-trust. If your company has to have that in literature, they are already skirting and it's just a matter of time.
All the companies are buying pretty much the same training units from the same set of providers. If you haven't experienced personally at the American office in the big corp you claim to work out, I'm not sure what to tell you.
> If you haven't experienced personally at the American office in the big corp you claim to work out, I'm not sure what to tell you.
It's disingenuous to continue to move the goalpost out to a more general scenario than what birthed the thread. Re-read the specific issue at hand. You can go to the companies mentioned and there is no anti-trust training, for developers (of any level) that covers what phrases or words you can say. Whatever "generalized training" you are handwaving about does not contradict that fact. GL with whatever.
I have had the training in companies not in danger of anti-trust, but only when in a leadership position, not as a developer. And not a single-purpose anti-trust class, but as part of a business ethics class or similar.
Maybe it depends on the industry? I've worked in big companies with big interests in goverment-regulated industries and every single person has had to do this sort of training, regardless of role (there'll be a course every month, and big responsibilities like anti-money laundering and corruption get rehashed yearly).
JPMC didn't have antitrust in the onboarding stuff? I find that difficult to believe. The bank I work for tells employees to never discuss products or prices with competitors without going through compliance. It's not really emphasized (it's one bullet point amongst many) but it's there.
I just checked and it's in the JPMC code of conduct on page 4,
It's not unusual for required training for employees to be mandated in the aftermath of, say, a class action lawsuit. So maybe it wasn't the case when you were there, but became that way later.
One of my companies competitors (I'm not told which) was caught red handed bribing a government official someplace. Because of a very close look at all their practices - including the anti bribe training - the courts concluded this was a rouge employee doing something the company didn't want him to do (even though it would have greatly benefited the company) and so the company is still around.
Training is a part of a robust process to ensure that your company only does legal things at all levels. It is a given in any large company that somebody will do something immoral/illegal. The real question is it one person and so the company can fire the bad person and be done, or is it the whole company and firing one person is just making a scapegoat.
I'm confused why this is anti-trust. Isn't this how all wholesale vendor deals work?
Regular wholesale: "We'll buy 200 units from you at $20 each. I'll sell them for some other amount, you don't need to care about it".
Amazon in this example: "We'll buy 1 units from you at $20 each. I'll sell them for some other amount, you don't need to care about it. Finally, don't worry about the wholesale rate for a single unit, we will make another 200 offers like this very soon.".
Why is there a legal difference between buying in bulk once and buying 1 many times?
Disclaimer: I used to work for Amazon in Marketplace, but never on this feature.
It sounded to me like the problem part was where Amazon sold competing products, then used the agreement to price-fix between their own products and the third party's.
Example: Amazon sells a dongle for $20, the competitors sell them for $20. Amazon makes a deal with each competitor, then raises all the prices to $25.
(edit) I think this kind of example also: The competitor's dongle is priced at $24 on Best Buy. Amazon raises competitor's the price to $24, but keeps its own dongle priced at $20.
> The “Sold by Amazon” program resulted in prices for some products increasing when Amazon programmed its pricing algorithm to match the prices that certain external retailers offer to online consumers.
> As a result, when prices increased, some sellers experienced a marked decline in the sales and resulting profits from products enrolled in the program. Faced with price increases, online customers sometimes opted to buy Amazon’s own branded products — particularly its private label products. This resulted in Amazon maximizing its own profits regardless of whether consumers paid a higher price for sales of products enrolled in the “Sold by Amazon” program or settled for buying the same or similar product offered through Amazon.
A wholesaler sells to a reseller at their usual price.
Reseller deliberately sells less than RRP & sometimes less than their buy price. It's a good way to guarantee the reseller "owns" the market.
Then, if the reseller is big enough and has captured the market, has the leverage to tell the wholesaler to lower the wholesale price and/or the reseller gets it made elsewhere and becomes the wholesaler.
It's pretty nasty.
It happened to my family business. A big box chain sold the same products for less than their buy price. We were close friends with the wholesaler ( a timber mill), and the sales rep even went to the big box to get them to lift their price.
2 years after shutting us down, the big box store sells the same product, from the same source, for 50% more than we ever used to sell it for.
It's more nefarious than simple loss-leadering and undercutting your competitor's margins. That's business 101. Amazon is playing business 201. Amazon took over pricing for the widget, and then undercut that price with their own. Stay with me for a second because 201 is kinda complicated.
Widget usually sells for $25. Amazon agrees to buy 1 from you at $20 (you give them a volume discount because it's Amazon buying so you figure it'll sell like hotcakes. You still make a profit at $20.). Amazon then prices your widget on their marketplace for $30. Seems fine so far. The trick is that Amazon turns around and sells their widget, made by an alternate supplier, for $23.
Your deal with Amazon means you no longer have control over how much your widget sells for, just that you're selling them to Amazon at $20 and Amazon gets to charge however much they want.
To no one's surprise, your widget, priced at $30, doesn't sell because Amazon's is $23. You're not allowed to turn around and sell them on Amazon's marketplace at all,
so they just sit there at $30 and don't sell.
The “Sold by Amazon” program resulted in prices for some products increasing when Amazon programmed its pricing algorithm to match the prices that certain external retailers offer to online consumers.
As a result, when prices increased, some sellers experienced a marked decline in the sales and resulting profits from products enrolled in the program. Faced with price increases, online customers sometimes opted to buy Amazon’s own branded products — particularly its private label products. This resulted in Amazon maximizing its own profits regardless of whether consumers paid a higher price for sales of products enrolled in the “Sold by Amazon” program or settled for buying the same or similar product offered through Amazon.
Amazon is actually fixing the price that you are selling on Amazon matched to what other sites are selling. There's no point in leaving if you're selling your widget on other platforms for the same price.
That sounds like pretty normal branding. I can get a powered hub for $20 from BUNCHALETTERZ who will disappear without a trace next quarter, or $35 from Anker that I’m pretty sure won’t burn down my apartment.
Is that true? This sounds like typical white label type stuff that you'd see at the grocery store. Safeway sells Safeway brand X and also name brand X, and presumably chooses the prices for both.
The grocery store probably has less incentive to abuse the relationship since the shelf space both products take up in the store is limited and valuable.
There used to be a restaurant chain called "Boston Market" (there are a few left). One of their signature products was cooked rotisserie chickens. What killed them was not a direct competitor, but the fact that Costco did, and still sells a similar product at a one dollar loss per chicken. The loss leader is going on forever.
Well, the competitor did agree to sell the items to Amazon. Nobody forced them. They did it for economic benefit. So I don't understand the problem here.
I don't really buy that consumer protection and antitrust regulations actually result in a better free market. I think the market is better off doing it's thing rather than a bunch of politicians trying to make it more efficient.
What do you mean by "better free market?" Are you using terms like "efficient" and "free market" in their technical sense or are you just saying that you don't like regulations?
Definitionally regulations are a divergence from an ideal free market. Provably, under some conditions (which don't exist in the real world) a market will converge to some definition of efficiency. Practically, no politician cares about this.
Politicians aren't trying to make the market more efficient with regulations -- good politicians are trying to protect their constituents, bad ones are mostly trying to protect their donors.
The funny thing is IP laws are by definition monopolies protected by government. Every one of the big tech "quasi-monopolies" are sitting on a mountain of it.
Be careful, IP is a hodgepodge of things, like copyrights, patents, trademarks, and trade secrets.
To pick one: trade secrets are not a monopoly. If you figure out the secret ingredient in Coca Cola (by legal means), you are free to use that knowledge and even publish it.
Similarly, I have my reservations about whether patents are a good idea; but I don't mind trademarks nearly as much.
This is anti trust because it’s probably in violation of the sherman act and price fixing.
The anti trust laws are designed to prevent monopolies and promote competition… as Amazon is acting as the market here and simultaneously fixing prices and discouraging competition with them thats a no-no
They did bought the goods from him beforehand. And he agreed to sell. He should have considered the possibility that Amazon has option to later sell the items as a higher price. Isn't that obvious to any seller?
Amazon does not buy and keep a stock, they charge you for the privilege of selling in their marketplace:
> Sellers then bore the risk of having their products not sell in a timely manner, or at all, while still paying Amazon for things like storage fees of their enrolled products
It's about the consumer, price fixing removes the competition and consumer have to pay more than they would in a competitive market.
It's sort of a cartel.
I am Amazon, and you sell cat mugs. I offer you a "sold by Amazon" contract, which you accept.
I start manufacturing my own cat mugs, and sell them at a price that undercuts yours. You have no way to change your price, so your mugs no longer compete effectively with Amazon cat mugs. Most of your sales go away, because Amazon is so dominant as an online marketplace (NOT as a cat mug manufacturer).
This is anti-competitive because Amazon used its dominance as an online retailer to become a dominant cat mug manufacturer.
If the argument is that Amazon is a dominant retailer and sells its own brand goods to dominate particular segments then exactly the same applies to, say, Walmart.
How does the "sold by Amazon" contract relate to that?
Because it can create any product that is selling well, and at any price point, because it _also_ has the right to subsequently raise _your_ price.
You're selling dongles for $20. You sign a contract with Amazon. It realizes that dongles are lucrative, and starts getting them manufactured. Hey, it can sell dongles for $20, too. But then they're competing with you, because you both sell $20 dongles. So, solution, they raise the price of your dongles to $25, so yours become instantly less competitive.
Substitute Walmart for Amazon. Substitute corn-flakes for dongles. Substitute Kelloggs for "me".
That is the situation right now at Walmart. Kellogg's Corn Flakes are $3.28 for an 18oz pack. Great Value (Walmart own-brand) Corn Flakes are $1.43 for the same size package.
I think the big difference here is who takes on inventory risk. If a traditional retailer wants to buy something wholesale and then not sell it because their price is too high, then well, they bought the product and it's their problem to deal with.
In the Sold By Amazon program, it sounds like there wasn't a volume minimum or an actual purchase-for-resale going on. The inventory isn't on Amazon's balance sheet at all, if it doesn't sell then that's someone else's problem financially.
Walmart is given a wholesale price by Kellogg’s. Walmart’s choice is to set their markup over that wholesale price. On average, the wholesale price by Kellogg’s cereal would be $1.64 and the wholesale price for the GV would be $0.715.
It’s complicated for Walmart, because there is documented evidence of them telling suppliers what wholesale price they will _accept_, but that does not change that it is ultimately Kellogg’s wholesale price that is being met by Walmart.
Walmart? I mean they're on Walmart's shelves. I'm pretty sure Walmart sets the price for everything that's on its shelves.
I mean, Walmart could just choose not to sell Kellogg's Corn Flakes at all. If that was more profitable, I'm pretty sure they'd do that.
They sell their own brand at a lower price point for price-sensitive customers, they sell the "premium" brand at a higher price for customers who buy on the basis of the name etc.
Yeah. Key difference. If the kellogs flakes don't sell at a higher price then Wallmart loses out. It's on Wallmarts balance sheet.
If Amazon doesn't sell the brand they have a contract with and now compete with they don't lose out. It's not on their balance sheet. They don't buy that inventory, spend on that shelfspace, etc
Additionally I believe Amazon was pricefixing in cooperation with other retailers.
Just to be clear, the difference from wholesaling is that in your example, Amazon has the right to set your prices, but it doesn't buy anything from you?
If Amazon actually buys your cat mugs, and then prices them higher than its own cat mugs, such that customers buy Amazon mugs and don't buy your mugs, you still sold all your mugs and there would seem to be no problem.
But the vendor agrees to let Amazon set their prices in return for, essentially, being an Amazon-sponsored product. The vendor doesn't have to participate, in which case it can still set its own prices.
I can see the argument that it's price fixing if Amazon & the 3rd party both agree to sell at the same price, but even then I'm not sure it's anti-competitive or anti-trust when some other 3rd party can come in, see the higher prices, and decide to undercut them. Not unless Amazon get's all sellers of a product to agree, but the article doesn't directly allege that.
> Kroger paid money up front for your potato chips
I agree, the Kroger Purchase Order is currently in bulk infrequently (e.g. 100units once a week), but the Amazon Purchase Order is currently not-bulk frequently (e.g. 1 unit 100 times a week).
Meanwhile, "Kroger makes no representation regarding the maintenance of any specific retail price for Products purchased for resale."[0]. As I understand it, that means it can change the price at any time. If in week 2, Kroger prefers a lower price, it can tell the seller "Last week was $22, but now I'll only buy the potato chips for $20 and no more. Do you still want to keep selling to Kroger?".
I don't see how this is materially different from the case about Amazon. Because the reality is no merchant cares about 1 bulk order, they only care about continuous re-orders.
Not always. Products can be sold as "pay per scan," where the manufacturer maintains ownership up until the moment the barcode is scanned at checkout. The retail store then instantly purchases the product for an agreed-upon price and turns around to sell it to the consumer.
Tangent, but Clemmy sounds too close to clammy for an ice cream brand (example cited in article of company that went out of business due to fact that shelf space was too expensive).
1) But most supermarkets do this in similar ways. Not quite the same as a single entity, but close enough (more like a cartel?) that I'm not sure I see much of a difference.
2) This is the major difference in my mind, but other vendors can still sell for less, so I'm not sure how much competition is stiffled.
3) Well, they actually are. It's called slotting fees. They can simply be for warehouse storage and a place in the store, or at higher levels can be paid to have products placed in specific locations, e.g., eye-level on shelves. This seems similar to signing up for the program in the OP to have your product highlighted as an Amazon-sponsored product.
I don't like many of Amazon's practices, but I'm not convinced this particular one rises to anti-trust.
It's also worth noting that with 1 you can find plenty of farmers and small producers do complain about the anti trust issuese of supermarkets in the same way.
This is how retail works, though. You buy from wholesalers at $X/unit. How you price it, and whether you undercut them with your own branded unit, are decisions for the retailer and has been for hundreds of years.
The wholesaler still gets the sales contract they signed.
1) Amazon has the kind of market power that triggers anti-trust concerns. You can't get anti-trust concerns when you're a small player.
2) It sounds like Amazon is not offering to buy units at a set price. They're offering to give the supplier $X if they sell the item. That means that Amazon can decide whether or not they want to sell the item - and the supplier has agreed not to compete with Amazon.
3) Amazon isn't saying, "we'll buy 1...don't worry, we'll make 200 more offers soon." It's more like, "we'll buy 1...if we don't buy any more, you're now prohibited from selling directly on our platform."
Let's take it to the extreme and, for a moment, assume Amazon is trying to be evil. Amazon wants to push AmazonWidget and wants to push YourWidget out of the market. They want to price AmazonWidget at $25. They see that you're selling YourWidget at $25. It's a brand-name that customers will want at $25. Amazon calculates that you're probably making $18 in profit so the come to you and say they're willing to give you $20 per sale. You accept. Amazon then sets the price of YourWidget at $1,000 and not a single customer orders it. AmazonWidget becomes a huge seller.
Let's say that AmazonWidget costs Amazon $15 and they want to sell it for $25. You've been selling YourWidget for $25. By taking control of the pricing of your item, they can make sure that AmazonWidget doesn't have to compete with YourWidget on price. They can price YourWidget at $30 so that they make $10 whether someone buys an AmazonWidget or a YourWidget. Previously, they would have had to price AmazonWidget below $25 to deal with the fact that you were selling YourWidget at $25.
The legal difference is about using market power against someone and against consumers. Amazon is also trying to play both sides - as a marketplace where anyone can sell and as a direct seller. If you get someone to say that they won't compete with you in exchange for a deal where they sell your item and then they take steps to lower the sales of your item, that's a big deal.
By controlling the selling price of the item and prohibiting the supplier from competing with that price, Amazon controls how many get sold and whether it's more profitable for them to push users to different products.
As the article points out, the big issue is that the prices stabilized at higher levels. If the price was usually $25 before and is now usually $30, Amazon has taken steps to raise the price level by taking out competition. This hurts consumers (with higher prices) and suppliers (because it lowered the number of products sold and offered a way for Amazon to replace purchases of their third-party products with Amazon products).
How is this different from a supermarket deciding to raise prices on a third party product to favor its own? I think the key difference is that Amazon is both a marketplace for sellers to sell directly and a retailer. Amazon's dominant position in online shopping has been fueled by third-party sellers on their platform. If you the use that dominance to hurt those sellers and consumers, you're changing the game after people have gotten locked into using your platform. For example, sellers need Amazon because consumers have Prime. Consumers got Prime because of the wide array of third party sellers. When you then take steps that work against those consumers and sellers due to your now-strong market position, that's a problem.
Let's say that Amazon said, "we should be able to do what we want like anyone else!" I'd say they should - but every person that currently has Prime should see that subscription canceled immediately and be prohibited from being a Prime subscriber for 2 years. That way, Amazon wouldn't have the market power over sellers and consumers that it currently enjoys and alternatives might become a big platform. The problem, in my mind, is when a company creates rules, builds market power, and then wants to change those rules when it's in a dominant position. If they want a reset on that dominant position, that's fair - but they never want a reset on that dominant position.
I don't actually think Amazon really meant to do wrong in this case. I think it can be an area where it's not intent that matters. I'm guessing that their algorithms likely started adjusting the price due to the realities of their profit margins. Before, they had their AmazonWidget priced at $22 because it needed to be at least $3 cheaper than YourWidget. They wanted a $10 margin, but couldn't get it. Once they were in control of YourWidget pricing, it settled on $30 which is the $10 margin they want - and then there was room for AmazonWidget to be $25. That seems like the most likely scenario to me. Amazon started identifying good-selling products and thought they'd be better at optimizing sales and profits by controlling the pricing of them. They probably are better. The problem is that it started optimizing for Amazon and not for that seller and so if sales went down 75% on YourWidget, they didn't care.
But the issue is that Amazon took steps to reduce/prohibit competition and it ended up raising prices after they had built up enormous market power under different rules.
> I'm confused why this is anti-trust. Isn't this how all wholesale vendor deals work?
Amazon has to have it tough - it is often both a retailer and distributor at the same time. The problem here was getting multiple retailers (of which Amazon was one) to agree to set pricing (this is textbook price fixing). If I leave out the part about Amazon being the marketplace, this seems like a slam-dunk price fixing case. If we view it like a wholesale agreement, I think it's a lot harder to see what the AG was after.
Arguably the more important outcome than monetary damages is that the offending program is ceased. From the press release -
> Amazon will shut down the “Sold by Amazon” program nationwide.
So in principle the problem has been stopped. Now whether Amazon will make a new "Buy from Amazon" program in 5 seconds that will have slightly modified details is to be seen...
> Arguably the more important outcome than monetary damages
Every single consumer that bought a product from one of these third party sellers, or a matching product from Amazon, has been cheated out of several dollars. For each product, for each sale... that adds up to way more than $2.5 million.
And the funny part is that a few database queries could likely surface exactly who has been harmed, how many times, and a gross sale amount affected.
It's not great that corps get away with paying such small fines. But in a case like this, I surmise that it's a way for the AG to extract a fine that is big enough to be meaningful to some people, but small enough that Amazon isn't going to drag it through the courts for the next decade.
From the article, the fee is to support the AG enforcement, it's not meant as a meaningful punitive damage.
> In addition, Amazon will pay $2.25 million to the Attorney General’s Office, which will be used to support the Attorney General’s antitrust enforcement, which does not receive general fund support.
This is the part that surprised me most. So instead of the government making sure that the market is kept fair using taxation, the AG finances this function by extracting money for its own use from offenders? That seems fishy to me.
I would assume that the count includes the huge amount of people who sell cheap, unbranded Chinese products under a random all-caps name. So, not that surprising.
Many official looking order forms and paperwork in supply chains come filled out in all caps.
It's a descendant of all those forms you would fill in with pencil and they'd say "MUST HAVE CAPITAL LETTERS" for legibility.
I suspect that all those all caps descriptions come from when someone has quickly copied and pasted text from manifests and the like, directly into something customer facing.
> Why the all-caps brands for these? Is there some belief that it stands out more or something?
In some cases it may be the only thing the person knows how to do. When I texted something to the person who recorded my electricity meter in Shanghai, I got back the response "哈哈，THANKS".
They are most likely not switching language in their phone - you can see it with the full width punctuation. In Chinese mode, typing English is a little annoying to get case right. A lot of Chinese people don’t differentiate between case also.
To be totally fair, I have no memory of what kind of comma they used and the fullwidth one that I used represents an assumption by me. What stuck in my mind was the casing.
But other than that, yeah, I came to basically the same conclusion that you give here.
I’ve bought some of these all-caps items and some (probably over half) have been surprisingly good products. I’m not deciding between them and Apple usually, but between those brands on Amazon and the same products on Ali. Now that Ali shipping has been nerfed, I often buy from Amazon.
In 2014/2015, I would buy insurance cargo from truck accidents: I had the space and the ability to grab and store the items until I could resell them via secondary means: This usually meant working with buyers at stores like BigLots and other discount stores, but, occasionally I'd get electronics (which isn't something that those stores really wanted).
I came across a huge lot of LG monitors that were involved in some fender-bender. Out of the lot of approximately 24 per pallet, only two were visibly damaged, and I had 12 pallets worth of monitors and the cost per-pound evened out to approximately $35/monitor.
I would sell these monitors, which were retailing for right around $200/each new, for approximately $150 in "Open Box" condition on Amazon, and would consistently sell anywhere between 8-10 of them a week.
Amazon charged me:
Cost for getting my items to Amazon (Usually around 9-11/each, depending on season and how busy UPS is), Cost for storing my item in their warehouse (usually around $2-4/month, depending on season), cost for picking and shipping my item (around $30 because it was considered oversize), and the constant reminder that these weren't my customers, they were amazon's customers (customers would "return" items, so, I'd get the entire cost of the item removed from my seller account, because, Amazon wouldn't eat their own fees here, and then have to fight them to get my money back when that customer wouldn't return the item). Amazon also fiercely competed with me on these monitors -- they'd knock down the cost of their "new" items down to what my refurbished cost would be...cutting me out of the 'buy box,' but, losing what I can only assume is about $30+ per monitor wasn't something that they did for long, as after a week or so, the price would be set back at MAP until I'd go and build a new shipment of items into Amazon, set a price lower than theirs, and then they'd automatically bring down their pricing to meet mine.
Amazon's profit to me would be around 40% -- around 80 dollars.
In 2016, Amazon changed the rules so I couldn't sell the items as "Open Box" and would have to sell them as "Used" because I didn't qualify under the rules as a refurbisher.
(admittedly, by that time, I transitioned away from selling items on Amazon and use a different channel for the sales of these items).
There are a lot of snake oil salesman selling "how to make money on FBA" videos and courses online, but, the reality is that the only entity who makes money selling new items on Amazon is Amazon.
It was pretty obvious what Amazon wanted from its business partners if you look at abebooks, a site owned by amazon, but not visibly if you just look at abebooks.com. 'Independent' booksellers sell used books through abebooks, but never for less than amazon sells the same books.
I never realized AbeBooks was owned by Amazon, but I've never bought a book from there because the Amazon price was always the same or better. Now it makes sense why.
I do not have a reference right now, but I remember reading that one of the conditions for listing your product on Amazon is that you cannot sell it for less anywhere else.
>participating sellers had limited, if any, ability to lower the price of their products without withdrawing the product’s enrollment in the Sold by Amazon program.
This sounds similar to how traditional retail works though: If company $A sells products through big box store $B, there may be an agreed upon price (Apple does this), but $B usually has discretion over pricing, and might stop carrying a $A's product if $A wants to sell elsewhere at a lower price. In this case the seller could still sell on Amazon, just not as an official Amazon-sponsored product. So I'm not sure how this reaches an anti-trust level when it appears substantially similar to normal retail sales. In fact in supermarkets it's not uncommon for the store to sell its own competing products-- the store brand-- which seems to fit the Amazon situation as well.
although I think it's great that it's getting shut down I don't like this part:
Amazon will pay $2.25 million to the Attorney General’s Office, which will be used to support the Attorney General’s antitrust enforcement, which does not receive general fund support.
That’s the thing, they may not break up companies, or pursue bad actors to the fullest extent of the law if they depend on fines for funding. It creates perverse incentives… we’ve seen this with eg police departments over relying on fines.
The goal of the agency should first and foremost be the protection of the public, not to extort funding.
why are we operating national, natural monopoly services on a for-profit basis that fundamentally incentivizes this in the first place (rhetorical). Amazon deserves to be taken into democratic public ownership for nominal compensation.
I was surprised that the consent decree required the program to be shut down nationwide, but it looks like the program began in 2018 and was ended in 2020.
I wonder how this will play out globally as nationwide is just one nation and not Worldwide.
Certainly be interesting how this plays out and did have a quick dig too see if the EU is, or has anything in the pipeline, though nothing jumping out.
So this is a story that will ripple and certainly, thanks to Washington states work, there is a smoking gun.
Will Amazon proactively get on top of this Worldwide in other countries will be most telling.
But one aspect of companies doing wrong by consumers and respective authorities fining them that always irks me - the consumers who suffered and paid the price never get a slice of those fines. That and fines of large companies has in all effect, become a revenue stream for respective government's with the consumer getting justice in name only and the government's coining it, in effect at the expense of the consumers. Be those consumers of suffered such bad company practices, or future customers who will be paying indirectly for such fines.
After all, will they force Amazon to dig in and compensate effected/impacted consumers of such price-fixing? That would be nice. Equally, be nice if Amazon in good faith did the right thing by those impacted. One can but dream and hope.
One consequence of this I haven’t seen mentioned yet: price matching at competing retailers may no longer work.
I often end up purchasing items at local stores, which tend to have higher prices, but happily price match to items “Shipped and Sold by Amazon”. I can see how it can be hard to abide by pricing from any random third-party seller, but evidently even the “Sold by Amazon” items were third-party anyway.
"In addition, Amazon will pay $2.25 million to the Attorney General’s Office, which will be used to support the Attorney General’s antitrust enforcement, which does not receive general fund support."
Not sure if I am more concerned that this puts a heavy incentive for the AG to go out and "get funding" from companies or that they are not funded to do this work.
$2.5 million is just over a half hour (33.6 min) of net sales reported on Amazon's 2020 annual report, or put another way, 0.0006% of net sales. I don't understand why the WA state attorney general considers that any sort of punishment.
I'm not anti-Amazon and don't even understand the alleged bad behavior. My point is that if governments want any corporation to behave, then the punishment has to be enough to deter future bad behavior. I don't see how this crosses the threshold where the corporation even cares about fines like this.
Now if courts start imposing fines/settlements/whatever that are double digit percentages of net sales, then I'd bet corporations would care deeply about it and start training their executives how not to be evil, and HBR would write articles about renewing ethics in corporations, and consultants would start offering ethical business practice training, etc.
Because the 2.5 million isn't a punishment. It's to "support the AG's anti-trust enforcement which does not receive general fund support". Did you even read the link?
The punishment is that they can no longer have this program.
Every time I read one of these articles on modern antitrust, I get frustrated by the laws themselves. Win or lose on the case, I don't think they do much.
Everything seems to be based on a marginalist theory/formalisation of what monopolies are and how they affect economies. The theory/law seems to target very specific sets of economic dynamics.
IRL, monopoly is a more nebulous concept. Size, power, ability to structure the market are often its primary characteristics, not a simple more-profit-less-utility outcome that can be charted with a simple model.
Actual antitrust, I think, needs to be more like an industrial policy set than what exists currently. Whatever the outcome of current antitrust actions, the monopolies stay mostly intact and unharmed. What's the point?
Marc Lore sold Diapers.com and his others sites to Amazon and worked for them for a couple years.
He then left Amazon and founded Jet.com. He ran Jet for a little bit and then sold it to Walmart. Walmart put him in charge of their US e-commerce sales, and they shut Jet down and pointed the domain to Walmart.com.
He left Walmart in recent years and I’m not sure what he’s up to currently.
I feel mixed about this because "sold by Amazon" meant that if there was a problem I got to deal with Amazon customer service rather than trying to get service from some Joe with a mailbox 3rd-party reseller.
Yes, I often knew I was paying more and explicitly chose the SBA option as a loss-risk reduction strategy.
Like you, I am willing to pay a extra for “Sold by Amazon” for the reliable customer service and return policy. But I do not like Amazon coordinating with other sellers to fix the price and would want them to compete head-on.
if this "fine" would have been given to me proportionally to my income, i would have to pay 0.33 cents. i see no initiative to stop inventing other creative ways to do business.
From my understanding (I may be wrong), rent-seeking in the economic sense is not literally about receiving payment to loan another party an asset (e.g. car rental), but about engaging in zero-sum or negative-sum economic activity.
For example, patent troll companies would be rent-seeking because they don't create any value for other participants in the economy (except for perhaps lawyers!). Amazon's primary retail business could also be seen as rent-seeking to an extent because their massive market share essentially forces businesses to sell through their platform and give them a 10-15% cut of the sale.
AWS, on the other hand, is (or at least was) a genuinely innovative solution to people's problems. It gave small organisations access to supercomputers at affordable rates, in a non-monopolistic way, and in turn created much more wealth for the broader economy than Amazon themselves extracted through AWS fees.
It snowed really hard here recently. I went to buy two plastic sleds on Amazon, the type you find at a Walgreens for $5. They were $70. I've pretty much curbed my Amazon use for anything but niche hard to find items at this point.
Giant cheap plastic things are essentially a worst-case use for Amazon because the individual delivery cost is most of the price. When you get a 5$ sled at Walgreens, it's cheap because you get in your car and do the last-mile logistics yourself.
That's what Amazon has done. Price fixing and control of the competitors inventory. Damn bastards.