The title is a little clickbait-y. As far as I understand it:
1. Think of Amazon as a search engine for products. 2. Amazon wants its site to be the lowest-price destination for products. 3. If Amazon finds your product on another website for lower than its own website, it'll just hide your listing from the search -- this is meant to be pro-consumer (when you go to Amazon you'll get the lowest price).
This is where it gets a bit more complicated: 4. Amazon sells ~40% of its goods under its own purchasing arm, known to sellers as Vendor Central. (These are items shipped and sold by Amazon.com). This purchasing arm wants X% margins from *brands, based on whatever their internal targets. From what I've experienced personally -- their terms are generally better than their competitors (Walmart/Target/Costco/Sams), so it's generally a no-brainer to sell directly to them when I can instead of selling direct.
So when 4 has a conflict of interest with #1-3, you get the systemic effect that in order for the sellers to get their **sweet purchase orders from Amazon, they now need to raise prices elsewhere so the purchasing arm gets their cut. The sellers don't HAVE to sell to Amazon, but then they'd miss out on giant POs from Amazon at good terms.
Designing a system to incentivize sellers to have their lowest prices on Amazon... I'm not sure if calling it a "widespread scheme to inflate prices" is the fairest thing.
*edit: Historically, Amazon VC basically ran at near break-even under Jeff, "your margin is my opportunity" and all that. Since Andy took over there's been a reshuffling of chairs and the different business units have different margin requirements now.
**edit2: the price inflation mostly affects big brands that sell 8+ figs/yr on Amazon, because smaller sellers don't get POs from VC (too small to bother).
There’s a great deal of self published fiction posted online for free. Amazon is happy for people to sell bundle that into a book and sell that.
Kindle Unlimited specifically requires authors to remove earlier copies of their own works to become part of kindle unlimited. Thus increasing the minimum price for everyone above what it would otherwise be.
Some authors make the transition and win, but many destroy their audience and thus current and future revenue sources like donations and patron subscribers. It’s a tempting infusion of cash, but the long term consequences can be devastating making the whole thing really predatory.
On Amazon, they created listings that imitated our copy and images. On AliExpress/Taobao/etc., they ripped off our images and pretended to be us. Deciding which product/listing is the original product is super nontrivial especially when there's international trademarking and IP law (or lack thereof) involved.
Am I a conspiracy theorist to believe that Amazon is behind Trump’s decision to end the de minimis?
Most favored nation clauses are often considered anti-competitive.
It also opens the market for cheap knockoffs. If some chi-fi headphones for 60 bucks are almost as good as the big brands and the big US brands are forced for high prices despite the bad build quality by Amazon, another big seller website should emerge. Oh wait, this already happened with AliExpress and temu.
Yeah, no, this is meant to be pro-Amazon, not pro-consumer.
> there's been a reshuffling of chairs
Hmm.. I think those two things are in conflict.
> The title is a little clickbait-y.
The attourney general of California disagrees with you.
> [Amazon's] own purchasing arm
...so we can't think of Amazon as just "a search engine", right?
You might as well hand someone a toy and say "Think of this as a toy gun. But this is where it gets a bit more complicated: 40% of these have a trigger that shoots bullets." Whom are you kidding?
Clearly with the scheme you described, these are morally two separate entities colluding with each other to use each others' huge powers in the market to raise prices and pocket more profit for themselves.
My understanding is they got caught with this in the mid 2010s and as a result had to come very clean on some of this inter-departmental stuff. Most people who've worked at/with Amazon know its fief-like bureaucracy and clean delineation of business units (as both a strength and a weakness), so I'd be curious if there was more to it.
Then the other question would be: if you run a system that has certain emergent behaviors coming from it, without direct collusion -- how much would you be on the hook for various things that do end up happening? It makes sense that Amazon search wants lowest prices on Amazon, and it makes sense that Amazon VC wants margin, so when the two effects result in price inflation is that Amazon's problem.
1. Average American spends THREE THOUSAND DOLLAR year at Amazon. That’s staggering.
2. As of now the trial is not scheduled to begin until January 2027 (although the discussed injunction is meant to address that). I believe the length of time required to get a decision in court is the single biggest impediment to justice being served. It usually waters down the final judgment, makes costs prohibitive for plaintiffs, and allows perpetrators to continue benefiting from illegal behavior indefinitely. In some cases, the defendant can be elected President in the interim eliminating any chance of facing a court decision.
Where else would americans be getting home goods like soap, appliances, electronics? Vitamins, perscriptions, etc?
The answer to almost every one of those, for the vast majority of Americans, is one of like 5 megacorps. Target, Walmart, Kroger, CVS, Amazon. Things have largely stopped being available retail because of all this consolidation. If I want to go buy a multivitamin, its no joke like $25 a bottle at my grocery store, and $8 on amazon. It is just kinda... a part of people's lives now, and the alternatives all involve either spending more money or time.
While they might not be the absolute cheapest options, they're usually a pretty good price and at least with those sources I'm not too concerned with counterfeit or tainted supplements, unlike Amazon [0]
Is it? That’s by households, not individuals. Is it really crazy to imagine a household spending $200-300/month at Costco, Walmart, Whole Foods—or Amazon?
Frankly, I think a lot of people have lost perspective on just how rich the average American household is: Around $145k annual income.
Not shocking that Amazon is capturing 2% of that gross.
http://www.sellersprite.com/en/blog/most-expensive-thing-on-...
Amazon is not just a US company either.
They also have an ad business. You could rightfully argue that ad spend gets passed on to the consumer.
Though now that I write that, I wonder if Matt divided by the total number of North American households or the number of US ones.
EDIT: Amazon North American segment revenue divided by aggregate North American household count is roughly $2,300. But I’m guessing the real number is closer to Matt’s estimate as US households are wealthier and likely represent a disproportionate fraction of that revenue.
https://www.johndcook.com/blog/2021/01/18/gell-mann-amnesia/
If you can’t trust someone’s analysis about something you know about, why trust him about something you don’t?
On the particulars of this number, he seems to be close enough, but it’s not nearly as shocking with any context: The average American household Walmart spend is comparable, Apple captures almost half that with a handful of devices and services.
My relatives use it for ordering office supplies for their business.
It's insane that the landlord of the mall is also running the biggest store in the mall
It's led to this scheme, but also just the general enshittification of buying things online. You can never trust what you buy from Amazon because their "marketplace sellers" will send you a counterfeit, and it's hard to find some brand names because they don't want to be in that cesspool
As low rent and lowest common denominator as Walmart was in the 90s, at least I could go in and know that a) I probably was getting the lowest price on that Rubbermaid trash can b) it was legitimately a Rubbermaid trashcan and not someone who ripped off the molds, used plastic that was 50% as good, and sells it under the brand Xyxldk, and c) could reasonably expect to find that trashcan offered for sale in the first place
Why amazon sellers have not opened up a class action lawsuit is beyond me. This case, succeed or fail will surface enough documentation that they may find cause.
The fact that lawsuits are won by whoever has more money and time is so deeply problematic. I have no idea how you’d go about equalizing it. Spending limits with devastating consequences if it can be proven that you broke them?
* More juries, and maybe something jury like for civil suits.
* Simplify the law and legal proceedings to the point where the extra time preparing won’t lead to better outcomes.
First, this is not new. It's been stated policy for years.
Second, manufacturers get around it in a clever way. They always list their items on their own site at the same price as at Amazon... but then magically almost always seem to have a 20% or 25%-off sitewide coupon available, whether it's for first-time customers, or "spinning the wheel" that pops up, etc.
So I don't know how much this is really raising actual prices in the end.
Otherwise, I'm not sure how to feel about it, because pricing contracts are common on both ends. Manufacturers frequently only sell to retailers who promise they won't charge less than the MSRP, and large retailers similarly often require "most-favored-nation" pricing, so they can always claim they have the lowest prices. If you want to end these practices, then it's only fair to have a law prohibiting it across the board, rather than singling out Amazon.
Companies with as much market power as Amazon simply cannot be allowed to exist. It was a mistake to ever allow it and every response that is not aimed at a total shattering of the company is another mistake. No retail business of any kind can ever be safe when companies like Amazon exist. (And although this article is about Amazon, the same is true of many other companies as well, like Walmart.)
At least by paying Amazon I can avoid dealing with all that. While I may pass the price to the consumer for Fulfilled-By-Amazon fees, which tends to be around $5.18 ~ $3.5 (quick google search), it's still a lot cheaper than using something like FedEx where it costs $10-12 per order.
The takeaway here is that Amazon has democratized fast and cheap delivery by building a monopoly. As the scale of things go up, the cost of operations can really go down. Think of meal prepping, when you cook food in bulk vs each meal separately, you're saving costs on power, gas and produce.
The only question is whether we can build a public benefit corporation, just like Amazon.
Received several orders that were returned items, with broken open packaging and sometimes the item was something else entirely, purely put there for weight by whoever returned it.
When I went to return some things at a major Amazon distribution center, the return area was closed for the week for some sort of construction or renovation, with no indication of that anywhere on the site. The only messaging was a piece of paper in the window once you got there.
At another separate major distribution center, the return area was a small room with pieces of paper taped to a door with an arrow pointing to the Amazon lockers where the returns are accepted.
Orders are now often so delayed that it makes the Prime subscription pointless. Have had multiple orders over the past year that didn't ship for 3 or 4 days.
Amazon listings are almost half Sponsored listings now, and there are unrelated ads on the side of listings.
Half of the listings are some random made-up brand name, like XIJGNU, which is just a Chinese seller selling low-quality products, and when the reviews get bad enough, they re-list the product under another made-up brand name.
Fake reviews were already rampant before LLMs, but now reviews are effectively useless because they are so easy to fake.
That being said, anyone who’s operated a two-sided marketplace knows that one of the biggest problems is consumers using your site as an index, and then seeking to dodge your fee by meeting with the seller on another platform, where they don’t have to pay it. This was a big problem for my startup.
This is a negative externality, because they’re extracting value from your platform (the list of sellers, products, prices, ratings, etc.), without paying for that value. If left unchecked, this could make running the platform financially unviable. One way to prevent this is to paywall your platform, but not every consumer wants to pay a subscription.
I think it’d be fair for Amazon to prohibit sellers advertising other platforms on its own, but prohibiting them from offering lower prices outside of Amazon outright definitely seems anticompetitive.
There is a company that operates an index where people can search for things and doesn't charge the site or the customer for things that rank well in organic search results. I think they're called Google. From what I understand they make quite a bit of money by selling ads next to the listings.
That model seems like it would work pretty well for such a platform, unless there was some major company preventing anyone from offering a lower price than they have on their own site so that everybody goes to their site instead of using a price search engine to find a site with a lower price.
I mean come on. If they're really using your site just to find a product, you think that's a problem?
A platform's fee should be going to things like payment processing, warehousing and shipping, and then if you're offering a competitive price for those services they should want to be paying you because they need those things and can't get a better deal on them somewhere else. If they can get a better deal on them and are only using your site because you're forcing them to with a dirty trick, maybe they're right to object?
Sounds great to me!
It was effectively a way to get an excess commission out of amazon if you printed through their printing arm, Createspace/KDP. Not sure if this worked the same for non print on demand books but if you printed through createspace you could set a higher list price and get royalties that were about 100% of the actual sale price.
No idea if the same mechanic is in play with the FBA rules but it seems very plausible to me that the largest impact is has is closing exploits like this.
That doesn't mean it doesn't also entrench market position, raise a few prices at the margin etc but it's very easy to miss the potential for gaming rules, legally, unless you're actively in the system. If an incentive is there the market incentive will be to use it.
I just go to Walmart now. And Walmart is no choir boy either but at least I can see what I'm buying.
A product on the shelf, I don't have the slightest idea if it'll break in a month or have a feature that doesn't work right.
When I start browsing Amazon reviews, I feel vastly more confident I know what I'm buying.
Only exception is clothing, since it's next to impossible to judge fit and texture and often even color online.
Walmart and Pepsi engaged in a blatant decade-long price fixing scheme designed to raised prices and punish small local competitors and were sued for it by Lina Khan's FTC, but - surprise - the case was thrown out the minute Trump took office.
Amazon has been openly doing this for years. They scrape other competitor websites, even though it’s against their terms of service, and if you sell for less elsewhere they find out and punish you. It’s blatantly anti competitive.
> Amazon, vendor [...] fixed prices on [...] This is also an example of Breaking the Price Match, but here, Amazon [...] The plan was memorialized in an email from [...] In other words [...] In response, Amazon insisted on [...] The plan was realized [...] The result of Amazon, [...] price fixing agreement was to increase the retail prices
I don't know how you could even understand what's being alleged without seeing the unredacted version.