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Comment by knowaveragejoe | Hacker News Reader

In theory though, if Amazon is making a superior product that's cheaper, isn't that what competition is supposed to achieve? I've bought a few AmazonBasics(cables, mostly) and have been pleased with the quality, but it could be radically different with other products.

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But that's the thing, it's a little bit questionable for Amazon to be a competitor. They started out as a partner that offered a retail platform for Rain Design, only to turn around and come up with a cheaper product. Even though it's perfectly legal, there's still an expectation of trust, which they've violated.

Would you sell products on a platform knowing that if you were too successful the people operating the platform would turn around and come out with a cheaper product? I wouldn't.

It is questionable because no one has been able to do it before. Free markets yada yada. . . I would sell a product until I couldn't sell any more regardless of the risk.

If only copyrights on media properties were this fluid.

Absolutely not true.

Supermarket own-brand has been around for years and years, along with department store own-brands. The original brand sells based on brand reputation and (perceived) quality of product.

This is exactly the same.

No only that, walmart will use their purchasing power to force manufacturers to make products specifically for them. Examples of this include things like specific SKUs that are smaller so that walmart can sell similar products at a lower price (e.g. 12oz versus 16oz).

That's not a great comparison, because of the way house brands are marketed -- basically store brands are marketed to the left of the name brand and cost a few margin points less. One of the reasons for store brands to exist is to incentivize manufacturers to buy the other product supermarkets sell -- premium shelf space.

Amazon is a big catalog, and they play all sorts of games with how and why they prioritize listings.

I meant that it is questionable to the parent because Amazon has never done it before.

Grocery chains have had store brands since before the internet, so this conflict of interest is not novel.

Lots of those are manufactured by the same companies that make the branded ones. So they can still get their cut.

What's to stop the "same companies" from working with Amazon to do the same? Amazon Hair Conditioner (made by Pantene"

Perhaps that is already happening, with a select few manufacturers. But consider that many marketplace sellers are third parties (e.g. an electronics shop). Or other manufacturers with different costs (many factors affect this... location, workforce..). What happens with these?

I do wonder if Amazon are making any kind of profit on these items. With their long term strategy they can very well afford to make a loss just to undercut the competition and put their products out there, make a name.

They can do cost/benefit analysis. They don't have to pay themselves 15% of the price including shipping in fees, they have good relationships with cheap overseas manufacturers (in China you pay literally pennies for plastic stuff in large quantities) utilizing economy of scales, they know the exact demand/sales of their competitor/"partner", probability they can convert competitor's sales into their own sales, control the visibility on their platform etc. I am sure they make larger profit than what they would get by taking a cut from a 3rd party seller. Or they are irrational, which I don't believe.

So... why don't these companies get on the phone with Amazon and make the same deal?

Because they will be destroyed in either case? (See how Wal-Mart treats its suppliers and grinds them into the dust.)

Amazon isn't manufacturing these products either. They're just cutting out the middleman and going straight to the source in exactly the same manner as grocery stores do with their private labels.

Right - if you are already having a product made in China, you are the middle man. If you are actually making the product yourself, then Amazon might come to you and create an off-brand version with some trivial differences. But, in any case the designs of simple products are not nearly as sacred as the actual manufacture of them.

Unfortunately, it does have a depressing effect on new design and innovation. And it certainly seems that the low-cost Chinese manufacturers haven't got the knack for originality yet.

I would, as long as selling my products with their platform still gives me more profit than not selling with it.

My business strategy would probably change to proving the market for my product before selling my business to the people operating the platform for slightly less than it would cost for them to set up a competitor product.

That would likely be profitable, but only as long as you can keep picking winners with your rolled-over cash.

Most people seem perfectly happy to use AWS.

This happens constantly on the iOS platform. Popular apps are replaced by built in iOS features.

That's one possible benefit. But try to compete with Amazon on price directly; many (now former) sellers reported having their accounts under review shortly after (often leading to permanent selling rights removal - there's always some odd item that you might have in your huge catalog, even if you never sold one, that might be interpreted as not allowed on Amazon) and nowadays many small operations just try to avoid competing on items Amazon sells itself because of fear of getting kicked out. That's not beneficial to customers at all. So basically Amazon might be heading to be in this mode:

- allow 3rd party sellers/manufacturers to sell items - once items are hot and are easily clonable, start manufacturing them - let original manufacturers bleed or kick them out if they compete on price with you - wait for another batch of sellers to identify next hot item - repeat

tl;dr: little guy takes the risk, big guy takes the profit

And this will work as long as Amazon retains their dominant market position. As soon as there is a viable alternative, all that pent up ill will they have generated will come back to haunt them 10 fold.

Ah yes, the dream of the free market. Create a product that is successful, only to be driven out of business by a monstrously large corporate entity that can take advantage of economies of scale better than you can. Ignore the fact that the majority of companies cant actually compete with that behavior.

    > In theory though, if Amazon is making a superior 
    > product that's cheaper, isn't that what competition 
    > is supposed to achieve?

Yes and no. It's the age-old question, right?

If it's too easy to rip off somebody else's idea, you stifle innovation.

But if you go too far in the other direction, innovation gets stifled that way as well.

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