Hacker News new | past | comments | ask | show | jobs | submit login

FBA seller here.

A lot of mom and pop businesses (~$20 million) have been built on Amazon over the past 10 years. Most of us are in the $250k to $5 million dollar range.

The impact of Amazon’s monopoly power is felt big time by us as we’re being squeezed with no place left to go online especially post-iOS change.

Our second option used to be the Facebook/Instagram/TikTok to Shopify connection but with that being dead in the water most of us have had to commit 100% to FBA to be able to stay afloat.

With the increase in inflation and Amazon abusing its power to significantly raise its prices for FBA and force us to use its advertising services our revenues have been severely impacted.

This doesn’t include their unwillingness to meaningfully fight counterfeits

Or that they penalize you if you attempt to drive sales elsewhere with lower pricing on other sites

Bloomberg did a write up on this a few months back:

https://www.bloomberg.com/news/articles/2023-02-13/amazon-am...




From the Bloomberg article :

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

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


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

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


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

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

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

Rinse and repeat.


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

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

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


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

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

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

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

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

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

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


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

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


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


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


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

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


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

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


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


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


Maybe not to you


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


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


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


OK, that makes a lot more sense. Thanks.


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

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

"Show me a business" is quite vague


Why not McMaster Carr or even Digikey?

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

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

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


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

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


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


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

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


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


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


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


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


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


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


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


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

Unless, if the price wars are never over.


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

Almost never happens like that.


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


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

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


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


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

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


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

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

More important than how you vote is how you buy.


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

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


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


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


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

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


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

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

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


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

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

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

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

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


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

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


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


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


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

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


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

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

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

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

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

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

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

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


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

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


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


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

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


I'm aware.

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

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

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


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

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


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

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


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

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

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


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


The problem is being both the platform and a competitor.

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

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


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


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

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

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

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

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

Who would defend that kind of scummy action?


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

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


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

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

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


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


Shortsightedness is the harm.

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

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

Monopolies are never good for the consumer.


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


Amazon is the rent seeker here.


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


How does it victimize people?

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

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


Are business owners not people?


Clearly I included one too many words:

How does it victimize?


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


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

There is no victimhood if the business voluntarily transacts.


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


Whoa buddy.

That’s a hell of an assumption.

1. Manufacturing does not happen in America anymore.

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

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

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

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

- Less accounting and bookkeeping jobs

- less marketing jobs

- less design jobs

- less seller fulfilled packing and logistics jobs


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

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

- Amazon charges a fee to list on their site.

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

- Buyers are cost sensitive and buy the cheapest product.

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


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


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

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


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

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


Consumers without jobs can’t consume.


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

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


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


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


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


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


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

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


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


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


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


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


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


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


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


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


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


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


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

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

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


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


Yeah all for < $200 shipped!


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


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

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


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


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


Yes. Curation is valuable.


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


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

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

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


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

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


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

Good fat margins are a result of an ineffective market.


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


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

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


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

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

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


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

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

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


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

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

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

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

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

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

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

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


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

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

Kinda like app stores.


Comparing to Apple, Amazon margins are thin.


You’re basically comparing despots though.


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


> and penalizing sellers offering lower prices off-Amazon

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

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


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


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

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

How is that anti-competitive?


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

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


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

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


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

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


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

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

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


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

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


Yes. I am a free market enthusiast.


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


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


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

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


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


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

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

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

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


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


Did not know about it - is it new?

Wonder what additional fees are associated with it.


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


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


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

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


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

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

* Solo Stove - dozens of identical knock-offs

* Power screwdrivers - Nearly limitless variations of the popular brands

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

This continues for nearly every single category.


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

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


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

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

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


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


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


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


Amazon is also the middlemen.


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

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


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


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


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


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


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


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


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


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

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

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


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

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


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

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

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

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

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


Nice! I remember her argument regarding Amazon.

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

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

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

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


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

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


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


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

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

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

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

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


? Sure there is

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


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


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

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


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

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

I don't know myself


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

Is there such a rule for fulfillment and delivery?

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


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


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


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


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

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

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

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

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

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


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

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


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


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


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


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


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

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


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

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


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


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


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


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

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


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


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

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


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



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


You have a hard time sympathizing?

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

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

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


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

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


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

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


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

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

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


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

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


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


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


I ran a small FBA business for a year nowhere near any scale and it was an interesting lesson. People who weigh in on these tech topics should actually try these things out to understand them better.

It's nothing like listing on eBay where there's some haircut off the top and that's that.

There are fees for - accepting inventory, holding inventory, returning unsold inventory, shipping sales, processing returns, destroying returns, transaction fees, ads to promote your listings in market, and probably 5 other things I forget. Depending on the fee it is - fixed, % of $, weight based, volume based, or some combination.

The fees change constantly with not much notice. So every time you think you've got just the right size/weight/price balance you get screwed. And where else are you going to go?

Like Uber drivers, I imagine some % of FBA sellers don't know they are losing money in real time. You need to do some decent accounting to track as all these different fees hit at different times. It's not like Amazon gives you the data & tools to track your all-in costs per sale.


Disclaimer: Former FBA seller here.

> So every time you think you've got just the right size/weight/price balance you get screwed. And where else are you going to go?

You've skirted around the obvious question: Why did you pick FBA to begin with? Amazon sellers existed long before FBA. They did their own shipping, so almost none of those fees apply. Many sellers continue to do well on the Amazon platform while not being part of FBA.

If you can't succeed without participating in FBA, then all that's happened is Amazon created an environment for previously unviable businesses to succeed, and has merely tightened it.

Edit: Amusing that this comment is being downvoted, whereas my other comment saying pretty much the same thing is being upvoted.


I think a more obvious question is how are Amazon making this possible if it's not profitable otherwise?


Amazon gets to negotiate good shipping rates, and has larger economies of scale than a regular business can achieve.

In general, cost per unit is cheaper if you have more volume.


AWS works this way too but I’ll get dogpiled by Amazon sycophants and other people who have built their careers around getting witless companies sucked into the Amazon machine.


Steve gave examples for the different kind of fees and that it's hard to track them and why. I wanted to ask you for examples for AWS. Would be good to know concrete pitfalls and traps.


egress fees, inter-DC transfer fees, IP fees, ebs storage fees, transactional fees on things that are transactional. If you don't carefully engineer everything you'll get left with a $15,000 AWS bill. This doesn't cost Amazon anywhere near $15k to provide, so they just "waive" the fees if you promise to be a good little user.


Don't disagree with this, but this is the same in almost all cloud providers. Want to get started with Digital Ocean's app platform? You're paying for Container Engine to store your containers, then App Platform Business just to support scale-outs, then multiply this for the number of services you're deploying and make sure you don't have egress overages etc etc.


I've never gotten a grand for deleting digital ocean block storage devices, though!


At least AWS gives me an invoice each month with a break down of fees. GCP just sends an invoice for the total amount. No detail, no breakdown. And I have never gotten any of GCP's many different pages under their billing system to spit out any numbers that make sense. Pick your poison?


Check out https://cloud.google.com/billing/docs/how-to/export-data-big... - you can configure GCP to spit out pricing data to bigquery, to be queried however you like.

(I don't think it produces a volume of data that escapes the free tier, but I'd have to check)


If I remember correctly, they charge for the BigQuery table you use for the detailed export. In other words: there's a charge for seeing detailed charges!

All other clouds provide a detailed cost breakdown report for free.


what a grift


> There are fees for - accepting inventory, holding inventory, returning unsold inventory, shipping sales, processing returns, destroying returns, transaction fees, ads to promote your listings in market, and probably 5 other things I forget.

Have you ever run a business where you have to manage your own inventory? What you listed and likely the 5 things you omitted constitute real work. Perhaps amazon's fees are capricious but they're doing all the work for you. You can manage your own inventory and shipping logistics and still sell on Amazon


Those fullfillment fees are nothing new. I worked for a publisher thirty years ago and they had a similar network of fees. The only difference was they were predictable in that the fee schedule changed only at time of contract renewal.

Whats different is that the fulfillment centers then couldn't see our books and weren't looking over our shoulder seeing our accounting figures, so as to grab the profits the moment it crossed the threshold of feasiblility.

Uber was easy and profitable in the beginning and clearly a superior value to car services and cabs. Many drivers took on debt to buy bigger better cars, never imagining the goalposts were adjustable by design so as to centralize all the profits.


It is obscene, like Ducth East Indian trading corporation, or Rockerfeller.

People will walk away, there's no choice and MegaCorps know this, so they will subtly lock down movement.

Medium sized businesses are the buttery smooth, slippery slope to hell these days.

Attention management and product discovery has to be done by permenantly white organizations, monasteries, regulated-to-inaction government arms, independent offshoots of a benevolent billionaire's philanthropy...

The panopticon doesn't just effecy day-to-day life... it also strangles the power and wealth of businesses to death.

I have been saying it for years, and people just dismiss it, why would a billion dollar company prey on a million dollar company, they have bigger opportunities...

Well. There it is.


The nature of Uber being easy and profitable in the beginning was a heinous dishonest trap engineered by venture capitalist subsidizers.

It should be illegal to convince people economically that a certain lifestyle is worth switching to when you are keeping secret your plan to slowly boil the ocean tweaking it so that you can get your exit.


Ebay doesn't do fulfillment, which is why they take a smaller cut.


Correct. My point is that people only casually familiar don't realize how vertically integrated the FBA model is.

FBA is like eBay, PayPal, FedEx, Google Ads and a warehouse all wrapped into one. But they charge you varying types of fees based on different measures, at different times, for each of those parts of the stack. And you cannot cross shop, mixing and matching other vendors in to keep them honest on pricing.

It's easy to use, but you are locked in to their stack.


Why shouldn't they? You've arranged to have product you didn't create shipped to a warehouse you don't operate to be stored by a system you don't maintain to be sold on a storefront under a brand you made up and that you didn't create to be fulfilled by a shipping apparatus instead of you going to the UPS Store. What exactly are YOU doing here that merits a payday? Mediating a relationship between Amazon and a Chinese manufacturing firm? They already have tons of those.

The entitlement these entrepreneur types exhibit is the economic equivalent of wind-drag. If buying stuff from random AliExpress sellers and charging 300% markup to sell it to people who don't know better on Amazon isn't working out for you, maybe you should find a way to contribute to the economy instead of just inserting yourself between existing profitable businesses and demanding money for sending some emails.


If it's legal they should do it because it's evidently profitable. If it's not legal then they shouldn't do it because it's illegal. Which is really the question at hand.

You're criticism seems to be grounded in a distaste for the kind of business being done (and I think it's quite fair to be critical of the business model based on cheap Chinese labor). But that's not really relevant to the question of did Amazon utilize anti-competitive behavior that violates the laws that govern how businesses are allowed to behave.


> If it's legal they should do it because it's evidently profitable.

Is it? The moaning from higher in the comment tree seems to disagree with that assertion.

Maybe it was once profitable, but it seems as Amazon's reputation for hosting tons of cheap resold goods gets worse, it's becoming significantly less so. I personally have known for years that it's possible to oftentimes find the gadgets sold for $15-20 on Amazon on AliExpress for a few bucks. This isn't exactly arcane information anymore.

> You're criticism seems to be grounded in a distaste for the kind of business being done (and I think it's quite fair to be critical of the business model based on cheap Chinese labor).

My criticism is that the same people who cry from the rooftops about how free commerce is essential and how they have a right to sell marked up goods under any name they like to people who can't trace their supply chain have zero basis to complain when consumers get wise to their shenanigains and go elsewhere. It's literally this kind of "business owner"'s fault that Amazon is becoming near unusable now. I'm not shocked one bit that Amazon is cracking the whip; their reputation is on the line and has been trending steadily down for years.

"Buyer beware" they chant. Until the buyers start bewaring, and then they start whining about unfair competition and high fees for their store that is entirely operated by a third party and literally cannot exist without it.

Amazon is no angel here either of course. They have monopolized the absolute shit out of online retail, one of the ways they did was offering reseller services and getting businesses on their platform in the first place. Neither "side" of this is right, per se. Both of them would send me as a customer up the proverbial river to make a single dollar. As far as I'm concerned, them fighting in court is strictly entertainment, apart from whatever precedents get set that might affect other businesses I actually give a shit about down the line.

But like, the businesses I give a shit about are like, local ones. Ones run by people, to serve people. Not ones pulling tag clouds from trending social media topics or buying ad space on instagram to sell an egg beater shaped like a cat for $35 that they got from a Chinese manufacturer for $5.50/10,000 and dropshipped to people. This is just that, with an extra step. And the entity that's the extra step is realizing how raw of a deal it is, and they want a heftier cut to put up with these middle men. And on that particular point I don't blame them one bit.


> What exactly are YOU doing here that merits a payday?

The hard part. Finding a product people want.

If that were so easy, Amazon would just be a store, no sellers. That part they can't do themselves.


If you can do the hard part, then do all the easy parts and leave amazon out of the equation.


It's always a signal that you're on to something when you get a bunch of pedantic rebuttals like this. Attacking the central argument isn't possible, so they nitpick.


You literally just said that they did the hard part, which is apparently identifying a product that consumers want and cannot buy. The commenter then says: why don't they just do all the apparently easy shit, which is making it, holding the inventory, shipping it, and handling returns/customer service.

Maybe your point just sucks because finding some cheap garbage on AliExpress that you can sell with instagram ads isn't actually all that hard, or that much work, which is probably why this exact business model was sold to people who, as stated by people selling it, had low skills and no interest in acquiring them, so they can generate passive income by operating an automated storefront on Amazon.


They did the unscalable part. That better? Are you happy now? Can you go find something else to nitpick?

> finding some cheap garbage on AliExpress that you can sell with instagram ads isn't actually all that hard

It's very hard. What you're missing are all of the thousands of people who try it and fail. And you see one person succeeding and say that's easy, they're just buying shit from China. No, they combined skill and a lot of luck to find a product in China people want. That's not just ordering shit from China. If it were, Amazon would do it themselves and cut out all of these middleman. Which they can't, because it's not scalable. Which was my original point.


Unscalable is not synonymous with hard for the vast majority of people. If you communicate confusingly, you'll be asked for clarifications. That's not nitpicking and you can avoid it by using words for what they're for.

> What you're missing are all of the thousands of people who try it and fail.

It's not easy or hard. It's lucky. It's getting your ad seen in the right place with the right audience and taking off with enough sharing to build virality. Then your store will do a brief burst of good business before you fall back into irrelevance and continue.

It's highly analogous to gold rushes. And then as now, the people who get reliably rich off gold rushes aren't mining gold, they're selling shovels and pickaxes, namely: hustle influencers, shopify, and indeed, Amazon.

> That's not just ordering shit from China. If it were, Amazon would do it themselves

Buy some Amazon Basics stuff and check where it's made, then get back to me.

> and cut out all of these middleman

Which is what they seem to be doing.

Like again, for emphasis: Amazon is not a good guy here. They are neutral, at best. But I have very low sympathy for people who build their entire way of life on one single platform that could at any moment tell them to kick rocks. It's bad when YouTubers do it, it's bad when instagram influencers do it, and it's bad here too. And all of these usually end in similar ways. You're only as good as your last post, your last sale, your last quarter of profits and if your and the platform's interests diverge enough, you'll be dropped like a flaming bag of dogshit.


> Unscalable is not synonymous with hard for the vast majority of people.

> It's not easy or hard. It's lucky.

Great, thank you for teaching me about the English language. None of this addresses a single thing about my point, it's just nitpicking my choice of words.

Use whateeeeeeeever words will make it through your compiler, insert those in place of mine - and that's what I meant.

> Buy some Amazon Basics stuff and check where it's made, then get back to me.

> Which is what they seem to be doing.

Nitpick 2, Electric Boogaloo. Now you have a problem with the way I've used some other words or the absence of some qualifiers.

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


> Use whateeeeeeeever words will make it through your compiler, insert those in place of mine - and that's what I meant.

Until I do it incorrectly, and then I'm deliberately misconstruing your point into something you didn't say. Or if I do it in a way you feel makes you or your argument look stupid, at which point I'm arguing in bad faith.

No thanks. If you'd like to discuss things I'm happy to do that, that's why I'm here as Obi Wan says. But I'm not responsible for steel-manning your point for you because you lack vocabulary.

> Nitpick 2, Electric Boogaloo. Now you have a problem with the way I've used some other words or the absence of some qualifiers.

This is still not nitpicking. You have repeatedly put the notion of product acquisition on a pedestal, including the fact that pulling goods from China is this difficult, laborious task (which, it does take labor, that is true). But Amazon knows how to do that, it's basically how it became the retail juggernaut it is.

And that includes Amazon Basics products, which without even looking at one, I'd be willing to bet non-insubstantial amounts of money are manufactured mostly in China. That doesn't make them inherently bad: Chinese firms will make your products as good or as bad as you're willing to pay for.


> Until I do it incorrectly, and then I'm deliberately misconstruing your point into something you didn't say.

That's what you're doing now, aside from pretending it isn't deliberate.

I strongly suspect all of you are Amazon astroturphers, so I'm going to disengage now.


No one is nitpicking. They just don't buy your argument."nitpick" implies a person is addressing a minor detail and not addressing the central point. This person, and the comment above (by me) is directly addressing the central point you made, and saying it's weak.

Building all the infrastructure required for FBA is much more difficult than choosing products. The proof is in how many people have done one v the other. Amazon does a decent job on both sides - building the infrastructure, and figuring which products to sell, at scale (they do 100's of billions of non 3rd party sales every year).


I rephrased it to accommodate the nitpicking and you completely ignored it, going right back to hard/easy rather than scalable/unscalable.

FBA is scalable.

These people are doing the unscalable part.

"But I was nitpicking whether the word nitpicking was accurate"

I'm not choosing a new word, get out your thesaurus. Then read this: https://en.wikipedia.org/wiki/Principle_of_charity


And it's still wrong. Amazon does 100s of billions of 1st party sales. As does Costco, Walmart, Target, and probably a dozen other stores I'm not aware of. It scales, big time. Choosing products to sell when you have a giant distribution engine is one of the most scaleable things in business.

If you want to trot out the principle of charity, it goes both ways. You assumed people were nitpicking. It was wrong. Every way you want to spin it by changing words, wrong.


> Amazon does 100s of billions of 1st party sales.

And the remainder is not scalable. All of that done by their sellers. As evidenced by the fact that they are not doing it themselves.

I'm beginning to think this thread is being astroturphed. All of you are employing an identical strategy of latching onto minor issues with how things are phrased. A standard PR tactic. And Amazon has a long documented history of astroturphing.


Yes. Anyone who disagrees must be engaged in nitpicking, PR tactics, and astroturfing. This all seems very rational. Lina, is that you?


Do you know when the astroturfing checks come in by the way? Also is that W-4 income or am I contractor?


You are human? You must be amazon's first gen astroturfing infra, mechanical turk style. I'm part of amazon's skunkworks Astroturf-LLM service. Automated, at scale astroturfing. I believe we will make it public facing via AWS soon.


Fucking AI taking our jobs


Oh yes, Amazon Inc., famously they have a hard time finding out what customers want.

Come on.


That part they can't do themselves at the same scale as all of the sellers can.

That is what I meant.


I had to look this up, so for other ignoramuses like me:

FBA is Fulfillment by Amazon, where you sell things on Amazon and they handle payments and shipping to customers.


it's a genius business for a "retailer"

normally they'd need to pay for storage, stock, liquidation of stock they didn't sell, returns etc

and instead now you pay for all of that for them

and what do you get in return?

   - a listing on page 17 of their ever increasingly shitty website behind legions of MINFARTO, PATRONICS and GIBRANKER aliexpress garbage
   - customer service staff with an inability to understand simple english or basic problems
   - your genuine stock mixed with counterfeits, that then they penalise you for
   - paying to give your sales information to them as a potential competitor, as if you do well they'll ripoff your product
and they take essentially absolutely no risk whatsoever

not a good deal at all


I would believe those are actual brand names.

Has anyone created software or a web site to generate hilarious Amazon brand names automatically?

Edit: Looks like there are lots of AI-fueled Amazon/business name generators. Most of the names weren't as funny as your examples, though I got some good ones (electrofakes.com, etc.) from prompts like "low quality tech products" and "cheap knockoff technology products."

Another site gave me the more Amazon-appropriate LAMOFY, HOROLY, YORBAX, etc. (all with .com domains and premade logos.)

As the NYT noted, "Amazon is to fake products as Facebook is to fake news."


I mean, MINFARTO has legs.

But then again, I remember seeing COBY products right next to SONY products and I guess they're still around. :)


SQMY is my fav SONY 'tribute brand'


My favorites are HILETGO, KeeYees, AITRIP, "Oi ya gai", Treedix, and Gikfun.

I bought products from all these Amazon vendors last year, hilariously they're still around.


HiLetgo is legit, they've been around for quite some time and make decent ESP32 boards among other things. You can tell the FBA placeholders from Alibaba drop shippers because they're almost universally six letters and all uppercase like MOREPI; because this is enough for them to get a trademark to participate in the Amazon Brand Registry and get reduced seller fees.


YoDoIt, the iFixIt knockoff, always gets a laugh from me


Nothing can beat ASHAMED. (Yes, really.)


Oh and if you want your inventory isolated so that it doesn't it mixed in with counterfeits... that's another fee.


Yeah, there is no risk spending billions on fulfillment centers. Amazon has never blown billions by spending too much on that.


And the vast majority of the products are just rebrands from Alibaba. As a matter of fact, there's an entire economy centered around finding products on Alibaba to resell on Amazon.


It's a super interesting segment there are like millions details for the system to work even if the basic product is the same you can have your own barcode and serial number label attached, you can personalize the packaging, you will have to translate the manual, the are entire microverticals that exist just between the no brand manufacturer and the guy flipping the product on a marketplace even before shipping takes it out of the factory you're already paying like four or more services provider, plus coordinators to make all that happen.


Not to be confused (as I was) with FOB, free on board, a term in commercial sales law, especially wrt international shipping: https://en.wikipedia.org/wiki/FOB_(shipping) I wouldn't be surprised if the similarity in acronyms isn't coincidental as in the abstract there's some conceptual, if not legal, overlap, and Amazon may have been aiming for something that read like authoritative legalese--the legal department must "always be selling" no less than the sales department. But neither would I be surprised if it was coincidental.


I think this is basically becoming a de-facto monopsony for some folks:

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


wow... that BB article makes me sad.

https://archive.ph/yw3Bv

In 2016, they collected 35.2%. In 2022, they collected 51.8% in fee.

That's insane.


This is not a defense of Amazon.

A neighbor of mine who makes high end silver jewelry was doing fine with the gallery he used (in Santa Fe). The gallery collected about 30% of his sales price in fees.

Another gallery approached him, asked to represent him instead. They took 50% in fees. He switched anyway.

His income went up (and stayed up). Presumably the new gallery provides some combination of better environs, more and/or different customers, better salespeople.

It still seems wrong that fees could be this high, for a jewelry gallery or for amzn. But it shouldn't be assumed that the high fees necessarily mean reduced income for the original seller.


"But it shouldn't be assumed that the high fees necessarily mean reduced income for the original seller."

I agree. It just gets passed down to the customers. Most of my shock was directed at the 50% increase in fee in just a few short years. You can't do that without having a lot of leverage.


> It just gets passed down to the customers.

That's a common but not an accurate belief:

As a business owner pricing a product or service, if your costs increase you can either take the marginal cost out of your net income or increase the price.

Taking it out of your net income is simple: You keep prices the same, revenue remains the same, and profit drops a bit.

Increasing the price is more complex; you are changing one component in a system of dynamic feedback: When you raise the price, fewer people buy your product, so the outcome may be less revenue and less profit. The impact of price changes on purchasing is called elasticity: Some products - e.g., fancy restaurant meals - are easily forgone and are thus price sensitive. Others, like necessary healthcare, can be priced extortionately and people will still buy it.

Arguably, if you are the mythical optimal manager, you've already priced your product to maximize revenue and therefore any change will decrease it. In that case, price increases will only worsen your profit.

The reason for your price increase is orthogonal to the customer's purchase decision - you raise the price, they buy less. They usually don't know and don't care why - do it for greed, to cover additional cost (and maintain your beloved profit margin), because your finger slipped on the price-your-goods app, whatever.


It's not just elasticity. The main weight on your prices is your competitors' prices.


And the quality of your product and what customers are willing to pay, though that seems a fading requirement when customers are 'everywhere.'


> they collected 51.8% in fee. That's insane.

Back in the 80's, my company sold compilers through third party mail order houses. They all demanded providing the product to them at 50% of their selling price.

It's what having somebody else advertise, collect orders, process payments, ship, and deal with returns is always going to cost you.

If it's unacceptable to your business, sell directly. My company did both.


You can't offer lower prices directly so Amazon forces all your customers to pay for their services whether they get them or not.

Or you can not be on Amazon but "just don't sell Windows if you don't want to pay extra" didn't work for Microsoft...

Amazon charges for all of those things still. This isn't 50% off and we deal with everything it is ~50% but you still take all economic risk.


I neglected to mention that the mail order resellers demanded we provide them with product at 50% of the price we retailed it. So, if we lowered the retail price, we'd also have to lower the wholesale price.

Nobody was being stupid here. Or maybe I should say that one learns the ropes fast or goes bust.


I am pointing out that your example includes risk transference. Unless they also charged you for shipping, storage, and returns.

There is a difference between "let me buy from you and I need room to make a profit" and "you can sell through me but you bear all costs but I still want my profit".


Yup, it makes me wonder what % of consumer goods for sale via FBA are from retail theft rings. 52% fees on stuff that cost you $0 ain't bad. Otherwise, it's very very bad.


The 52% is dominated by small crap items that basically cost $0 in bulk from China (cables, phone cases, etc)

On these items Amazon fully realizes they can charge 90% and the seller is still making a profit, so they do.

If you're selling appliances or TVs or computers the % is not nearly that bad.


Would be curious to see numbers on the bigger items. Have you used FBA?

The warehouse and shipping fees on such large & heavy items would be onerous would be my guess.


> Would be curious to see numbers on the bigger items. Have you used FBA?

Yeah, I've done enough FBA to rank somewhere between a serious hobbyist and an actual lifestyle business.

There is a sweet spot. If you're selling lightweight crap items, even the small shipping and fulfillment costs still tend to dominate. If you sell huge stuff, the shipping will bite, but not as bad as you'd expect -- Amazon has very good rates. The big problem for bulky items tends to be warehouse fees, and also the logistics of getting it to the FBA warehouse in the first place.

I'd say around 1 cubic foot is exactly where you want to be (with the dimensions carefully chosen to keep you in a favorable category, of course). I believe 18"x14"x8" is the biggest legal standard package.

Somewhat counter-intuitively, if you miss that standard cutoff, you might as well go big (3+ cubic feet) since you're paying the same oversize rate either way, the only drawback is warehouse costs. There's sort of a no-man's-land in between toaster-size and microwave-size.

Anyway, here's the actual fulfillment fees, if you're curious (notice how reasonable the rates are in the "Large Standard" range):

https://sellercentral.amazon.com/help/hub/reference/external...

https://sellercentral.amazon.com/help/hub/reference/external...


Depending on what services they provide that might not be terrible, its basically high end art gallery margins, but for consumer products with low margins that seems unsustainable. I'm curious how much AliExpress takes.


Between 5-8% commission, and you’re responsible for your own warehousing and shipping.


In other words, a lot of clueless people entered drop shipping. With huge competition, sale prices declined, constant costs took more percentage.


>A lot of mom and pop businesses (~$20 million) have been built on Amazon over the past 10 years. Most of us are in the $250k to $5 million dollar range.

It's interesting, Amazon also put a lot of mom and pop businesses out of business during this time period as well. The overhead that used to go to local commercial property owners, independent trucking and warehousing companies and such now all goes to Amazon. It's a total monopoly in the old school robber barron sense. Not only do they own the railroad they also own the steel plant and the coal mine.

Break 'em up like Bell I say!


Selling anything in America is incredibly difficult even when you make design and or manufacture your own products.

Amazon controls the connection to the customer.

Walmart/Family Dollar control pricing.

Stamps.com controls independent shipping/stamps.

Stripe and the major card companies take a chunk of fees for credit card transactions.


eBay controls the consumer reseller market. (FB Marketplace, etc. are designed for local, not national, sales)


Great insight overall - can you describe more on the FB/IG/TT to Shopify connection not working or now dead?


Apple mostly prevents narrow targeting on iOS now


So basically, Apple's focus on user privacy had the knock-on effect of ruining Amazon's potential competition?

That's astoundingly rich


Amazon's "potential competition" in this case is driven by ads via Meta (or maybe Google). I'm all for Apple preventing Meta from spying on me, even if it makes it hard for small companies to advertise to me.


It's really just a non-obvious consequence.


Not really, all the walled gardens were internally celebrating the decision.


Context on my question: I run one of the that works on this connector at IG - email me rbw at fb.com I’d be happy to connect and filter this feedback.


> Our second option used to be the Facebook/Instagram/TikTok to Shopify connection but with that being dead in the water most of us have had to commit 100% to FBA to be able to stay afloat.

Can you explain this further?


Meta/TikTok do less spying on customers, so it is harder to target ads to customers on iOS. This is the desired behavior. It means people who want to use targeted ads (called "the FB/IG/TikTok to Shopify connection" by the GP) are not able to.


You can thank Apple's IOS 14.5 updates for making Facebook/IG/TT ads much less effective than they used to be for SMBs.


By "mom and pop businesses" do you mean people selling cheap crap from China that is the same as the crap sold by a dozen other "mom and pop businesses"? Hard to feel sorry for businesses that are contributing to the rapid decline in the quality of all product categories.


> lot of mom and pop businesses (~$20 million) have been built on Amazon over the past 10 years. Most of us are in the $250k to $5 million dollar range.

> The impact of Amazon’s monopoly power is felt big time by us as we’re being squeezed with no place left to go online especially post-iOS change.

you either wouldn’t have a business at all without FBA, or you’d have higher margins with the same net earnings.

if you don’t like FBA try advertising on facebook. it’s very expensive because it’s very effective. the cost of the ad is so great that socks have to cost $20 and t shirts made in china have to cost $30.

i used to buy from marketplace on amazon. but dealing direct with sellers is worse than the ebay gamble. so i only buy FBA. i prefer direct sale from amazon if possible. the price is always higher but i have guaranteed no hassle.

otherwise i shop local.

i don’t know about dirty tricks but from my POV amazon earned their market by having consistent and reliable customer service. if you want to increase your sales it’s worth it to ride on _their_ brand. $250k to $5m for a mom and pop drop shipper sounds absolutely fantastic to me.


I can't help but think that Amazon should be replaced with a non-profit or regulated public utility that provides a single unified online marketplace, part of internet infrastructure like ICANN. Sellers would select among competing fulfillment services (warehouse+shipping). Platform referral fees would go toward customer remediation, anti-counterfeiting, and review integrity.

I don't merely say this as a "fuck Amazon" reflex or a "fuck capitalism" reflex. I say it because it obviously would allow so much of the dying segment of mom and pop small business to become viable again. Just from a policy perspective it's a home run because it's a way to juice GDP, improve consumer purchasing power, AND reduce income inequality.

As a matter of fact I would suggest that Amazon as it exists is anti-capitalist. It is feudal. Capitalism is the deployment of capital and assumption of risk in pursuit of new value creating activity. Amazon is not marshalling new capital to innovate or improve its digital marketplace. Rather, Amazon simply owns digital real estate and extracts rent, like some kind of futuristic dystopian corpo-baron.

The best part of all this is that Amazon doesn't have to be forcibly nationalized or broken up or anything like that. The government just needs to support and endorse a good alternative, because Amazon seriously sucks.


Don't you think if we turned USPS into this it would be a another billions of dollars a year waste for taxpayers? Do we really need to be subsidizing drop shippers?

> Amazon is not marshalling new capital to innovate or improve its digital marketplace. Rather, Amazon simply owns digital real estate and extracts rent, like some kind of futuristic dystopian corpo-baron.

What on earth are you on about? They own a url.


Amazon owns one of the most sophisticated logistics networks in the world. They own warehouses and robots and trucks and planes. All of that adds up to a meaningful, valuable contribution to the world.

I buy tons of stuff on Amazon. I buy from them rather than from eBay or an independent online retailer because I know it'll actually get delivered to my house on time. For me, the marketplace is basically irrelevant - it's the promise of fulfilment by Amazon that I care about.

I sometimes reluctantly buy from an eBay seller or a random e-commerce site when the item I want isn't available on Amazon. Those retailers tend to offer "FREE DELIVERY", but they also tend to be very evasive about how long it'll take and which company will do the delivering. Sometimes they'll advertise next-day delivery, but take two or three days to actually dispatch the package. Sometimes they'll use an ultra-cheap delivery service that takes 3-5 days, with no prior warning of which day they'll actually try to deliver on. Sometimes their terrible delivery service will decide that they just can't be bothered to deliver to my house, so they'll lie about having tried to deliver it and tell me to collect it from a warehouse. Sometimes they deliver to somewhere random in the vague vicinity of my house (a neighbour, underneath a parked car, behind a bush) and I get to play a fun scavenger hunt where the prize is something I already paid for. These bad outcomes literally never happen to me when I buy from Amazon.

In the event that something did go wrong with a delivery, I'm confident that I could just contact Amazon and they'd make it right; when something goes wrong with $OnlineRetailer, I often find myself refereeing a dispute between the retailer and the logistics company, both of whom deny responsibility.

There are plenty of alternatives to Amazon, but from a customer's perspective they just suck.


All of what you're saying has to do with Amazon fulfillment (FBA), not Amazon.com the Internet marketplace.

They're two entirely different things (you can actually use Amazon fulfillment for items sold on other websites, although it's typically too expensive). If Amazon fulfillment continues to dominate on an independent platform, that's great, they earned it, but at least they won't have absolute pricing power because sellers will have alternatives, and at least other companies will have a chance to impress you, too.

I'd figure that the marketplace would show the fulfillment company in addition to the way that the courier is typically indicated, so that customers could express their preferences. If the item does a lot of volume, perhaps a seller would even have inventory with multiple fulfillment companies, and buyers could pay a surcharge to get their preferred fulfillment, same as shipping.


> Don't you think if we turned USPS into this it would be a another billions of dollars a year waste for taxpayers? Do we really need to be subsidizing drop shippers?

You've missed the idea entirely. No shipping services are envisioned whatsoever by the "public utility". It would just be the actual marketplace connecting buyers, sellers, and fulfillment.

Amazon can continue to do order fulfillment if they like, it's just that any company with a warehouse can actually begin to compete with them. Sellers would be able to freely associate with whatever fulfillment company best suits their needs, rather than being captive to FBA.

> What on earth are you on about? They own a url.

Right, from which they extract enormous rents. It is not a product in which they continually invest. If you have used it with any frequency over the past decade, you've almost certainly noticed how shitty it's become. That's not an accident; their "sellers" (tenants) are locked in, and are paying something more like obligate rent rather than indicating with their dollars that Amazon's product is the best.

It would be the same story with privately owned power lines or privately owned roads. You're not using them because they're the best, but because you don't have a choice. We screwed up with the actual internet cables, but we still have time to get it right with internet marketplaces.


> I can't help but think that Amazon should be replaced with a non-profit or regulated public utility that provides a single unified online marketplace, part of internet infrastructure like ICANN.

if the market was working correctly Amazon's profits would be driven down to zero and you'd effectively have this

> As a matter of fact I would suggest that Amazon as it exists is anti-capitalist. It is feudal.

absolutely


What's the recourse if the market isn't working correctly?


Currently, the FTC suing them. Eventually, some sort of breakup and strict rules about counterfeits and house brands.


> if the market was working correctly Amazon's profits would be driven down to zero and you'd effectively have this

Are you sure? Consumer behavior seems to be to simply go to their default marketplace rather than to search the whole internet (which is slow, painful, and low-trust), so it ends up being a winner-take-all system where alternative marketplaces like eBay are almost irrelevant and Amazon charges whatever they like and basically ignores counterfeiting and review fraud.

There are "natural monopolies", like with roads and power distribution networks, and I would argue that online marketplaces have turned out to be another one, and we should modify our public policy to reflect that.


FBA SKU pooling has completely killed Amazon for me. I used to purchase on Amazon regularly but I just can't trust them shipping me a genuine product anymore. I've gone back to select local eShops, even if the quoted Amazon price is often cheaper.


Thanks for sharing your experience. Do you think Amazon dropped the planned fee they were going to charge for those sellers who don’t use prime, in anticipation of this suit? Would that have impacted you?


How much would a "Fulfillment By <Company Other Than Amazon>" be worth to you?

Could you get together with a large bunch of other FBA folks and somehow fund an alternative?


What’s do you mean exactly about the Shopify tiktok Facebook connection being dead?


Probably that Apple's privacy changes made those advertising channels far less effective.


Thanks yes I reread the comment and that sounds most likely


Why was the Apple privacy change so severe to making "the Facebook/Instagram/TikTok to Shopify connection ... dead in the water"?

I understand a bit about digital marketing, but not why this was so bad...


I'm missing some context to understand all of this.

What was the "post-iOS change" and why did this make it difficult to go elsewhere?

Why is Facebook/Instagram/TikTok alternative dead in the water?


Apple privacy changes reduced advertising effectiveness


I heard some stores switched to Shopify, would be interesting to learn why it is not an option for stores like yours.


Shopify and Amazon are quite different things.

Amazon is a marketplace and provides exposure - in other words, they bring you traffic besides providing ecommerce functionality. Possibly a lot of traffic if there's not much competition already in your space.

With Shopify you have primarily an online store solution. It's up to you to do your own marketing somewhere to drive traffic. Shopify does have what they call "Shop" now, which works like a marketplace, but in my experience that's still a relatively small channel for Shopify sellers.


> Shopify does have what they call "Shop" now, which works like a marketplace, but in my experience that's still a relatively small channel for Shopify sellers.

It's getting pushed harder due to things like Shop Pay being a thing. I've actually been trying to use it more, given I do purchase an increasing number of things from Shopify-powered retailers - but their search and targeting still needs a lot of work for it to behave like a proper marketplace.


What about shipping logistic and warehousing? Afaik this is something what Amazon FBA helps with as well?


Hm, all of a sudden the seemingly outrageous fees don't seem so outrageous anymore.


There are additional fees for using FBA...


It does, yes.

Shopify did try to get into providing those services for its clients but they later reconsidered:

https://www.freightwaves.com/news/flexport-acquires-shopifys...


Shopify requires you to build out performance marketing strategy and with the IOS changes, targeting has lost efficiency. It’s more expensive to acquire customers.


How much do you personally shop at Amazon versus other outlets?


Once I figured eBay out, it's about 90% eBay, 5% Amazon, 5% other.

Amazon does a great job of making it appear that they are the best option to shop at. But they really aren't. Even with Prime Free Shipping, if you search eBay correctly - the prices are likely better there.

I know what some are probably thinking, eBay is full of scammers and knockoffs etc. That's not really accurate. Especially when you figure out how to use it correctly.

eBay policies are designed to protect the buyer. If the item doesn't arrive, you're getting a refund. Every. Single. Time. If you're unhappy with the item: tell the seller. Most will make it right for fear of negative feedback, and knowing they'll lose the INAD. INAD? If the seller wont fix it, file an Item Not As Described claim. You will win and they'll be forced to either refund you or accept a return.


I feel like going into eBay, I expect it to be the bargain basement race to the bottom. There’s no veneer. It is what it purports to be.

Meanwhile Amazon is full of fake reviews, counterfeits, sponsored listings, and other scams that are passed off as legitimate or even premium.


what is the biggest barrier to moving to the second option, customers?


Amazon has around 60-80% market share in ecommerce, depending on where in the world you are.


Go sell in Temu or Walmart. No one is stopping you.


what on earth did iOS change that impacts your amazon business?


Privacy. The iOS improvements to privacy with advertiser ID becoming opt-in instead of opt-out has been brutal on targeted advertising.


sounds like a good thing to me


But could you have guessed that this policy would have helped (albeit in its own small way) to prop up a monopoly in the advertising world?


> post-iOS change

What is the iOS change you’re referring to?


ATT, where apple hobbled other ad networks running on iOS. It used to be that DTC companies could use the fine-grained targeting offered by FB and Google to reach consumers without needing to go through a major distributor. Since the targeting is much less effective it's more expensive (potentially uneconomically so) to reach people. As a result, sellers are forced back to Amazon.


Lots of TLAs:

ATT: Apple's App Tracking Transparency, not AT&T

FBA: Fulfillment by Amazon, not related to FB

DTC: Direct To Consumer, not Depository Trust Company


What is a TLA?


TLA = Three Letter Acronym


and ETLA = Extended Three Letter Acronym


TIL TLA’s meaning


TIL = Today I Learned

Sorry, couldn't resist :)


I work with DTC Shopify brands and I personally haven't found the ATT hurting ads performance in both Meta and Google. I'm sure YMMV but I've not seen it since it started. Maybe I work with very broad targeting compared to others.


I've been saying for years—and it's been received un-popularly here on HN—that ATT has been a bad thing for the industry overall, and this thread is a primary case in point.


If ‘industry’ is selling cheap tat by invading privacy then anything bad for that is good for society.


Are its unintended consequences in propping up monopoly also good for ‘society’, then? Hate to break it to you, but the topic is a bit more nuanced than ‘privacy good’ ‘ads bad’.


Businesses got along just fine before all that intense user tracking was even possible. If your business absolutely needs it to survive, then your business doesn't deserve to survive.

"boo hoo, I can't invade my users privacy anymore! Waaaaah! It's unfair"


A lot of the old machinery for small businesses to find their customers - e.g. news, hobbyist magazines, etc - is no longer around, and so there's nothing for those businesses to return to. The Internet, and specifically advertising companies, killed them off. What's unfair is not that they can't violate privacy, but that Amazon still can.


Is Amazon somehow exempt from the App Store's privacy rules?


Apple limited data from being transferred between apps. So you can’t measure whether your ad being clicked in one app resulted in a purchase in another app (aka. a “conversion”). That throws a big wrench into ad pricing, because the sellers want to pay-per-conversion. It hurt companies like Snap, Shopify. Since Amazon owns both the search/discovery and checkout in the same app, this doesn’t affect them.

Also, Apple didn’t limit their own advertisers from measuring conversions. So if you click an ad in Apple News and then buy an app from the App Store they will measure and charge the advertiser for that conversion without ever popping up a scary message saying Apple wants to track you. Go figure.

The companies have worked around these issues by doing stuff like statistical modeling to guess the conversion rate, but this has obvious downsides and makes everything harder, which puts them at a competitive disadvantage vs. vertically-integrated players like Apple and Amazon.


For one thing, the privacy rules only cover sharing data with third parties. They don’t cover Amazon using its own data for product recommendations.

But also, Amazon doesn’t rely on product recommendations in the first place. When I want to purchase something, I usually go to amazon.com and type in exactly what I’m looking for. No need for Amazon to guess. Amazon does make recommendations, but at least in my case they represent a tiny fraction of purchases.

In that way I’m voluntarily contributing to Amazon’s monopoly. I feel bad about that. But I use Amazon anyway because there are no alternatives that offer even a remotely comparable buyer experience.


By virtue of everything sold on Amazon being in the Amazon app the rule in question is kind of moot. The ATT privacy rules don't matter to them because they've already got everything they need to know about you from your habits in their app.


Amazon has its own enormous scale, it doesn't need Apple's complicity.


Weren’t those outlets even less targeted?


The key was that people self-selected into those outlets. If you were selling, say, game controller skins; you'd be making a pretty sure bet buying ads in GameInformer or on Joystiq. The problem with going back to that kind of business model is that these dedicated websites with specific niche audiences are dead or dying because the ad dollars moved elsewhere.


Shouldn't the ad dollars be moving back in after super targeted advertising got neutered?


It kind of is. Look at magazines like Monocle, and websites like Uncrate, Hiconsumption, and Gearpatrol.


Business didn’t have to compete with Amazon in so stringent conditions. People even were able to (gasp!) maintain physical stores, etc etc etc


You say that, but what this rule has done is made it so this kind of tracking is available only to large apps like Amazon. The little guy gets snuffed out before they can even gain traction.


was there also any change related to Apple wanting a cut of anything sold through an app, and how the Amazon shopping app works on iOS, and could that also affect 3rd parties?


No, physical goods have always been excluded from Apple’s commission

In fact they explicitly prohibit using in-app purchases for physical goods, presumably because they don’t want to deal with the headache that comes with providing customer support for those transactions.


Not to be rude but you made millions on the backs of Amazon. Now you’re complaining that you have competition.


> on the backs of Amazon.

They were using the Amazon platform for what it was intended for, and Amazon made more millions off of them. It was supposed to be a mutually beneficial relationship.


And I am saying what Amazon is doing is not anticompetitive at all. These “companies” that sell on Amazon are basically glorified trade companies that arbitrage low cost Chinese manufacturing. I don’t feel bad for them at all. If they are hurting so bad, go sell the goods on Shopify store or Walmart/Target. Oh, what’s that? They charge more than Amazon? Interesting…


You're over generalizing. There are plenty of sellers that took the time to develop their own products and sell them, only to be copied and undercut by Amazon.


How is that different from Walmart selling their Great Value store brand? They see what products sell well then formulate their own cheaper alternative, maybe even giving their product better shelf placement.

Every national grocer does this. It seems to be a pretty close analog yet nobody bats an eye at the practice.


In general there are many different grocery stores, even Walmart the massive company it is only represents something like 10% of grocery sales in the US.

Amazon represents something like 40% of all online sales. Typically having a large plurality in a market raises the likelihood of actions against you.

>It seems to be a pretty close analog yet nobody bats an eye at the practice.

Or, more likely, tech people pay attention to Amazon and not the myriad of suits occuring in the retail and grocery world.


> Or, more likely, tech people pay attention to Amazon and not the myriad of suits occuring in the retail and grocery world.

We're listening. Feel free to toss some examples of these myriad of law suits against brick and mortar stores for their in-house brands.


Walmart has more than 20% share of grocery in the US...


The local Kroger supermarket has Kroger branded items on the shelf right next to the national brand. The latter is always more expensive, I usually buy the Kroger brand.

The supermarket wouldn't stock the national brands at all if customers weren't buying them.


I don't know Kroger, but in a lot of cases the store brand is just a label change on the national brand.


Isn't that exactly what Amazon is doing?


Yes, that's my point.


> How is that different from Walmart selling their Great Value store brand?

Well for one it’s different in that store brands are often made by the same manufacturing/processing plant as the regular brand.

So not only is consent implicitly build in because the producer agreed to make the store brand variety, it’s another income stream.

And secondly the store brands typically go out of their way to differentiate themselves from the main brand to such a degree that if you hold the two boxes next to each other you wouldn’t mistake one for the other.

Thirdly they significantly undercut the other brands and sellers. They can do so because they don’t have to pay themselves a commission and all the other fees, which in turn forces the other brands and sellers to match or eek out a small price difference in which they’re cheaper in the hopes to get some sales, cutting into the already thin margins that are left after paying Amazon’s fees.

Amazon is also in a better position because of the vertical integration, they have a direct relationship with the manufacturer which cuts out the margins of the middle men (the sellers and distributors), regular sellers on Amazon have the distributor’s margins to deal with and then their own margins and as opposed to Amazon they can’t sell their items as a loss leader.

As for Walmart and similar retail, it’s a whole different situation. The manufacturer sets the price and within it, their margin. The retailer then purchases it at that price and tacks on their margin, but if it’s on the shelves then the manufacturer has been paid so there’s no risk for the manufacturer because the retailer carries the risk.

There are some nuances and exceptions, such as manufacturers sometimes being able to force a MSRP onto the retailer or a retailer being big enough to leverage a better price or a risk shifting agreement where the retailer doesn’t have to pay for delivery until the items are sold, nevertheless, in general the relationship is entirely different from the relationship Amazon has with its sellers.

And lastly, Walmart doesn’t hire people to walk beside you in the store to swiftly grab a Great Value variant and push it in your hand each time you so much as think of buying something.

The cereal factory that makes Kellogg’s cereal also making Great Value cereal is therefore not comparable to Amazon.

Amazon typically makes their Basics items look identical to the most popular brand and place it at the top of search results.

Now the original brand is forced to pay to get their item at the top of the list, and even then it’ll get second place, underneath the Amazon branded one (often barely above the fold).

Take this example of me searching for a padlock[0][1].

Not only is the Amazon branded lock identical to the one below it, it’s placed prominently at the top of the results in such a way that it’s the only product that can be seen in full.

The one immediately below it doesn’t get top spot despite being “sponsored” (i.e. paid to be prominently displayed) and if you look at the price they’re trying to be a little bit cheaper than Amazon in the hopes to generate sales but given how minor the price difference is with the Amazon branded lock, it comes across as a painful thing for them to do because it seems to me as a meaningless difference (but admittedly that’s me reading into things).

The issue is that when you’re the platform holder that sets the fees for sellers, controls what people see, have insider knowledge on sales and you use that to benefit your manufacturing and sales division, then you have too much control and are abusing your powers imho.

Brick and mortar retailers don’t have this much control over and information on their suppliers.

0: https://pasteboard.co/AZRfDpAtXw4f.jpg

1: https://pasteboard.co/VEFULgwx2IgB.png


That is literally the opposite of anti-competitive.

That is the definition of a pro competitive behavior.

Lower prices for consumers is the whole point of a competitive market!

Yes, big companies can compete in the market, by offer better quality stuff, for a lower price. Thats what we want!

You are literally arguing in favor* of monopolies, and against competition by saying that other companies shouldn't do a better job.


Reality is far more complex then the simple take you have here.

>by offer better quality stuff,

Amazon, for example, offering counterfeits of your product as your product is not under the definition of "better quality stuff"

>for a lower price

Again, offering a lower price consistently is one thing. Using pricing as a weapon, for example selling a product lower than cost in order to monopolize a market is not.


> Using pricing as a weapon, for example selling a product lower than cost in order to monopolize a market is not.

If the price stays low and never goes to high monopoly prices then it is a good thing.

If a company becomes a "monopoly" by being cheap, and staying cheap, thats just competition by definition.

Which is the situation we are seeing with amazon.


>If the price stays low and never goes to high monopoly prices then it is a good thing.

Not necessarily, but it goes a long way to balancing out the negative consequences. The problem, though, is they've never had prices stay low. Eventually, prices go up. So far, Amazon does this through loss-leaders; products that have low prices allowing them to capture a market and charge high prices for other products as a monopoly.

>If a company becomes a "monopoly" by being cheap, and staying cheap, thats just competition by definition.

If that was all they were doing it would be legal.


Selling things at a loss doesn’t mean things are cheap it just means the real costs are being subsidized elsewhere.


The competitive market has multiple goals - lower prices for consumers is only one of them.

Big companies compete in the market by offering the same quality for a lower price. That's good, no problem with them doing that.

The problem is when the big companies crush nascent competitors by using their advantages in the market and not by being better quality or more consistent. That's bad; it stifles innovation and creates market concentration, resulting in monopolies and allowing large companies to charge supracompetitive prices.


> by using their advantages in the market and not by being better quality or more consistent

But they have a lower price.

That's competition working as intended.

Yes, the lower price thing should win out against the more expensive product.

> to charge supracompetitive prices.

We aren't seeing too high prices.

We are seeing low prices and then competitors that suck complaining about the fact that they suck in comparison to the more competitive company.


That is not competition working as intended.

So you can have pro-competitive behavior (lower price) that balances out anti-competitive behavior (crushing nascent competitors through market manipulation or cartels); That doesn't mean everything you do is above board. It means that while the lower prices are there, a certain amount of anti-competitive behavior has been acceptable because the net outcome to consumers is theoretically positive.

[edit] Think about this - if you can win with lower prices, why do the other anti-competitive behaviors? Why not just have lower prices and let others try to compete with higher quality or lower prices than you? Wouldn't that be better?

The reality of this is, though, that the monopoly you form affects far more than the consumer product price. What the FTC is saying here is that they are moving back to structural restriction rather than simply allowing anti-competitive behavior so long as the price is good, a la the Chicago School.

>We are seeing low prices and then competitors that suck complaining about the fact that they suck in comparison to the more competitive company.

That's not what we're seeing, though.

What we are seeing is artificially high prices. One of the allegations is that if a seller prices below Amazon, Amazon removes their access to market.


> So you can have pro-competitive behavior (lower price) that balances out anti-competitive behavior

Defeating competitors with lower prices is pro competitive, not anti competitive.

It is exactly what competition is supposed to do.

> why do the other anti-competitive behaviors?

Notice how I made no comment on anything to do with vague "other behavior".

Instead I was only directly responding to the idea of "undercutting" competitors.

This is competitive and the whole purpose of competition.

Undercutting competitors and copying them is the only thing I was responding to.

So my point stands.

That thing is pro competitive.

Go back and read the comment that I responded to here:

https://news.ycombinator.com/item?id=37662993


While that was the original comment you responded to, the thread we were on was this one: https://news.ycombinator.com/item?id=37668676

>> So you can have pro-competitive behavior (lower price) that balances out anti-competitive behavior

>Defeating competitors with lower prices is pro competitive, not anti competitive.

I already acknowledged that lower prices is a positive, not sure why you repeated that. If that's your only point, then yes - you are right, lower prices is a positive for consumers. It's a balance, though; lower prices don't mean there is no anti-competitive behavior happening.

Undercutting competitors and copying them is often fine, though the process by which a competitor is undercut can be anti-competitive itself and have structural consequences that are anti-competitive, and copying competitors is obviously restricted by patent and copyright. It's not a blanket 'this is the whole purpose of competition' thing.

>Notice how I made no comment on anything to do with vague "other behavior"

It's not vague - it's laid out in the indictment. I get that you don't want to respond to it and only want to prove that lower prices is good, but that conversation ended, we all agree that lower prices for consumers is good. The question is how good. Good enough to balance the bad behavior? The FTC clearly thinks otherwise.


> and only want to prove that lower prices is good, but that conversation ended

When you respond to me and bring something up, it comes off as if you are trying to refute something that I am saying.

If you are now that that I was correct completely, and that you were just bringing up a separate point that is irrelevant and does not refute anything that I said, well then OK?


You were not correct completely. I was refuting something you were saying.

1. That was not the definition of pro-competitive behavior. 2. Lower prices for consumers is not the whole point of a competitive market.


> Lower prices for consumers is not the whole point of a competitive market.

You are 40 years behind on the modern day interpretations of the anti-trust laws by the courts then.

An analysis of how much consumers benefit or are harmed by certain behavior is what the courts use for most anti-trust laws.

And lower prices are almost the court decided definition of a consumer benefit.

So yes, the point stands.

Someone else was complaining about competitors being undercut, and I responded by saying that actually lower prices are good and this is what our anti-trust laws are trying to promote, not stop.


>You are 40 years behind on the modern day interpretations of the anti-trust laws by the courts then . . . lower prices are almost the court decided definition of a consumer benefit.

That's not the policy of Lina Khan and the current FTC. She was literally put into the position she holds because she was critical of that framework for antitrust.

Yes, since the 70's Bork and the Chicago school has held sway in courts, but that's changing. So no, I'm not behind - this is why the FTC is bringing this case in the first place.


> Yes, since the 70's Bork and the Chicago school has held sway in courts

Oh OK, so then I am correct under the overwhelming majority position/framework which is the only interpretation that matters for enforcement, which is the interpretation held by the court system.

I am more than happy to accept that concession and only be "wrong" under the minority position that hasn't been relevant for 40 years.

> That's not the policy of Lina Khan and the current FTC

They can make whatever bad arguments they want in court, and lose their lawsuits I guess.

They don't decide the outcome of these court cases.

If anything this strategy is actually harming then, as they make failing arguments that the courts won't listen to.


If you took the time to develop and market your products, you would not have solely relied on Amazon e-commerce. Most likely, the single greatest source of traffic was Facebook (Instagram) and Reddit. You would only sell on Amazon, if you’re from EU (or RoW) and that Amazon US made sense for you in terms of logistics. In other words, if you solely relied on Amazon to make money that means your business model was BUILT on fooling consumers on Amazon algorithm not your actual product.


The reason you see only low-quality Chinese knockoffs with computer-generated names could be because Amazon's anti-competitive behavior made selling real products unprofitable.


Amazon was originally the world's largest bookstore. What did authors sell then -- commodities manufactured in China? Your comments are painting with a very broad brush.


So it isn't anticompetitive to remove access to the marketplace if you charge a lower price than Amazon does?


a competitor that owns and governs the platform you have to use is different from another 3rd party that you have to compete with


You don’t have to use them. That’s the point of my argument. No one’s stopping you from selling it using Shopify where you can set up an e-commerce store within a couple of hours.


The whole point of the case is to show that they control a monopoly. When there's a monopoly, you can't go anywhere else!


And my point, as someone who’s worked in antitrust field for over a decade, is that Amazon is a company that does the least to exert monopoly power out of all the big tech companies. In fact, they do so little that I think they are being stupid.


That's not a really good point.

"They're bad, but they aren't as bad as those other guys. In fact, I think they are stupid for not being worse."


Do you tip your landlord?




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: