Amazon knew seller data was used to boost company sales | Hacker News Reader

Amazon knew seller data was used to boost company sales

politico.eu

Well, it's something that is slowly backfiring. It's under the eyes of everyone, and not enforcing such policy will only make it even worse for Amazon itself that eventually will end up selling only non-branded products. Finally it will be only another e-commerce like "ebay" used to be, and something else will replace it. Just enjoy the ride until you can.

PS: speaking out of experience, I had one time a talk to a director from an important online shop (top 3 in the country in that specific field) and "this sort of things" was exactly the reason why they chose to use MS Azure instead of AWS. Imagine how deep it can go. And I totally support that.

PPS: I don't understand the downvote. Please, be specific on why you disagree instead of just clicking on random symbols.

> I had one time a talk to a director from an important online shop (top 3 in the country in that specific field) and "this sort of things" was exactly the reason why they chose to use MS Azure instead of AWS. Imagine how deep it can go

This seems to be very common. https://www.forbes.com/sites/bobevans1/2018/07/18/walmart-ci...

Amazon is a direct competitor so it makes sense for Walmart to not give them more money via AWS.

Everyone in retail is a direct competitor to Amazon. It makes sense for anyone with a physical storefront to avoid AWS.

Upvoted, but I disagree that it's backfiring.

Backfiring would imply things are changing or getting worse for them. And I'm certain that we're not at "peak Amazon."

Worse, Americans especially are becoming numb to top down abuses. Not only am I worrying that this is not backfiring, but I'm also worried about the precedent we're setting by being so tolerant to it.

“Money talks and BS walks”

Consumers may not be fed up with Amazon, but if this is SOP then the sellers WILL leave and a competitor with better SOP will come in.

Getting f’ed in the arse as a consumer is one thing. Getting f’ed in the arse by Jeffy B as a business is another.

It is trust which makes this world go ‘round.

If sellers want their sales information to be private, they should make a compelling retail experience they control. That is where they obtain real competitive advantage. Changing from Amazon to another online retailer - that retailer will still analyze third party sales data.

It still isn’t clear if it matters. You have little perspective or experience on selling easily cloned $10-100 items (Amazon Basics) anywhere. Most of the margin is made at the point of manufacturing, by taking $1 overseas labor and selling it for $5. AmazonBasics and the other product are both made by the same labor, the same process, so the economics of what’s really going on are still in equilibrium.

But I understand (though not really sympathize with) the aspiring middleman trying to buy that $5 product and sell on Amazon being mad about doing, essentially, product discovery for Amazon. On the other hand nobody is forcing them to be middlemen.

You don’t have to launder cheap overseas labor at all. If the EU commission focused on the economics that mattered - the labor arb - the impact will be as large as you’re anticipating. It’s my opinion that the injustice of the offshore labor system is of far greater importance than some bullshit Amazon versus Some Aspiring EU Tech Company battle.

The issues with Amazon go further than this :

https://arstechnica.com/tech-policy/2017/08/lawsuit-amazon-s...

IMHO these websites should be disallowed to sell their own brands. (I wouldn't mind if physical retailers wouldn't be allowed to sell their own brands either.)

Great argument, could be used to rebut anything:

If someone wants their mobile phone data and photos to be private, they should make a compelling mobile os they control.

If someone wants a water supply that is not polluted with toxic runoff they should start their own waterworks, lay their own pipes, and potentially buy their own lake because some pollution is unremovable.

If someone wants not to be discriminated against they should start their own country.

Meanwhile your reduction tactic can be used to claim entitlement to anything.

You have to give me whatever I want or modify your behavior in whatever ways I insist upon, because the only alternative for me to get my demands met is by creating the product from scratch and/or starting my own country, which is of course absurd.

> starting my own country

Technically this worked pretty well when we had unexplored continents. If Elon has his way, maybe we'll soon-ish have Mars.

Mmmm. Nice logic there. Examine the following and see if you can detect where things get... off.

>Ya know what? I'm gonna make a thing that lets third party sellers sell their products and avail themselves of my burgeoning logistics network! It'll be so cash. I'll charge 'em pennies, they get to sell to a wide audience, I get use out of my logistics network, win-win.

Sounds like the start of some good ole fashion enterprise right?

>Hey, now that I got everyone on here, and since I'vegot all this seller data just lying around, we should do something with it. Charts, graphs, the whole shebang. Can charge extra or piecemeal to help people do more business, thereby enabling them to get more regular product flow, possibly even getting them to sign up and pay me for use of my logistics network to cache their stuff. I can turn around and offer supply reliability to end consumers, I can offer revenue stability and insight into invemtory profitability for my merchants, and I'm still making bank off my logistics network! Win-win-win for everyone around.

Still good, right?

>Hey, we got all this sales data laying around right? Why don't we aggregate it to see what's moving in the market overall so we can diversify into becoming a merchant competing in our own marketplace without any of the risk anyone else has to take because we have the ability to front-run commodity movement using info no one else has available to them at that level of abstraction oroverall visibility. Oh... Also, don't say 'Front-Run' because it'llmake the compliance and legal people upset, but it's totally what we're doing. Bonus point: with our scale, if we do find a winner, we can get in at rock bottom deals from the manufacturer, meaning we can ectract the value potential better than anyone else out there.. Sure, some of the merchants may lose out, but it's our platform, and their data is on our stuff right? Admin's priveleges. Besides, it isn't their sales data, we can just generate some anonymized non-vendor specifiic metadata to search using the web services we implement! Then it's our data not theirs!*

If you don't see where one of those three starts getting anti-competitive and abusive, you are waaaaaay too far down the slippery slope of the monopolist slip-n-slide.

The last one may be somewhat ham-fisted, but it's not far from some of the more... Fraught... conversations on the virtues and prickly points of business models with coworkers in the break room.

I assure you it does happen. Check out the GooglePay and ApplePay branding guides for similar examples of things that you read that make you go "Huh, is that why that's confidential? Because it tells you to do anti-competitiive things?"

Good luck finding a copy of course. You'll just need to find a poorly packed truck or something.

This still does not make it equal between Amazon and the sellers. Remember sellers have to pay a listing fee, referral fee etc which Amazon does not have to. So with everything else being equal, sellers are basically paying a validation fee for Amazon to learn about their products, then compete with them. No one should trust Amazon in whatever business they are in.

The problem is that Amazon is now basically the market itself while at the same time a competitor or a potential competitor. Small businesses don't have much choice in the matter if they want the ability to reach an entire market. If they go their own way and build their own retail experience, there is a ceiling on the percentage of the market they can sell to.

Without any regulation to curtail this behavior, the end state seems like it will have to be Amazon owning the markets that have the best margins and the least risk. Competitors will die and Amazon will be able to increase prices to maximize their profits without needing to worry about being undercut. That sounds exactly like what anti monopoly legislation was written to protect against.

chose to use MS Azure instead of AWS

The article says someone used data from Amazon(the online store), not AWS. You should absolutely use Azure(or GCP) if it makes more economic sense for you but migrating from AWS to Azure because of this may be an overreaction.

It's standard practice for any retailer to not use AWS.

Part of it is why would you want to give any competitive knowledge to Amazon with your data or even metadata assuming you encrypt data with your own keys (eg. # of users derivable from # of distinct home/mobile IP address connections to your servers, # of transactions from connections your servers make to payment processors etc).

The other part of it is why add to Amazon's profit margin when it's well known AWS likely subsidizes retail to a large extent.

I'm curious what kind of access Amazon would have to your data as a retailer running on AWS.

Not in a technical sense, I'm a software engineer, I understand what data _is_ there, but more to the extent of, do they go out of their way to identify you, an AWS customer as a retail business and use that _retail_ data in ways such as described by the original complaint here?

If the answer is anything other than "they definitely don't", I'm concerned.

Nobody can know for sure. Whether or not they were secretly mining data from AWS servers, they would say they don't and nobody on the outside would be able to tell. Even if it's unlikely, many people are simply choosing not to risk it.

This is at the level of a conspiracy theory right now, and one that doesn't even make any sense.

If it were true that Amazon were taking sneaky peeks at data inside AWS related to retailers, and this became public, AWS as a business would be done.

The loud banging you'd be hearing would be the door closing as the last customer exited, followed by all the engineering staff who work on AWS as they see the writing on the wall.

Why would Amazon look to achieve some marginal advantage in its retail businesses at the risk of a total loss to one of its marquee businesses, AWS? It's an idiotic risk.

> If it were true... and this became public, AWS as a business would be done.

Why on earth would you think that? They did worse on their storefront, which has a much smaller migration burden than AWS, and while a few big brands made a stink and pulled out, it didn't even noticeably slow growth.

... because it's a colossal breach of trust. AWS has an entire staff of people whose job it is to convince clients that they can be trusted to be a safe custodian of data that includes heavily regulated types of data.

Doing this would blow a huge hole in that.

Do you really think banks are going to stay in AWS if this happens? Do you really think Salesforce is going to be OK with it? Do you think they'd ever do any US Govt business again?

Yes, yes (to the extent of maintaining their business relationship), and yes. I think you vastly underestimate the power of apathy. 99% of their customers won't even think about it, 90% of the customers who do think about it won't weigh its importance strongly enough to even potentially impact their decision, and 90% of the remaining customers will be satisfied with some minor deflection, platitudes, and hand-waving.

Don't get me wrong, I wish you were right, I just don't think you are.

There is no need for a conspiracy theory.

The metadata that is _required_ to produce your monthly AWS bill reveals a ton of information about the success of your business and what is doing very well for you.

Doing analytics on customer billing is something that Amazon has every reason to be doing, and what Amazon does with that information can be anticompetitive or not.

At a certain level of aggregation, metadata is AWS need-to-know for capacity planning etc or for account execs to understand the needs of their covered clients.

There's definitely room for discussion over when what level of granularity is necessary and whether metadata at different levels of granularity should be shared with product vs. customer facing teams.

That didn't seem to be what the GP comment was about though - 'mining data from AWS servers' sounded to me like a much more invasive approach to client data.

> Why would Amazon look to achieve some marginal advantage in its retail businesses at the risk of a total loss to one of its marquee businesses, AWS? It's an idiotic risk.

There's a pretty obvious way to achieve this risk mitigation which is by spinning off AWS into a completely separate company with separate management accountable to a separate board with separately traded shares and not sharing any offices, employees or infrastructure with Amazon retail.

I don't see how this would be fundamentally different from what Facebook did with WhatsApp data ?

Its always a conpiracy theory untill it happens, and then it becomes obvious all along.

People who predicted the 2008 crash used to get tinfoil hats in the mail.

> This is at the level of a conspiracy theory right now, and one that doesn't even make any sense.

It's a conspiracy theory to believe that a company whose policy it is to not access data that is on their own platform, who was caught accessing said data, would violate such a policy?

Yes, of course they do. There was a post on here about a year ago from someone in the "Amazon profitability team" that involved digging through customers AWS instances to see what they could learn or duplicate for Amazon.

I'm more than a little disturbed by that response, can you back that bold accusation up with some references?

I _need_ to read more about this (about to begin a migration to AWS, not retail though).

https://news.ycombinator.com/item?id=19734261

https://www.datacenterdynamics.com/news/ovh-ceo-unlike-amazo...

https://sellercentral.amazon.com/forums/t/amazon-literally-s...

https://fortune.com/2016/04/20/amazon-copies-merchants/

https://www.theverge.com/tldr/2019/9/19/20874818/amazon-allb...

I can't find the most recent set of posts about peering into customer's AWS instances to research what they could copy but consider that govcloud exists.

Am I missing something or do none of these links even mention AWS?

I’m also unsure how the explicit trust from the government (“consider that govcloud exists”) is somehow evidence for their untrustworthiness?

Thank you for the effort of posting those. Unfortunately they don't really indicate any data being taken from AWS specifically, all of the copying behaviour appears to be Amazon storefront copy-cat tactics.

As for govcloud, it exists because regulatory requirements for running things for gov are more strict than your average user/business requires and such cloud offerings require certain levels of hardening and software security and assurances. I happen to work in the space so I understand the need for an alternative offering for government requirements. There's really nothing nefarious going on there and its more about govs not wanting to run alongside regular users. I see nothing concrete I could take to my superiors.

Source please?

Amazon != AWS. As someone who has access to customer data in AWS, I'm very limited in what information I can access (to the point where it actively makes my job in Premium Support harder than it would be otherwise). I also have to provide a legitimate business reason for access to data.

Not only is there an audit trail for what I do internally, but any calls I make to review customer data is published in the customer's CloudTrail trail. So the customer can audit when their information is accessed.

This report has 0 to do with AWS.

> This report has 0 to do with AWS

Same company, leadership and culture. If you compete with Amazon, or could compete, it would be pretty stupid to put your jewels on AWS.

On the other hand, it seems to be working out pretty well for Netflix.

Different leadership and largely different culture. Or are you just making assumptions?

Being on AWS works for Netflix, Disney+, and a lot of other streaming services I won't mention. ESPN and Fox Sports both use AWS. A lot of incredibly visible companies that offer cloud storage white-label S3. Tons of game studios use AWS.

A lot of successful companies are pretty stupid I guess. But I'm not going to spend my time trying to refute conspiracy theories about AWS. You do you boo-boo.

I suggest that your reply would be much better without the last paragraph.

hmmm, yes.

AWS profits appear in Amazon's annual report, AWS is an Amazon business unit. The CEO of AWS reports to the CEO of Amazon.

Interestingly enough Andy Jassy, who is taking over the reins from Bezos, is the CEO of AWS.

I was not aware of that, interesting indeed.

On the other hand Apple competes hard against Samsung, yet relies heavily on Samsung to build a large part of it's competing products.

Although I admit that this might not be as true anymore as it was a few years ago.

Probably because Apple has an army of lawyers to protect against any problems.

This.

Samsung is a much looser conglomerate than Amazon. Furthermore, their fab division is much larger than their handset division. I imagine all parties have weighed the pros and cons.

Apple continues to actively steer away from Samsung, anyway.

Given everything mentioned in your comment, I don't see how it implies that amazon can't cast a dragnet at some level you're not aware of.

Let's put it in terms of business. What does Amazon gain reading the data of retailers in AWS that they don't already have? How much more money would this make them?

How much brand damage and lost of business to AWS (their most profitable organization) would they lose if this were to leak? The more prevalent their use of this AWS customer data, the higher the chance it gets leaked.

Why do you think Amazon, one of the most logical and data driven companies, would make such a bad business decision?

Info about what products sell well? Amazon has a thriving white label business and they can use it to decide what to make.

And we think they need to risk the lost of business of breaking into your data on AWS to get this information? They somehow have no other way to infer this? How much business is this thriving Amazon-made products line? It's a fraction of AWS's profits considering retail's overall profits.

People have done worse for less. It may not be a significant fraction of Amazon’s income but it could be a significant fraction of a sellers income or a significant fraction of sales manager’s sales.

> They somehow have no other way to infer this?

That's actually the point. So what if they're using "anonymous" or other indirect data? If "Amazon.com" might be benefiting from AWS data of any kind then it needs to be investigated as potentially anti-competitive.

When I say infer I mean from analysis of retail trends, pricing, and supply data. They don’t need to raid your AWS account to know that USB cables are profitable.

To me the only difference is that AWS biggest client base has the money and expertise to go after Amazon in protracted legal battles while simultaneously scrubbing AWS from their companies.

Most retailers, even big ones, don’t have the money or expertise to do this like that. Of the few who do (Apple for instance) Amazon is keen in making sure that those companies are heard and has direct relationships with them, but that’s few and far between.

That’s my take on this

I think there are enough retailers with at least some money, I think this is mostly an issue of business expectations.

If AWS were caught sharing your data, with anyone, for any reason, it would be a gigantic mess of a problem. Forget 'competing with Amazon on Amazon' - we're talking about sensitive data of all kinds in every single line of business. It would destroy them.

Selling on Amazon, and then having sneaky Amazon PM's use your data against you is bad, but the quasi-same thing would exist in other retailers. Best Buy doesn't sell '3rd Party' so obviously all of their sales data is theirs, and I think that the expectations between '3rd Party' and not '3rd Party' Amazon may just be a little bit blurred.

I'm suspicious frankly about the distinction, because Amazon may very well believe that that data is theirs to look at anyhow.

But AWS has to be a different story, if not, it's going to hurt.

An interesting thing to note is also that AWS sells pre-rolled HIPAA compatible services in a lot of their offerings. If AWS accidentally peaked into one of these services in an unauthorized manner it'd be a huge legal event and, I suspect that part of them working out that their services are HIPAA compliant involved being extremely transparent on how a number of things around those services operate with some department in the government.

Those servers, at least, should be free from any of the snooping concerns folks have.

It doesn't have 0 to do with AWS. AWS funds the amazon beast they compete against. As a retailer you would have to be absolutely insane to feed money to the Amazon mothership via AWS so they can continue to fund undercutting you in the retail space.

All of that is ignoring the fact that any customer of size WILL be sharing details about their go-to-market with their AWS account team. Just because a random guy in support can't login to their systems doesn't mean their assigned architect doesn't know what their process workflow looks like and didn't help them design it...

It does though. That money being paid towards AWS will certainly be used to subsidize Amazon's undercutting. A retailer paying for AWS is funding their own demise.

> "this sort of things" was exactly the reason why they chose to use MS Azure instead of AWS.

Unless I've grossly misread these articles, Amazon were using third-party seller data from sales on the Amazon.* websites.

The data was on their (Amazon.com) sales database (who sold how much of what, for how much). They weren't accessing (hacking) data hosted on AWS (a database hosted for an online shop not related to AWS)

Those two things are very different.

EDIT: To put this into perspective. Any store (online and offline) that has its own branded products, probably looks at sales of the existing non shop branded products and makes an own branded version when it looks like it will be successful ("Panasonic SD cards are selling well, and look like they have good margins so let's bring out our own version"). What Amazon is being accused of is using sales data from 3rd party sellers on Amazon.*

AWS could easily collect metadata like how your traffic looks over time, where it's coming from etc., and use that to inform Amazon business decisions. That would go a bit further than what's in this article, but it isn't a huge stretch.

That’s why they used the words “this sort of thing” and not “this thing”.

I dont have the source anymore, but ive heard of precisely this happening: Amazon employees snooping around the AWS setup of some other ecommerce competitors... so yea, its not just limited to the amazon seller account data

About 5 years ago I personally knew an SRE at AWS who did snoop around customer files (and Amazon corporate’s internal HR database...) for his own amusement - he proudly showed-off his phone’s browser to me which displayed some HR data for a mutual of ours. He doesn’t work at Amazon anymore and now has a criminal record (both for entirely unrelated reasons), I guess Amazon either never found-out or they didn’t care.

So yeah, I believe you.

(Amazon does have internal controls that do limit most users’ access, but he said was an SRE with “global” access, apparently - I’ve never worked for Bezos so I don’t know what Amazon’s access-security is really like).

AWS and Amazon Retail are two different entities altogether. Even their infrastructure are at least logically siloed and my educated guess is even physically siloed in some places.

AWS is certified to comply with a bunch of cloud/data standards/regulations such as HIPPA, PCI DSS and so on. Even if a single evidence is found that AWS is breaching them the consequences will be severe.

Also for Amazon as a whole it makes very little business sense to lose a AWS customer paying hundreds of millions of dollars a year just to gain some marginal advantage in retail space. Note that Amazon retail already is operating at the limit when it comes to having accurate sales information about its competitors. It has crawlers to scrape online data and employs hundreds of analysts to build multiple models. And it’s been on this for close to three decades. So trawling AWS customer data is net negative for Amazon. It doesn’t take much for competitors to move away to Azure of GCP.

So it’s in AWS’s best interest to be absolutely fool proof about not going anywhere near customer data. Dealing with business data is a whole lot different ball game compared to collecting tracking customer data like Google does. Businesses will be unforgiving.

I had the same thought a while ago. I remember when Amazon mostly acted as a retailer, and not as a marketplace. Nowadays I don't see why I shouldn't buy on ebay or somewhere else, as the marketplace approach negates what I liked about it: everything from one company, a single parcel, easy refunds. If I receive each item from a different retailer anyways, I don't see why I should feed the beast.

Thought exercise because I legitimately struggle with this. Is this fundamentally different than Costco using sales data to choose which Kirkland products to launch/sell? If so, how? If not, then why do we not pursue Costco with the same gusto as Amazon? To me this behavior by Amazon seems worse, but I can't figure out why.

I'm not sure if it's fundamentally different, but maybe you're just (like I am) more inclined to perceive Amazon as a "bad" company. Costco has a lot of goodwill with the public.

Imagine if a Costco sales rep offered to swap something in your cart with the Kirkland clone, or if they suggested the Kirkland product as you reached to grab something else off the shelf.

Are businesses in the business of increasing efficiencies (more revenue, more profit, lower costs) or are they in the business of doing what is in the best interest of consumers or both?

I don't think your example really holds weight. I goto Costco because they offer products I want at a price I like. If during shopping they were trying to give suggestions to better deals I'm not sure as a consumer I get to complain about it do I?

I've never had amazon offer to swap anything from my cart.

Aren't traditional grocery stores doing the same thing but using price, sales, positioning, name, and label imitation? When I reach for Quaker Oatmeal Squares, and Wholesome Oatmeal Squares Cereal is right next to it, for cheaper, also in a blue box?

It's a lot easier to comparison shop. Also you can trust that the Quaker on the shelf is real name-brand Quaker. So you can look at the store brand prices, packaging, etc. and make a reasonably informed and quick decision.

I wouldn't be surprised if Amazon lets the fraud and ratings scams go somewhat unchecked so as to make their own house brand look "safe" and desirable.

And they have gotten into lethal trouble because of it, I think there is a ongoing case against Oreo because they abused their market power to affect in shelf positioning in a way which likely counts as unfair/illegal abuse of marked power.

Most important grocery stores and similar are resellers, Amazon is a proxy.

Sure that pretend they sell you things but actually you just buy things through them, not from them. (Except their own products.)

Take a quick trip the Costco website and you'll see they use the same recommendation tactics. Looking at a bag of Peet's brand coffee, I see Kirkland Signature brand coffee sitting in the "Similar Product". Just saying...

Disclaimer: I'm not a legal expert, just an engineer with my own opinions.

I struggle with it as well because conceptually in my mind this is the same as a grocery store using customer buying data to inform itself. Grocery chains have been using private label brands to compete with name brands for years. Check your cereal aisle for the "fruit loops" in the back without a box that are ~50% cheaper than the name brand boxed real fruit loops.

I never saw this as wrong growing up. I saw this as the store offering a cheaper comparable and consumers were able to chose which they want. In fact, the grocery store also controls what is on the end cap and what is on top and bottom of each shelf.

I think the landscape is heavily skewed in favor of the dominant online retail merchant. This skew and dominance is what causes people to claim afoul behavior is going on.

Grocery stores select which products they want to sell and have limited capacity.

Amazon provides a platform through which "everyone" can sell "anything" with no tightly constrained space/slots.

As far as I know Amazon is legally closer to a market place where everyone is up their own stand (but they are required to look mostly the same) and which happens to also require you to use their payment system.

I.e. Amazon is just a proxy while the grocery store legally buys and resells the products.

I am not from the US but I think Amazon has much more market dominance than Costco. If Amazon had 20% market share nobody would mind, but they don't have real competition that comes close.

Amazon has less than 20% market share in retail overall. Remember their competitors are not just the online sellers who are pushing this antitrust angle. It’s Walmart and Target and grocery chains and CVS and Walgreens and brick and mortar department stores and so on.

Difference in quantity has a quality all of its own.

There are kinds of behavours that are acceptable for an individual or a single groceries store, but if a large company adopts it across the country and puts it in the policy, then they are beaking the law.

Suppose Costco allowed other vendors to be present and selling in their stores. Costco requires these vendors to use Costco's checkout systems. Costco then takes the data gleaned from those sales to determine which products to compete with and then begins aggressively pushing their competing product.

Is this fair to the vendors?

This is an interesting thought experiment. Maybe the objection is that Amazon is erroneously considered a neutral marketplace, and not a "store". But practically is there a difference between these arrangements, other than the incidence of who technically is the retailer and who is the wholesaler?

I think the real issue is how people shop online versus in stores. Online, they see a linear feed of individual products and buy whatever is near the top. In a store, they see a variety of displays, and it's almost hard not to comparison shop even a little bit.

It's much, much easier to be "anti-competitive" on a web store than a physical store. Imagine if Costco did what Amazon does, deliberately making Kirkland products easier to find in the store and look more reputable/trusted compared to other brands.

So I don't think the problem is that this particular move by Amazon is any more anti-competitive than anything a normal store with store brand would do. The problem is that Amazon already engages in other anti-competitive activity, so pretty much anything they do related to their own store brand is distasteful.

No in that case Costco would likely get into legal problems.

Actually there had been legal cases with unfair market practices in grocery stores between different competing products sold there. I think there is currently a ongoing case with Oreo.

> To me this behavior by Amazon seems worse

only seems worse because amazon is so big, and so monopolistic, that a lot of people hold them to different standards.

It's the same idea that people expect a rich person to pay more taxes, or contribute more philothropically.

I'd rephrase this:

"only seems worse because amazon is so big, and so monopolistic"

as:

"only seems worse because amazon is so big, and so dominant"

I don't think monopolistic is a fair adjective because it has an implied legal connotation. Is Amazon a monopoly or just the largest e-commerce retailer today?

Monopoly isn't the best term either, there's definitely other companies that are vertically integrated and are single-sources. What they don't do (or try to avoid?) is leveraging their position to unfairly complete with other companies.

Amazon launching new product lines and boosting them to the top of the search results is almost textbook leveraging. Having information showing they used their internal data to find which products to market is basically icing on the cake.

Google has already been dinged for this with their Google Apps boosterism on their search results. I can't imagine this goes any differently from that.

Monopoly does NOT mean being the only seller. According to US law, having 50% of the market can be enough.

> According do US law, having 50% of the market can be enough.

Having much less than 50% of a descriptive market can be enough, if, e.g., you have pricing power, which demonstrates that irrespective of what other players may be described as being in the same market, they are not actually competing with you.

I DIDN'T claim Amazon is or isn't one.

It's not even 50%, according to the FTC[1]:

> Courts do not require a literal monopoly before applying rules for single firm conduct; that term is used as shorthand for a firm with significant and durable market power — that is, the long term ability to raise price or exclude competitors. That is how that term is used here: a "monopolist" is a firm with significant and durable market power.

[1] https://www.ftc.gov/tips-advice/competition-guidance/guide-a...

> It's the same idea that people expect a rich person to pay more taxes, or contribute more philothropically.

This has to do with diminishing marginal utility of wealth and nothing to do with holding different people to different standards.

I know man, this idea that people in power have more responsebility that a random homeless person, socialism!

This is a good point. I don’t think Amazon’s practices are structurally different than those historically of Walmart or Costco.

Each captured sales data and built private label alternatives to key brands on a regular basis. Small differentiator in the case of Costco is that they have a practice (though not a policy) of offering the leading vendor the opportunity to produce the private label before doing it themselves. But that’s a small detail.

Besides the fact that headlines about this get traction, there is a differentiator with Amazon in that they actively market themselves as a marketplace for small businesses in the way we’ve come to view Shopify. Costco and Walmart were always very clearly retailers...they buy stuff and sell stuff at a margin.

So while I think a lot of the blowup about this is overdone, there is a legitimate argument about the difference between how Amazon markets itself and what it does. But, frankly, for anyone with any level of experience with retailers or, frankly, tech platforms, this kind of capture behavior should be expected.

I used to stuff shelves at a grocery chain ~20 years ago and one difference seldom mentioned is that grocery chains bought from the manufacturers. That meant that we as a grocery chain were responsible for the sale to consumer, we were not merely a marketplace for a bunch of different brands.

So, even if we had our own competing labels for some products, the manufacturers would never be left in the cold with unsold stock (if for example we chose to drop one brand or run a promotion for our own).

This is generally not how grocery operates today.

Most large grocers:

  - Sell shelf location slots to the highest bidder.
  - Include a consignment clause in their vendor agreements requiring vendors to take back spoiled, customer-damaged, and unsold inventory at X point or on-demand.
  - Require merchandisers to keep inventory in-stock for as many products as they can get vendors to manage (e.g. the coke delivery person is in-store several days a week.)

All of this is especially true for shelf stable products and beverages.

The modern grocery store is effectively managed like a flea market and is allowed to do so because the chains have so much leverage.

So while we can take issue with Amazon’s practices, we have to remember that most of large-scale retail operates in ways that if written about to the level of Amazon, we’d also be griping about.

Are you maybe describing US practices? Some of these practices has been prohibited for a decade in EU and it was recently broadened to include agricultural and perishable products: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELE...

Yes, US.

Possibly related is that EU grocery margins are amongst the lowest in the world.

What you have described is false. The major brands do not "sell shelf location slots" to the highest bidder (aka slotting fees), or require consigment clauses, or require merchandisers to keep inventory in-stock, as a general practice.

Slotting fees and consignment clauses only apply to new products. Slotting fees are used as an alternative to consignment; they are basically a discount on the wholesale price paid by the store for new products that may not sell through. Alternatively, the store may sell the items on consignment, in which case it only pays the distributor for products actually sold through.

Merchandisers...are employees of the stores (they're responsible for internal marketing efforts)...Perhaps you meant distributor? Only a few store chains have an in-stock requirement (Walmart and Costco), and that is due solely to the volume at which they sell-through.

More importantly, and the crucial legal distinction: retail stores pay the distributors for the inventory on their shelves, except for the 1% offered on consignment (i.e., new products sold on a trial basis), while Amazon gets paid by the distributors. That legal distinction is at the heart of why what Amazon does is problematic.

(Source: Kroger was a former client.)

I'm not intimately familiar with either side, but I see it as: - Costco buys x amount of product at y price from seller and then sells it in its store. - Amazon provides a platform for sellers to sell with a cut going back to Amazon.

There is a fundamental difference between being a retailer and providing a retail platform.

All Costco would really have access to is how much they've bought and how that has performed for them. Meanwhile Amazon is providing a platform for companies with a policy that they will only use their data to help them, which is what is allegedly not happening.

> I'm not intimately familiar with either side, but I see it as: - Costco buys x amount of product at y price from seller and then sells it in its store. - Amazon provides a platform for sellers to sell with a cut going back to Amazon.

This isn't really how it works. Retailers very often have arrangements to defer payments until after the product is sold.

In fact, in France, retail margins are so thin that supermarket chains reportedly make most of their profit by selling the inventory, investing the money in short-term funds, then paying the suppliers one month later and keeping the interest.

With short term interest rates in the negative in France, I wonder what their business model is now...

https://data.oecd.org/interest/short-term-interest-rates.htm

The difference is between retailer and marketplace. Both Amazon and Costco are retailers, and both could use that knowledge to decide what products to self-source for better retail margins. Either way, still a retailer, but maybe also a manufacturer / wholesaler.

But Amazon is also a marketplace. In that role it acts as a "rentable retail space". Using the data of the retailers in your marketplace to decide what to make/wholesale and then retail is another layer.

You could easily argue that it reduces to the same thing. But societally we've excepted that the retailer is a full layer in the system and gets full access to the data flowing through it. The marketplace itself is historically more of a fee-for-use type of thing, so its not an ingrained concept for us.

I'm still not understanding the distinction here. Costco and Amazon both sell company-brand products, alongside non-company products. Costco and Amazon collect and analyze sales data from the sale of both company and non-company products.

When Costco sells a product they’ve already bought it (a retailer) on the other hand when Amazon sells something they’re just acting as a middle party for the item in most cases.

I'm not sure how Costco works specifically, but that's not the case in all retail. At GameStop, game publishers only got paid when their games sold not when they were put on the shelves. If there are 100 disk cases put on the shelves for Call of Battlefield and none of them sold, eventually GameStop would return them and the publisher got nothing.

>When Costco sells a product they’ve already bought it (a retailer)

In practice that's not the case at all. Many if not most retailers require suppliers to buy back unsold inventory

That's often not the case. Retailers like Costco, Walmart, Best Buy etc have a wide variety of different selling arrangements. I've sold products through all three and often did so on terms that gave them full right of return for any unsold product as well as significantly delayed payment.

This combination basically nets out to be financially the same as pure consignment. They won't pay me for my product until well after it has sold-thru to an end user. Everything that's unsold comes back to me (and they bill me for shipping both ways!) In the meantime, all I have is basically an "IOU" promise to someday pay IF it eventually sells (and they always drag out the payment beyond the already-extended due date).

Also, if I want to be featured in their circular I have to "buy" that just like an ad in a magazine except the retailer will (usually) DFI (deduct from invoice) the "ad" cost, which means they just owe me less (if and when the product sells and they actually pay). The same is true for getting my product displayed on an end cap or with in-store signage.

The big retailers bring in new products to "test" all the time and do so at basically no financial risk to themselves (other than the opportunity cost of the shelf space) while capturing all the sales data.

>(and they always drag out the payment beyond the already-extended due date)

That's pretty much their business model isn't it? Make money on investing for the days between product sold and payment.

You can only make a little money on that because interest rates are near zero, and investments with non-zero returns carry risk.

Amazon sells products and facilitates others' sales.

If Amazon carried the entirety of their inventory themselves like Costco or like Walmart used to be (before the expansion of their own online marketplace), it would be a distinctly different situation.

That doesn't sound aligned with the California case yesterday?

All of Amazon's "we're not actually a monopoly" and "we're not responsible for defective products" arguments are based on this. They claim they are very much NOT a Costco or Walmart.

You have the wrong mental model. Amazon isn’t Costco. Amazon is a shopping mall that has access to its tenants’ sales information and also owns an anchor store in the same mall.

Costco can determine that Best Brand shoes sell in its stores and decide to source shoes themselves and stop carrying Best Brand.

Amazon can determine that the Footlocker in their mall is making a killing selling Best Brand shoes and either sell Best Brand shoes in their anchor store or source their own shoes, all at a price that Footlocker can’t match. They can also advertise those shoes throughout their mall and change the layout so customers have to walk past their cheaper shoes to get to the Footlocker.

This explanation doesn't explain the difference to me at all. Costco can see that vodka sells well, so they can make Kirkland brand vodka. They control the layout of the store, so they can change the layout so people see Kirkland brand first when they get to the liquor section. They know the pricing of other vodkas and which ones sell well, so they can source Kirkland vodka at an ideal price point.

None of what you've described about Amazon differentiates it from Costco at all.

I think the only difference is that Amazon is a digital marketplace, so they can and do let their users pioneer what gets sold.

Space is at a premium with a physical location, so the likelihood of an actual store exploiting that is extremely unlikely

Unlikely? I literally just described an example of Costco doing this right now with vodka. That's not a hypothetical - Kirkland brand vodka is a real thing.

Your logic is backwards - when space is at a premium, making the most profit off each item in that space is critical. It makes more sense for Costco to do this than it does for Amazon, not less.

Store brand products are not new and not the issue. Let's pretend that Costco didn't currently sell vodka at all. If Costco wants to know if they should start selling vodka or bottling their own vodka and selling that they don't have access to the sales data from the liquor store next door to Costco. Amazon is letting other businesses take the risks and using sales data from those businesses to outcompete them.

But Costco does sell Vodka and wouldn't have made that product if Vodka sold 10% of what it actually sells. Because Amazon sells literally everything, is it a crime to do what Costco does, just on a bigger scale?

The only end-goal that would actually solve the problem fairly is if companies couldn't sell first-party products (or products from a partner where they have a vested interest in) in their store. If you just take care of the one company, you end up with other companies doing the same thing in 20 years like how iOS still has a default music player when MS got burnt for that with having a default browser.

I feel like people in this thread are being deliberately obtuse. The issue isn't about selling vodka. It isn't about selling store brand alternatives to brand name products. The issue is where Amazon is getting their data from when decided what products to sell and what store brand products to make.

When Costco decides to make a store brand alternative they are using sales data for things they have sold in their store. Amazon is using data for things other people have sold. Amazon is not doing what Costco does.

This is not about making a home brand. Amazon can literally look at the sells data of e.g. some seller which sells Nike Air Jordans (as a stupid example) and go and source those themselves and offer them (the exact same brand) cheaper than the seller, because they have all the sales data. Now how would Cosco do this?

Costco also looks at sales data for competing products (within Costco) and chooses to make house brands of those products.

It's not like Amazon sees sales data from someone's shopify site if people choose to sell on both brand.com and amazon.com.

That's the right way to look at it, missing just one crucial detail.

Costco pays for the items that appear on its shelves (excepting the <1% of goods that are on a consignment basis, usually new trial products). The distributor of the store brand and the name brand have already been paid for the products (and are usually the same company).

Amazon gets paid by the distributors (aka third party sellers) on Amazon.com for handling their sales (even in instances where it is not handling fulfillment), while also competing against them. That is where the anticompetitive concerns arise.

If Amazon just sold stuff through the Amazon.com seller, and didn't have third-party sellers, (or if it operated a separate website for third party sellers) that would be fine.

Don't most large brick and mortar retailers maintain refund for unsold goods agreements in addition to defects? Generally only exercised if they are complete failures.

Effectively the difference in practice is a matter of financing and grain of operation - older retail would gain more and give no extra to upfront sales of say toliet paper after a demand spike raised prices while Amazon would give them a per sale percentage cut.

At what point does own involvement in consignment sales models become not fine? If it works at 1% consignment. Is it 25%? 50%? 75%? 90%? Or more likely it doesn't exist because the whole concept is a fabrication that pays no attention to real law and operates in the court of public opinion to push their bullshit which wouldn't even need a defendant motion before winding up dismissed by a judge because they cannot point to any real laws?

I don't know why HN is so focused on consignment sales. They are a tiny portion of the retail market, because no store (even Walmart) has the leverage to force consignment terms on their suppliers except for the tiny portion consisting of new products that distributors are trying to get stores to start selling.

Also, Amazon does not give a per sale cut of the percentage, nor would they, since that's not how consignment works. Consignment goods are still sold at retail price; the only difference is that the supplier only gets paid for goods that sold. They don't get to share in the (additional) profits if the retailer (aka "Amazon.com")charges more due to spiking prices.

It's simple, Costco actually buys the inventory, and resells it. There are more advanced kinds of agreements (like buy back X number of coats of you sell less than Y) but that's largely how they operate.

Amazon is much more like a digital mall in that they rent out their store features for sellers.

However, Amazon would like to be seen by the customer as Costco and this causes dissonance between how they treat sellers, and how they treat customers.

Okay, you've described the business models, but so what?

In both cases, they still use the sales data available to them to create and sell their own products at the expense of third party sellers. In Amazon's case, that means diverting customers away from third party listings to their own. In Costco's case, that means making fewer purchases from third party sellers because the amount of shelf space available decreases as Costco puts more of its own products out.

The type of sales relationship that they have with third party sellers doesn't change the fact that both are using sales data to create and sell their own products at the expense of those third parties.

In both cases, they still use the sales data available to them to create and sell their own products at the expense of third party sellers.

Costco doesn't have any third party sellers. Costco is the only seller.

Yes, but the terms of the relationship make Amazon's behavior anti-competitive. Costco isn't going to various brands and asking them to sell at Costco, they buy inventory and resell it at a profit. Amazon has convinced a large portion of the retail market to feudalize themselves on Amazon's platform, then they are using the data accrued to take over the markets of their current and former tenants.

>"Okay, you've described the business models, but so what?"

That the defining feature mate!

Getting paid an extra to provide premium service to a customer is normal in some areas, but it's a crime of you hold public office.

S/he may argue that public officials manage to do it too, despite its illegality, hence it's Okay for Amazon to do so. For some, whatever Amazon does is okay, there will always be some other cases happening elsewhere that in some twisted ways are the same. I think most people are only ever consumers, and can't escape their subjectivity on this matter. They get theit toys delivered within a couple of days, the invoice says free delivery, they want things to remain that way so what ever Amazon is doing is okay (for them, for now)

In the Costco model, Costco pays up front for the vodka and incurs all the risk if the vodka doesn't sell. In the Amazon model, Amazon charges third-party sellers "rent" to be on the platform in the form of a cut of all transactions, but the third-party sellers still incur all risk for inventory that doesn't sell. And then Amazon turns around and uses the sales data from the third-party sellers to undercut them later on.

I am not sure about Costco, but Best Buy does not purchase all the items it sells. For some items it only remits a payment to the manufacturer after the item has sold. Should they not get to see the sales data?

> relationship that they have with third party sellers

There are no third party sellers at Costco, it’s only Costco.

Costco buys products from third party sellers. That is a relationship with third party sellers.

No, those are Costco’s suppliers which are completely invisible to the customer and completely different.

Costco purchases the items from the suppliers, generally. They then resell them to you for a markup.

With few exceptions, every single item in Costco is sold by the first party seller: Costco. So my point stands: third party sellers are generally not a part of the Costco experience.

Not always true. Usually, Costco/Target/Walmart/etc. pay for it before it sells, but it’s not always like that. “Vendor” products like Frito Lay, Bimbo, etc. are sometimes given the ability to just put product on the floor at no cost to the retailer. When it sells, the retailer will send money to the vendor.

Consignment sales represent less than 1% of retail sales at these stores, and generally only are required for new products that the retailer will not purchase in bulk before the distributor proves market demand.

Generally, for the sales you have described, the consignment sales are paired with marketing efforts by the distributor to demonstrate customer interest. If the test succeeds, the store will purchase future lots from the distributor. If the test does not, the product disappears from the shelves and the distributor stops selling it.

I know, but I deliberately didn’t mention that because it’s the exception, not the rule.

If you pick up a random item in Costco, it’s paid for and sold by Costco.

You can't see the difference because you're conflating the terms seller and vendor. There are no third-party sellers at Costco.

The difference really comes down to three things: the layer on which the competition occurs, whose data is being used, and whether the competition is fair (which comes down to risk/reward).

At Costco, the competition occurs between manufacturers. Costco uses its own retail data as a retailer. The risk to the vendor to sell at Costco is marginal (even if they have to pay for shelf space) compared to being in the market at all. Costco can compete with a store brand, but if they want to sell the vendors products they have to go to the vendor. They can't undercut the vendor with an equivalent product unless they make an equivalent product for cheaper. The risk is spread out and Costco owns a healthy amount of it.

At Amazon, the competition occurs between retailers. Amazon uses its competitors data, which it gains by being a 'marketplace'. The other retailer carries all the risks associated with being a retailer. Amazon takes a piece of it, the size of which depends on what 'services' the retailer uses through Amazon's marketplace. If the retailer fails, Amazon loses nothing. If the retailer wins, Amazon can use the retailers' data and begin selling the same product. It can use its size and the retailers' own numbers to get a better deal with the vendor and undercut the other retailers price on the same exact product. (Store brands are also an option and an issue, but if you're focused on that, you're missing the forest for the trees.) The retailer takes the vast majority of the risk, but Amazon can, at its option, swoop in and take the majority of the reward.

When Costco sells Kirkland brand vodka and Grey Goose, all bottles of Grey Goose are sold the same way. Costco purchases directly or from a distributor. Grey Goose may or may not pay for shelf space, IDK. Purchasing premium shelf space is a common practice for other retailers and grocers. When Grey Goose is sold on Amazon, either Amazon buys it and re-sells it or Grey Goose sells it through a marketplace account incurring Amazon's marketplace fees. So Amazon can always have two listings for one product, a marketplace listing and an Amazon listing. Their Amazon listing can always be cheaper.

They don't have two listings though. They list the prices of all sellers in one item, with the lowest price as the default.

Costco sources Kirkland products from people they already do business with. So if they see your Vodka is doing great, they call you and ask (well, as a giant customer of yours "ask") you to make a Kirkland version as well. On those bottles you'll make less, but you're still going to make a lot of money there. And getting cheaper people to buy your product without diluting your brand. And a lot of money off your branded product. Most things I've seen from manufacturers online is that being asked to supply Costco with their product and the Kirkland version is a win from both asks.

Maybe Costco is different, but at a lot of stores the line is blurrier. You might be able to get your product on store shelves, but if you want good placement, you basically have to rent that shelf space.

> Costco and Amazon collect and analyze sales data from the sale of both company and non-company products.

It's similar, although personally I think the relationship between the companies is meaningfully different:

Costco purchases product from manufacturers, and may choose to source product from other manufacturers (including under its own brand name). It uses it's own sales data to make this decision.

Amazon acts as a marketplace for other businesses to list and sell their own products. These businesses are online retailers which use the Amazon platform, and pay Amazon fees for this service. Amazon is then using other retailers sales data in order to inform it's own business.

The difference is with Costco it is their own sales data, while in Amazon it is the sales data of other retailers. It would be an issue if Walmart had access to Costco's sales data and not visa-versa (this would provide Walmart with an unfair competitive advantage). Similarly other smaller online retailers do not get access to Amazon's sales data, but Amazon get's access to the other retailers sales data who use their platform, and will then use this to compete with them.

Amen.

Despite this I don't see how the case is that Amazon is being anti competitive while Costco isn't - just because they purchase and resell inventory doesn't mean Costco (or Walmart or Sams Club etc) doesn't hold the same power over their product suppliers that Amazon does to do data science on their sales to determine what new products to make in-house.

Plus, walmart is now a marketplace as well. This overpriced GPU is 'Sold & shipped by Monoprice Inc'. It's only a matter of time before Walmart commits the same anticompetitive acts as Amazon using Marketplace data. https://www.walmart.com/ip/Zotac-NVIDIA-GeForce-RTX-3080-Gra...

Analyzing their own sales and analyzing other people's sales on their platform are two different things. Saying that Walmart may also try to do this in the future does not make it right or excusable.

How is it different? The same outcomes and potential power abuse happens in both situations.

I really think you don't get the point of how Amazon marketplace works

Who takes the risk in each scenario is different. If Amazon was only using their own sales data then they'd need to start selling a more diverse range of products themselves to acquire that data. Some of those products would sell well and some would be flops. Amazon would have invested money into selling all of them so the cost for the flops negatively affects their bottom line.

In the current scenario someone else sells things on Amazon and is taking the risk that the item they're selling will not sell well. If the item is a hit, Amazon swoops in and starts selling it themselves or possibly makes a competitor and sells it themselves. Either way, Amazon reduces their own risk of selling poorly performing products while also cutting into the upside for the vendor who took that risk when they are successful.

Edit: I forgot to mention above that the people taking this risk are paying Amazon to do so.

> Just because they purchase and resell inventory doesn't mean Costco (or Walmart or Sams Club etc) doesn't hold the same power over their product suppliers that Amazon does

With the Costco example, Costco as a retailer holds power over their product suppliers. If they are making an own brand, what they are doing is buying it from another supplier and asking that manufacturer to put their own label on it. These relationships can be anti-competitive and present opportunities for market-abuse, but in a meaningfully different way to the Amazon example.

With the Amazon example, Amazon holds power over other retailers using their platform.

And with the Walmart example you have stated, I do think that suffers from the same problems.

To be competitive, Amazon would be able to say everyone has access to the same information to rent out the online marketplace's booths. This is the issue at hand--Amazon has all of the information and is breaking its own rules in using it to give them advantage in the marketplace. Greedy greedy capitalistic cheesey.

I think the difference they are getting at is something akin to this.

In one situation you run a stall and buy products from people to sell at that stall. At some point you use what you've learned doing this to sell your own product.

In the other, you don't buy anything from anybody. Instead, you rent out a stall for other people to sell things from. You then watch the stall and use that information to open your own stall.

The first case seems pretty normal to most people, I think. The person you were buying from originally doesn't inherently get some kind of assurance that you will always buy from them in the future. There's no difference to the seller if you buy from somebody else, don't sell any of that product, or make your own. We just don't expect that buying goods from somebody inherently adds any other kind of obligation. It's two equal parties making an exchange, and nothing more.

The second case, however, I think is not so clear cut. All of the sudden you have a lasting relationship between two unequal parties. These are the sorts of situations where you tend to find more implicit or inherent obligations on the participants. It's no longer the guy you sold that thing to not buying from you again, it's your landlord competing with you.

I'm not trying to pick a side here, so much as I am trying to explain why people might not see the two situations as identical. And of course there are plenty of real-world complications too.

Costco buys products and resells them. Costco's research numbers are paid for entirely by Costco.

Amazon rents space to merchants where those items are sold through the site for a fee. Amazon is never on the hook for a sale and is basically getting paid to do the market research to set up as a competitor.

Yes, Costco does do some referral sales but I can't think of anything which has gone on to be a Kirkland product.

Costco buys the products it sells. Then it decides how and for how much they will be sold. Their product, paid for. That’s the difference

This explanation makes the most sense to me, but there is something that you are leaving out. Not only is Amazon a marketplace, but it is THE marketplace. Amazon has an effective monopoly on small-seller logistics and marketplace services in the United States (and many other places), soup-to-nuts.

If you are anything other than a massive corporation, any manufacturer that chooses not to sell through Amazon and utilize all or most of its services (marketplace listing, payments, warehousing, delivery) will be at a massive cost disadvantage and will not be able to compete with other sellers that do choose to participate with Amazon.

And more significantly, perhaps, if you don't sell through Amazon's marketplace, you are often unable to compete with Amazon itself.

This just isn't really true. It depends on what type of product you're selling, but there are a huge number of independent ecommerce stores that do extremely well.

I sell dog treat mix (coopersdogtreats.com) - I do much better both in terms of margins and overall sales on my own website (with traffic coming primarily via paid FB ads) than on Amazon.

That's not even including other huge marketplaces like walmart.com, Chewy, Etsy, etc.

Amazon doesn't have a monopoly on small-seller logistics - I'm about to move all of my logistics over to a 3PL, and there are plenty that will cost-effectively work with startups (ShipBob, Shipmonk, etc. - just Google "ecommerce 3PL" and you'll see what I mean).

How much Amazon plays into your business obviously depends on the category, but the idea that it's impossible to compete in ecommerce unless you're on Amazon is an easily disproven myth.

I'm curious about how you would compare Amazon vs your own site. Things like Amazon's buyer-friendly return policy comes to mind...which clearly come at a cost for sellers (and buyers, fairly directly).

I have a very small number of returns on Amazon, since my product can't be used and then returned.

Amazon isn't terrible, but it has two big problems for me. First, margins are lower because I'm not only paying them a cut of every sale, I'm also paying for Amazon advertising. Second, I don't have a relationship with the buyer, which is the real killer. I do really well with repeat sales via email, and those are where the real margin is since I'm not paying to acquire those users again. On my site, I can afford to break even (or even lose a little money) on the first sale, where I must make money on each sale on Amazon.

I will say the one big difference between my product and many on Amazon is that it's not something that you seek out - very few people are searching for "dog treat mix" on Amazon (or Google/Bing/etc.). Amazon does have some types of advertising that work well for targeting other luxury dog goods, but my volume is going to be limited there. Facebook advertising works better for me, because I can target people by demographics and explain the product in an ad.

To that point, it may be important to be on Amazon if you're in a commodity business. On the other hand, it sucks to be in a commodity business for so many other reasons that I hardly think it's reasonable to pin the blame on Amazon for the difficulties there.

The one thing I will say about Amazon vs. Shopify that surprised me is that Amazon's support tends to be quite competent (at least if you call them - you get nothing but canned responses via email), while Shopify's is just terrible. They can help with basic issues using the software, but when it comes to real problems, like bugs in reporting (or more recently in my case, a bug where they undercharged a customer), they just say they'll get back to you and never do unless you are incredibly aggressive about hounding them.

Sorry I missed your detailed reply -- very interesting.

What people kind of miss is that outside of FBA it's the actual logistics companies that are handling the logistics for all merchant fulfilled Amazon sales. The normal logistics companies are also handling a ton of the work involved with getting goods to FBA. There are lots of 3PL solutions that can deliver FBA style performance at a lower cost to the seller. There are other advantages to not using Amazon as a seller or just using Amazon as one additional channel among multiple ones.

I've seen at least one other comment saying this, and not that I don't believe you, but can you name several companies that do that and come within say 150% of Amazon? Last time I really dug into this was years ago and nothing was really close then, maybe it's better now?

My other question to comments : > What are the Amazon level logistics and delivery service that is available to a smaller retailer? I see some nascent choices but they really aren’t that close.

I've priced out several and all are within 150%. Shipbob is the closest at 10-20% more expensive than FBA, but depending on your product it may actually be more cost effective. I need them to pick and pack several items, since I sell my stuff individually as well as in kits (boxes of multiple items, which are vastly more popular than people buying individual items), and they include most of the cost of building out those kits in their shipping fees.

I'm happy to read what you are saying, and stand corrected.

I wonder, though. Do you think your experience is typical?

Am I wrong to think that your product is more niche and premium than the most products that are sold via the Amazon marketplace? Do you think that you might get more repeat business than most products sold on Amazon?

It's been a while since I've looked into pricing for FB ads, but my sense is that a product with more narrow margins and less potential for repeat business could find it difficult to attract customers via advertising without increasing prices beyond what could be found on Amazon for competing products.

I think Amazon's too big and broad to describe any experience as typical, but there are certainly differences in the type of business.

You are 100% right that my products are niche and premium, and that definitely makes a difference. But on the other hand, if you're a startup selling a commodity product, you're in a bad position for a whole lot of reasons other than Amazon.

From an advertising standpoint, you're right - I have the advantage of selling a product that has a high repeat rate, and that's helpful. On the other hand, my AOV is fairly low and my margins are okay but not extraordinary.

I think that the points you're raising here are what matter - not Amazon. If you're in a business that is one of: high AOV, high margin, subscription/frequent repeat customers then you're okay. If you're in a low margin, commodity business and you aren't operating at a huge scale, you're not in a great spot.

Ultimately, I think the actual value added by Amazon for startups is trust - I know that if I order from them, your product will arrive on time, and if there's an issue it'll get fixed ASAP. All of the other stuff, like two-day shipping and customer-friendly return policies, is doable off of Amazon. Even trust is achievable in other ways, though - my company was featured in an Associated Press article that was broadly syndicated, and when I slapped "AS SEEN ON USA TODAY, FOX, KTLA AND MORE" on the top of every product page and the top of my FB ads, it made a huge difference immediately.

And actually now that I've typed that I'll add one more thing in Amazon's favor - ease of use. If you don't know a lot about ecommerce, it's pretty easy to get set up and ship them product. It's also easy to advertise, simply because their advertising is much, much simpler than Facebook. There's no copy and limited ability to use creative outside of your product images, so you don't have to constantly test stuff. While my sales on Amazon aren't high margin, they're also extremely low effort.

I think Shopify’s massive success means this likely isn’t this extreme

> But Amazon is also a marketplace. In that role it acts as a "rentable retail space".

Most brick and mortar retailers also sell space to manufacturers. Product positioning in the store and even on the shelves isnt solely due to UX

So how do you factor in the recent ruling in California?

> An appeals court in California has ruled that Amazon can be held liable for products sold through its marketplace by a third-party seller

That seems to obviate the distinction of 'marketplace facilitator' vs. 'retailer' for them. That makes them much more like Costco with a special relationship with vendors to set up vendor-specific sections in their store.

Personally, I've always detested the 3rd-party market in Amazon and wouldn't mind seeing it go away.

Amazon doesn't see it that way, their optimised their business as an ad platform + logistic solution. Higher margins there than bothering acting as sellers with risky margins.

Amazon doesn't see it that way, their optimised their business as an ad platform + logistic solution. Higher margins there than bothering acting as sellers with lower and not even guaranteed margins.

> But Amazon is also a marketplace

Meanwhile, https://news.ycombinator.com/item?id=24174276

"Amazon Liable for Defective Third-Party Products Rules CA Appellate Court"

It seems both regulators and Amazon want whether or not it's a marketplace to go both ways whenever it's convenient.

In an ideal world regulators want to define Amazon as whatever best fits with the public's best interest (as opposed to what is convenient)

It's hard to make new laws to address specific problems with Amazon and at times it acts like both; sometimes it's mostly a marketplace and other times it does things like mixing inventory that make it more like a retailer (in the sense that they're presenting a unified front for multiple suppliers).

There's nothing definitional about "marketplace" that says you don't have to bear responsibility for what is bought and sold on your marketplace.

You're misreading the ruling. The ruling is for state law not federal and says the following, "The Appellate Court didn’t agree with Amazon’s stance. It noted that the product had been listed on Amazon, was stored in an Amazon warehouse, had payment facilitated by Amazon, and shipped it out in Amazon packaging, proving it to have a hand in getting it to Bolger and thus liable under California law." So, this stance will change depending on the product and what law is being alleged to have been broken.

Majority of big retails also rent majority of their shelves to vendors. This is called consignment contract.

So no big difference...

That sounds awfully like the Platform vs Publisher distinction "logic".

Two helpful questions I don’t know answers to, but I’m quite confident that the difference between answers are the crux of the matter:

Who are Costco customers?

Who are Amazon customers?

I think that most Costco customers also use Amazon. I.e. I get my basic bulk items from Costco and my specific items from Amazon. Perhaps this is why amazon is trying to get these customer with "Subscribe and save" which offers discounts for subscriptions on basic items.

Although, I have not seen any real data on this. Just my gut read.

I'm not familiar with Costco. Do their sellers operate their own stores inside Costco's premises?

I don't think they do. It's similar to a grocery store that sells other companies products. Costco is different in that they sell products wholesale/bulk.

Costco is a retailer. Amazon claims to be a neutral 3rd party when providing marketplace services to 3rd party sellers. Especially when trying to disclaim product liability. They tried to have it both ways, and now they'll get neither, and deserve it completely.

Amazon is pushing people towards Fulfilled by Amazon. It makes sense as a marketplace, providing a more consistent experience. However when they compete in that marketplace, it means they're charging you to get data to outcompete you (via FBA fees). It also means that if they do enter that market, they're double dipping. They're taking away your revenue stream for their own profit, while simultaneously increasing what they charge you because it's harder to get your inventory out of Amazon's warehouses via selling it. They can also almost always outcompete you, because they don't have to pay the marketplace fees (they get the service at cost). They can also use the money they make from marketplace fees to undercut you, selling their competing product at a loss (but net zero after you pay your fees) until you get off the marketplace. Amazon also has a perverse incentive to not sell your goods because they don't have to pay for them, so they're totally okay if they can ensure that no one buys your product.

Costco has to buy the goods they sell. If it's on a shelf, Costco wants it to sell. If they don't want something to sell, they stop buying it/carrying it. They can't make any money by buying a competitor's product and letting it sit in a warehouse.

The incentive structure for Amazon is bad for everyone else. Their ideal profit scenario is to have warehouses full of other companies' stuff that never sells, and to sell an Amazon branded alternative to each consumer with demand. Costco's ideal profit scenario is to never buy third party products and only sell Kirkland goods (assuming demand stays the same). Amazon needs to pick one; they're either a marketplace, where their ideal profit scenario is to sell literally anything they have without preference, or they're a retailer and their ideal profit scenario is like Costco.

Costco launching/selling products with own sales data is one thing.

To make it clear, Here you should consider Amazon.com different entity than Amazon Seller Account. Now would you sell on amazon.com if amazon.com leaks your data to "amazon seller account" owner to boost his sales of a similar product, which you sell.

Moral thing is, Amazon seller division who deals with product directly sold by Amazon, should never have access to the data of other sellers.Fullstop.

You need to consider whether there's a difference between physical mail and Email (esp. Gmail)? And whether Google's business model is monopolistic because its 'software' over the internet.

I think its a matter of scale. Say Costco makes a Kirkland brand cereal, there are other stores that you can buy cereal at and there is competition. For a lot people, all online shopping comes from Amazon. Amazon uses this position to their advantage in many ways (high quality customer data, branding, etc.). This actually disincentives people from making compelling products because of the risk that Amazon will just steal the product.

This is a good question. It rests on an implicit assumption that we think Amazon's behavior is anti-consumer ("bad") and Costco's is not ("good").

But perhaps one way to resolve this dissonance is to consider that Costco's behavior is anti-competitive too. They are a beloved brand, but that doesn't mean our emotional attachment to Kirkland products is an accurate reality-based moral stance.

I recall hearing on a radio show a while ago about this topic a lawyer noting that a difference in these cases is that a retailer "takes a risk" in order to get the data, that is that they open up their storefront to this supplier, allocate space for them, and pay the supplier. The only way they learn that the supplier's product could be a success is by selling the suppliers product.

In contrast Amazon takes on zero risk. It snoops on the data of transactions, and then launches competing products.

The distinction comes down to the legal differences in how they operate their sales operations:

Costco is legally a "reseller" that purchases items from manufacturers/distributors (at wholesale prices) and "resells" them to customers. (Note: only a tiny fraction (<1%) of Costco's inventory is sold on a consignment basis, meaning that the manufacturer/distributor only gets paid for units actually sold on. This arrangement generally only applies to some new products being sold on a trial basis.)

Amazon is also a reseller of items sold through the Amazon.com seller...but not for items "sold" by third-party merchants. The distinction is that for Amazon.com seller sales, Amazon has legally purchased the inventory sold, even if the payment terms may more closely resemble consignment transactions than wholesale transactions.

It is like Microsoft learns your business through your emails and starts the undercutting. Does it sound more serious?

AmazonMarketplace is a software vendor and data should belong to sellers only.

> Is this fundamentally different than Costco using sales data to choose which Kirkland products to launch/sell?

It's 100% different. Costco doesn't make any of the Kirkland brand products. Their suppliers do. And Costco usually only carries one brand of, say, batteries. They go to Duracell and say "We want to buy X Duracell batteries and Y Kirkland batteries from you over the next Z years". If Duracell doesn't want it, their next call is the same thing to Energizer.

Basically, Costco says to their suppliers "We want to give you X high margin sales and Y much lower margin sales." And you know that going in. And are ecstatic because all those sales would otherwise go to your competitor.

Amazon says "here's a flea market", then uses their security cameras to see what items are selling at everyone's stalls. The next day, the stalls of the people who run the flea market (right next to the front door) also have the best selling items. Oh, and their tables are infinite and maybe they also fuck with the listings on the map to make it harder to find that those items are also at your booth.

The Amazon and Costco situations are different.

When they start by doing independent market research, selecting a product, building/sourcing it and marketing it, then analyzing data generated by their own sales of these products in their own stores (brick & mortar or online), they are the same.

The DIFFERENCE is that Amazon also hosts other sellers and uses THEIR data.

So, an entrepreneur comes along having designed, arranged fabrication, and imports a product, then pays fees to sell it on Amazon. Amazon now uses THE MERCHANT's own data against them to notice the successful product, decide that it will be profitable, then search out the same manufacturer, offer a better deal, start selling on their own market as Amazon Basics, then kick the original seller off the market. [1], [2] It happens repeatedly enough to call it systematic.

So, if you are only marginally successful, you can continue selling unmolested.

But, if you find good success, Amazon will use your data to chop the top success zone right off of your business, after charging you for services while you spend decades building it.

It is even better than Zuckerberg's plan - at least Farcebook doesn't charge you to hijack your data for their purposes - Amazon charges you AND hijacks your data.

Just because it evades existing laws does not make it right.

I will certainly not be selling anything on Amazon that either 1) I'm 100% certain cannot be reproduced elsewhere or 2) I only intend to be a small or temporary market.

[1] https://www.wsj.com/articles/amazon-competition-shopify-wayf...

[2] https://www.hitc.com/en-gb/2020/12/24/amazon-tripod-company-...

The most interesting part of the HN discussion is not about the definition of what Amazon is doing, but the occasional misunderstanding of how large brick and mortar retail businesses operate at scale (see: buying shelf space/payment dependant on sales/etc).

There are lots of folks on here that understand what Amazon is doing, less who understand retail businesses mechanisms.

I'm not sure what Amazon is doing is legal (def will vary widely between the eu and us markets), but it is another interesting example of how doing something at scale can be perceived as fundamentally different then when it's done in a smaller way (especially as it pertains to privacy).

It's less doing it at "scale" and more doing it as a monopoly/monopsony.

Walmart has faced similar questions as well, but as much of a monopoly/monopsony as Walmart is, it's far less than what Amazon is. Moreso in non US advanced countries that actually enforce the anti trust regulations in their laws.

In what market is Amazon a monopoly?

Being strict about the term, none. But "monopoly" has become a colloquialism for "big company (that I don't like)".

Amazon has certainly generated enough bad faith and operates at a large enough scale to galvanize the anti-trust advocates

They are popular, efficient, and usually affordable - if not cheaper than many competing outlets, but I do not see them as a monopoly by definition.

Amazon has made it more convenient to use their services than their competition in many ways, but to my understanding, there are alternatives for just about everything they offer.

> Moreso in non US advanced countries that actually enforce the anti trust regulations in their laws.

I think it's pretty disingenuous to say that the U.S. isn't enforcing its antitrust laws, the DOJ certainly opens investigations against these conglomerates, they just don't take them to court, so there might not be enough info for the DOJ to think there's a case. We don't know the full story for any of these cases and thus can't become sole arbitrators of whether or not something is an antitrust violation.

The problem is probably that the DOJ doesn't like to bring cases against people in they they don't have hard evidence and a high likelihood to succeed in their prosecution - they have an average 92% success rate in the cases they bring against defendants[0]. I'm not one to say how to run the DOJ but chances are they could find more damning documents via court discovery (if they think they have enough of a case to get to discovery, at least).

0: https://www.justice.gov/doj/page/file/1249306/download#page=... (page 16)

> The problem is probably that the DOJ doesn't like to bring cases against people in they they don't have hard evidence and a high likelihood to succeed in their prosecution

It has nothing to do with a lack of evidence and everything to do with not biting the hands that feed the boss's next campaign fund.

The DOJ, SEC, etc have an army of non-politically-appointed civil servants.

And yet not a single non-politically-appointed civil servant at the DOJ has the actual authority to bring an action against a big company like Amazon. When the DOJ brings a major antitrust case against a major American company there is no chance it didn't get the Attorney General's, and probably the President's, sign-off first. None. Zero.

Potayto, potahtoh.

Failed enforcement attempts are as ineffective as non-attempted enforcement.

What's a law with no teeth?

It has teeth but high standards. It is a bit more like Treason charges in the US. Technically a capital crime but often not worth trying as the precedents make it a high fence to clear. You are better off finding some anticompetitive business practice to cease.

But anything about monopoly from the professional liars is just a bunch of table pounding as they lack laws and facts.

> as much of a monopoly/monopsony as Walmart is, it's far less than what Amazon is.

Walmart retail sales are significantly larger than Amazon's retail sales.

For 2019 (chosen to avoid the disparate impact of pandemic), Walmart sold $514B while Amazon retail sold only $135B first-party and $200B third-party. Given the growth rates, Amazon will pass Walmart, but I don't think Walmart has "far less" power in retail than Amazon.

I think mail order and brick&mortar compete in some product segments, but are separate in others. For example, perhaps split off much of grocery and bulky cheap items as well as legally constrained products from WalMart's total (although Amazon is making inroads there).

Walmart has a huge online/mail component too. They basically bought and (unlike so many) successfully integrated and digested Jet (and now Bonobos) explicitly for that.

This, and Walmart isn't just going to sit by and let Amazon win, why would they? I think folks on the Internet generally tend to assume Amazon is inevitable, but I doubt that's how Walmart thinks of it.

Walmart and Amazon are both good for one another, and their competition helps us, except for when they basically non-compete over things like wages.

I agree about the internet/tech user part of that. If you asked me to give estimates of their relative size 5 years ago, I'd have probably said that Amazon was much bigger than Walmart, which would have been entirely wrong, of course.

The pandemic was a huge boon for Amazon, but I don't think the battle for retail will have a clean, singular winner and consumers are endlessly demanding in terms of what it will take to remain the winner. Toys-R-Us and Sears learned that painful lesson within our adult lifetime. They won't be the last.

From a little bit of retail corporate experience: people are used to seeing Amazon roll over competitors with under-invested supply chains.

There aren't really any of those left.

Amazon taking on Walmart, Home Depot, or (I assume) Target is going to look very different. Because all have been shoveling money into their supply chain efficiencies for the last 10 years.

>but as much of a monopoly/monopsony as Walmart is, it's far less than what Amazon is

I don't believe this to be the case. How is Amazon a monopoly, given the large number of online retailers that continue to be successful?

I don't think that's a fair comparison. It would be like if Amazon owned the entire mall, and would kick out competitors and establish their own stores once they become profitable.

Amazon is both a retailer in the sense that they sell products, but also owns the entire marketplace as well.

This.

They are also so good at building malls that they own the construction company and the supply chain of raw goods for the construction efforts (AWS). They use their scale to cut costs for construction globally so it doesn't make economic sense for others to build without them. Even some of their competitors use their construction company to build their vision of what a mall looks like. All the while Amazon is gaining valuable insights they can steal to use on their own malls.

They don’t kick out competitors though, merely open up their own stores. To me (the consumer), that seems fine.

To abuse this analogy further - if they also put signs for their owns stores in front of the other stores signage, or redesign the mall to direct people away from the competitors - that seems less fine.

What if there's multiple other malls just across the street? As is the case in online retail. Even easier than crossing the street, to be honest, just click that second result in Google instead of the first. Is it so hard to admit that Amazon's customers are using them because their offering is great and not because of lack of alternatives?

That's irrelevant to charges of anti-competitive behavior

Amazon has always used dark patterns with their 3rd party sellers. They even restrict the price sellers can charge on products they sell on Amazon and their own website. This ensures Amazon will be the lowest price.

In this analogy, that would mean you have a store inside the mall and right across the street. Amazon sees you are selling products cheaper across the street since rent across the street is way cheaper than inside the mall. Amazon then says either you charge the same price in the mall or you get kicked out. You could call Amazon's bluff but most sellers are not risking their seller accounts.

It would be like if Amazon owned the entire mall, and would kick out competitors and establish their own stores once they become profitable.

Just wait. It may happen.

During the pandemic some of the big mall companies bought their tenants, either out of bankruptcy, or at crazy cheap prices.

At first it looked like the malls were just doing it to keep the lights on and the storefronts occupied. Now there's more and more people saying the mall companies may try to become "Amazon In Real Life."

To me, it sounds like Department Stores 2.0. But it'll be interesting to see if it actually happens.

How is that functionally different from identifying a product that is selling well, making your own version of it, and selling that at the identified best or lower price from the data generated by the third party? Sure they may still list the third party (in direct competition in the same marketplace) but that doesn't mean they aren't acting extremely anticompetitive for a marketplace.

This isn't one off or new either but a pattern of abuse by Amazon: https://fortune.com/2016/04/20/amazon-copies-merchants/

Or from today: https://arstechnica.com/tech-policy/2021/05/4700-amazon-empl...

You seem to have a limited understanding as well.

Unlike other retailers, who are front and center that they own the sales data (some even sell it back to you, the 3p merchant), Amazon explicitly states they will not use that data (except in aggregate). Bezos' statement that he cannot say for sure if the policy has been violated is an admission that it has, and is even encouraged. It's very possible and easy in fact to enforce a chinese wall around that data. That they have chosen not to -- that the data is possibly available at all -- means that they expect successful PMs to use it on the down low.

It's clear they have this policy so as to attract merchants. So to turn around and violate it is a pretty severe issue.

Second, Amazon is in a position to actually produce or re-brand products under their own very strong brand. Unlike other retailers whose store brand is always the discount and less desirable option, and generally not taking away sales from the premium product.

These comparisons to brick&mortar stores are mostly irrelevant.

Amazon told 3rd party sellers it wouldn't use their sales data for its own sales (and possibly contractually agreed not to? - unsure here), and it now seems that they broke this promise.

How other stores operate doesn't matter. Amazon said it wouldn't do this and used that trust to attract sellers and grow their platform.

Companies break contracts all the time. The consequences range and can include legal action, hurt relationships, lost business ... but also could be minor ('business is business').

> Companies break contracts all the time.

Which is an excellent reason for preventing these types of monopolies from forming in the first place. Once you let one retailer get so large, they have almost unlimited power to act in this way, but the people who they harm have very little power in receiving any recompense for it.

> The consequences range

They sure do.. and Amazon is one of the largest companies operating today. The range is "off-scale high."

There is breaking contracts in minor often mutually agreed ways, or because 'can't do it'. Happens all the time.

Stealing your customers sales metrics, yeah that's never okay.

Lots of comments here of the format "every store does this."

No, no other store operates this way. Walmart and Costco do not have a little flea market of third party sellers inside their stores who run their own logistics. This would be more like Amazon being both an anchor tenant and owner of a mall, and requiring that every other store within the mall provide all their sales information, then rapidly evicting all the successful stores and replacing them with knock off stores that they also own.

> Walmart and Costco do not have a little flea market of third party sellers inside their stores

walmart.com does

That is true, I picked a bad example, although Walmart Marketplace is a very high touch service which is expressly targeting sellers that they don't want to cover themselves.

I have some good native Indian aromatherapy products... what category do you think it would fall under?

isn't this effectively how home depot and lowes are run? basically everything is on consignment, and they occasionally spin up private-label versions of tools to sell?

Not the same thing. Check out other relevant responses here, too. In short, Home Depot or Lowe's are buying products to resell. They are the seller themselves. OP's argument is that Amazon is the platform facilitating the sale -- hence the mall owner.

I'm a third party seller and I just left Amazon. When you buy a book, for example, are you aware that 40% of the sale goes to Amazon? Many sellers sell cheap items at a steep loss just to keep their sale metrics up. A couple bad reviews, etc. and your business is kicked off with little explanation and cold or no way to appeal. Third party sellers are not treated well and I'm not surprised Amazon steals seller data metrics

>A couple bad reviews, etc. and your business is kicked off with little explanation

There's got to be a dark underbelly to Amazon going on at the same time. My wife is bored enough that she's taken up a fight with Amazon over some bluetooth earbuds she returned. The earbuds themselves just simply didn't work; they'd do things they're not supposed to and not things they are supposed to so she posted a review saying such.

The seller started contacting my wife trying to bribe her to change her review to 5 stars. My wife updated the review as such saying the seller is trying to coerce her to change her review but she won't budge.

Amazon has now removed my wife's review saying she's "harassing" the seller despite having emails to prove the seller is the one who won't stop contacting her even though she's explicitly requested such. So my wife is battling Amazon asking them to re-instate the review or give her a real reason why it was removed.

It really is to the point where I won't buy from Amazon anymore unless I have no other choice. I don't trust a single thing about their review system. I don't trust a lot of products being unopened/untampered.

Yeah, as another perhaps anecdotal example, I've recently been forced to buy a book from Amazon because I literally couldn't find it anywhere else.

Despite the book being listed as "New", I received a book that was not only pretty old, but also had clearly been stolen from a library, with stamp marks and everything.

I'm not going to leave this alone, contacting the library and exposing this fraud is going to go pretty high on my pile of "to do" things...

Amazon has structured their reviews to enable unethical behavior by sellers.

Any review which comments on the seller or seller's behavior is removed because the product page is supposed to be a page of seller-agnostic reviews of the product. There is a separate page of reviews for each seller, but it is buried to the point that no-one looks at it.

It makes it leaving reviews about sellers doing unethical things like paying for reviews fruitless: either you put it on the product and it is removed quickly, or you put it on the seller and no one sees it.

The 40% in a vacuum does not really complete the picture for me. Is it possible to get the same book at a lower price somewhere else? If it were the case why would there not be other retailers undercutting Amazon?

Maybe I am missing some monopoly related issue here, but I would love to know more.

Isn't it sad that all our tech giants are guilty of anti-competitive behavior? You know, things that are supposedly illegal and should have been stopped by government regulators long ago?

It makes me wonder if these American businesses are really so different from the likes of Tencent, Huawei, etc and their ties to the Chinese government. Everyone knows those companies are only as big as they are because of government support. Can you really say that isn't the case with Google, Apple, Microsoft, Amazon, Facebook, etc?

They are getting there. Don't forget censorship and silencing unfavorable political speech.

I think the difference is that FAANG's regulatory capture isn't an explicit part of how our government works, it's implicit.

"we have a policy against this, but we violate it all the time"

“I am shocked, shocked, that gambling is going on in here.”

2nd sentence in the article:

>“I can’t guarantee you that that policy has never been violated,”

4th sentence in the article:

>identifying one case in which an employee used the access to improve sales.

So only violated once...

That they are telling us about.

Not quite. Per a secret audit carried out internally and smuggled out.

Is there a maxim for this?

When a group of people are highly incentivized to do something bad, they'll conspire to do something bad. Don't call me a conspiracy theorist.

It's basically Murphy's law

Human nature

Utility maximizing entities

Amazon should be nationalized.

All these 3rd party companies want is a "farmers market", a stall to sell their wares. Give them the municipal software infrastructure they need to do so and maintain it as a public good.

An apt comparison - most of the farmers’ markets around here have been ruined by resellers, too.

No, those Driscoll strawberries in March didn’t come from upstate New York farms.

Seriously, though. Between reselling and 'owner/operator businesses' (read: pyramid schemes selling oils, scents, candles, and makeup), the local farmer's market is just an absolute train wreck anymore.

Local farmers who used to sell at the farmer's market have moved to subscription boxes, from what I can tell.

Yea I am going to go ahead and say No to that....

Amazon has issues, but "nationalizing" it would not ease those issues in fact in most ways it would make them worse.

> Amazon has issues, but "nationalizing" it would not ease those issues in fact in most ways it would make them worse.

Change my mind then? What would be worse in that situation?

When was the last time you used government-run software? Was it a good experience?

Amtrak is great. I generally like government-run services. Have you tried dealing with your local cable monopoly? It's a nightmare -- why not get the government involved so things work more smoothly and there is more competition?

Less than a month ago, to sign up for my COVID vaccine. Yes, it was a good experience.

Yes actually, I recently signed up for my vaccination online via the GoVAX system, was flawless and painless: https://massvax.maryland.gov/

I've used plenty of for-profit software that did essentially the same thing but which fell flat on it's face in terms of UI/UX.

All the time. Yes. I've also had bad experiences with plenty of private companies.

Interop requirements may serve better than direct government control.

At the very least, it’s worth being clear eyed with respect to the quality of government run services.

What would be necessary for the government to run a service like Amazon successfully? Is our government today capable of doing such a thing? I think the answer is clearly no.

> What would be necessary for the government to run a service like Amazon successfully?

Anti-corruption measures to stop politicians from sabotaging those services. E.g., USPS.

Idk if USPS is truly an example of excellence, even if they are an example of govt excellence. In 2020 they shipped 70 billion packages, of which 90% was spam.

> In 2020 they shipped 70 billion packages, of which 90% was spam.

Is that their problem, though? I don't think anyone expects the post to police package contents.

They do police package contents to a degree, but only for actual crimes. Postal spam isn't a crime (and probably shouldn't be, as much as I'd like to get rid of the spam).

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

They do police package contents, pretty heavily even. They allow spam (presorted bulk mail in post office terms) because the spammers have a strong lobby.

Well 90% of products on amazon are shit too, maybe some made with child labour. Are you sure this comparisom will be favourable?

Government run services can be absolutely excellent though. It’s not a pure truth that government run = subpar.

You're absolutely right. They can be.

With that critical truth that you've touched on said... American civilian resident-facing government services tend to be organized and run with all the strong incentives being to make it good for everyone but the residents. Usually the workforce has a strong union and management has their goals, but us users have no strong force to exert except distant oversight in the form of Congress.

Some organizations escape this. Others do so partially at best. Most do not. State DMVs are notorious pits of utter misery, and this is generally an honest reflection of experience.

You can report a passport lost online, but you have to file a DS-11 in black ink at a post office to request a new one. This process can be easy or hard unpredictably, depending mainly on how nice the postal worker feels that day. There are few to no organizational incentives towards better customer service.

Why black ink? Because the State Department says so. And they don't have to care what you think.

The GPS has like no downtime, same for the enrgy grid and the post office.

Not that i see calue in nationalising Amazon, but i thi k it would be fine

> What would be worse in that situation?

It would be by far worse to not have Amazon, or dump their market share to shady chinese competitors like ali express.

Aliexpress is Ebay, not amazon. That being said, both feature a decent return policy, shitty and invariably wrong item description, no ability to properly filter goods and fake reviewes.

The only dailight I see between them is the shipoing time and language.

You said "X would be great" but didn't explain why, so a response like "No, X would be bad" is equally lacking in details. Its hard to discuss anything without an underlying basis for the conversation. There is no precedent for the US government providing services comparable to Amazon at comparable cost/benefit.

I explained why, commercial goods and services would have a safe sponsored forum to sell their wares without worrying about a profit hungry giant measuring their success, cloning their business and driving them to bankruptcy.

You have identified a goal, which is a great start, and is definitely worth considering. However, I see a few gaps when connecting the dots. At present, there is nothing stopping one vendor from cloning another vendors products and services and marketing them outside of Amazon. So many products these days are just white-label goods made in China and rebranded elsewhere. Also, should the government really be in involved in managing logistics, storing and shipping smartphones and sneakers all over the world? I don't see this as the best use of our tax-dollars.

I completely disagree. Amazon should be nationalized. This would make life better for citizens.

Why?

How does a USPS job compare to the job of an Amazon delivery driver?

How often are USPS on time for deliveries vs Amazons drivers?

That varies substantially by region.

In my area, Amazon's logistics is the least likely to be on time. I've gotten many free months of Prime from delayed packages.

Good point. In my last apartment, Amazon threatened to stop delivering to the entire (large) complex because their delivery people failed so hard at delivering. Packages were left just about everywhere and the Facebook group became more like a lost-and-found package site. Something that didn't happen at all with USPS.

As far as I can tell, just as often. No, I don't have the same expectations, but that is more than reasonable considering Amazon has an easier job (every seller already has there product in an Amazon warehouse, as is the USPS has an additional processing step).

At face value, you argument amounts to "brutally exploiting workers produces better results".

You might be right, but...

Products more expensive is better?

Amazon is far from only being software atleast in India.

They've such a volume here in India that since Amazon has got here, traditional LTL logistics soared in price wayyy higher

Amazon has completely revolutionised logistics here in India, you'll have hard time sending a box from point A to point B cheaper than what Amazon offers.

We are at a point where Amazon sells things much cheaper shipped to your door than a shop near you. (If you don't live in a metro city highly likely, the price which Amazon offers, local shops simply can't beat them)

And in India something like 60-70% people live in small towns and villages, traditional family owned distribution networks are failing to compete with Amazon, yes the ones which power most of the shops in the town.

I maintain, the traditional family owned distribution networks were even more exploitative (screwing over both customers and their workers) in India atleast compared to what Amazon offers.

Amazon delivery agent here are guys from low economic class and often from villages nearby. I am glad my purchases are helping these people survive than the "several property owning shopkeeper near me" competing with me in the real estate market while simultaneously ripping me off on the price on various tools.

Few years ago I was working for such family owned distribution networks and I never seen such miseries in life, truckers were often not paid at time, often driving trucks which hardly get any service (dangerously), the axel could become rocket anytime while on road. Amazon has only brought best practises to us, they've regular vehicle maintenance schedule, drivers get paid on time. Amazon delivery agents are some of the happiest people I've met despite working so hard, they are always smiling while delivering stuff to me.

The distribution agents were regularly fired without payment (it's not completely organized sector so lots of labor operate in grey area, where if they don't get paid don't have any legal recourse and most likely no one will believe if they ever worked for the person they are claiming to have rendered their service to. I am glad, the nepotistic and exploitative power nexus of family owned distribution networks is dying.

Easy return was never available in India, and you risked getting "death stares" from the shopkeeper if you ever returned anything to him because of quality issues of the product.

Other than this, most of the times I had seen "young girls" walking into market and getting "40% discount" by some thristy shopkeeper and they wouldn't do same for a guy ever, atleast this form of descrimination is dying with Amazon.

And honestly speaking, if a lot of Amazon executives in Bangalore and Gurgaon are getting rich, it's well deserved for what they've done for the nation.

I forgot to mention, we've many Amazon competitors but primarily Flipkart - well, getting them to replace/return anything has been tough for me, maybe because I live in a small town, I don't say but I get all my packages in 2 days from Amazon (without prime), while Flipkart takes 5 days here minimum.

What would I like to see Amazon change?

1. Make it possible to sell low value items which cost less than 200 and aggregate it before it's shipped to customer and charge customer shipping on aggregate weight shipped for these small combines. Sometimes it's very difficult when you've to order small items and pay 150-200 shipping on each item. These can be "no return combine", I will not bother returning such low value item, so Amazon saves overhead and additional costs.

2. Please revolutionze hardware space for retail buyers, stuff like "steel sheets, MDF, nail, bolts, nuts" - we don't have any Homedepot or Lowe's, we really need it and my hope is only on Amazon. Other countries like US has Homedepot where u can get most of the hardware fittings while this space is seriously lagging in India, everyone uses different naming for a spare part, etc...we don't even have anything like "McMasterCarr".

So true. Without amazon retail experience is shit in India

Stallman said it too:

https://stallman.org/amazon.html

> We should not allow a company to have a share over around 10% of any market. If in a certain field a single dominant company is beneficial for society, that means it is a natural monopoly, and should be served by a regulated utility.

> We should not allow a company to have a share over around 10% of any market.

If a company was already at said 10% limit and you wanted to buy something out of them because to you their offer is by far so much better than any of the alternatives, in your opinion what should happen?

There should be an investigation into why they can make a far better offer than their competition. Most answers are likely exploitative in some way.

> Most answers are likely exploitative in some way

On what basis are you making a claim like that? Toyota sells roughly as may vehicles in the US a Ford and more than the other manufacturers. Their cars are in many ways better than their competitors qualitatively and often cheaper. Do you think they are exploiting people?

I could keep listing examples of market leaders that offer better products that are more aligned with consumer preferences, but I'm not sure that's going to convince you.

I think what OP means is that amazon is using all the data they have from their storefront to beat everyone in the market, which does seem unfair to me.

I get that, but it doesn't seem any different from any national retailer that sells store brand products along side competitors. I'm not even sure how unique this data is. Every corporation in America has access to relatively detailed data about their competitors' sales. There's a time delay, but know what's selling well is really a small part of executing on go to market strategies.

>Do you think they are exploiting people?

Yes, part of how they achieved this was by violating emissions standards for a decade, something that they've been fined for. I'd be willing to wager they engage in similar practices too.

>I could keep listing examples of market leaders that offer better products that are more aligned with consumer preferences,

Their existence alone won't convince me. You need to answer why the competition is unable to produce similar products at similar prices.

> violating emissions standards for a decade

This began well after they entered the market and upset the dominance of established players.

> You need to answer why the competition is unable to produce similar products at similar prices.

The same way some people are better at given task. Many older firms are complacent, and operating on an understanding of the market as it existed in the past. Technology, consumer preferences, commodity prices, and other market conditions are constantly changing. If you see something you competitors don't you can offer better cheaper services. The bigger your competitors are, the slower they are to change course.

At bottom, firms are made up of people who are uniquely skilled and qualified. Better people in better systems will perform better. It can be dead simple sometimes. Firms with happier employees are often more productive.

If you don't understand the basics of competitive advantage, then of course you think companies can only gain an edge by doing something immoral. But this is ultimately sophomoric economic thinking.

>This began well after they entered the market and upset the dominance of established players.

I still find it unlikely that it is an isolated incident, but that decade is also when they started to pass the mentioned 10%.

>But this is ultimately sophomoric economic thinking.

Your attempt to explain why the competition may be unable to compete is "they're just better." Beyond that, you just say smaller is better, which is the point of my argument.

What does that mean - Investigation of what? By whom? and on what basis/framework? Can you propose something workable?

In any case, there are many reasons a company can offer a better deal - they have invested money and developed a new product/service that the competition cannot simply copy or negotiated a better deal with a supplier, or they're simply a better managed company, or about a million other things businesses can do to gain leverage over competition.

Also, like a closely fought game - the advantage could just be temporary. These things are very fluid.

The price would regulate itself by offer/demand balance and you would still be able to buy it if you can afford it.

With no limits, they can actually create artificial lower prices that competition can’t match, and they become exponentially more powerful and dominating.

And sometimes you end up as a customer having less options and lower quality.

Price dumping is already illegal.

Explain Uber then :^)

> The price would regulate itself by offer/demand balance and you would still be able to buy it if you can afford it.

No, not really. I shopped around. I picked the best for me. I want to buy from that company but it is already at your 10% limit.

What then? Can I actually buy what I want?

if a company is maxing their sells, don't you think they will raise the price?, and play at a 9%, so there will be always room for new buyers willing to pay the price.

And honestly is hard to debate because it's an vaguely defined hypothetical, I guess we are talking about situations where the state limits how much you can produce. I think is already happening if you think about Spanish Olive Oil for example, EU limits how much countries can produce, so the price goes up, still everyone that can pay for it can buy it, but at a price that represents the scarcity of it, otherwise you can choose other origin of same product.

I'm really not an expert in these topics, but that's my mental model of it, and I'm not even defend it as I'm not sure it is the optimal, specially the EU way about vegetable production.

> a company is maxing their sells, don't you think they will raise the price?

I said nothing about price. It is irrelevant. I shopped for a product and that particular company had exactly what I want, and they offer it in a way that makes it the absolute best option for my preference. The choice was made. The company wants to sell the product, I want to buy that product from them, but they hit 10% market share. What then? Am I free to buy what I want from who I want to buy it from?

This can happen already to you when products go out of stock, because the company doesn’t have enough capacity to produce, or they underestimate the demand, but after the company makes profit and reinvest in the next batch, they can adjust the price to balance the demand.

It’s not like you are already free to buy whatever you want, there are production limitations, and your budget limitation.

Right now big companies are allowed to give 100x better solutions at fraction of the cost, that makes imposible to other companies to compete and your freedom to buy is just not real, as many times you’ll be obligated to buy from the big fish, being the only alternative. In the other hand limiting them, they will have to raise the prices and then it would make sense that something 100x more convenient is also more expensive. Right now we have convenience and low cost, but it’s at the expense of killing smaller business and creating virtual monopolies.

> This can happen already to you when products go out of stock (...)

No, it can't. Your case involves a scenario where no transaction is possible because there is no product to buy or sell. It has zero to do with my very simple and very straight-forward example of a customer wanting to buy a product indeed sold and available and on the store of a seller who already reached its 10% market share.

My example is very clear, and for some reason all proponents of this virtuous 10% market share are either unable or unwilling to step up and either think their idea through or explain how they expect to implement their virtuous idea.

And this is a very simple and straight-forward example: a seller has a product I want to buy, I shopped around and that seller has the absolute best offer, I want to buy the product from that seller, the seller has the product on the counter and I have the cash at hand, but the seller already hit the 10% market share. What then? Is the next step so mysterious that no one can even come close to dare explain what they believe should happen?

You keep asking the same, What then? which leads me to think we are parting from very different scenarios.

Perhaps the difference comes from you thinking in a limit that applies as per number of products sold, and you could find yourself on that situation of "what then?" the product being on the shelve but you are unable to buy it.

I'm thinking in a scenario where the limit is on the production, similar to what I mention before, the EU controlling vegetable productions.

So you don't get to find the product on the shelve if it's already gone but you'll find some other brand, the ones that are better will be more scarce and more pricy as a consequence.

Now, do I want as a consumer that the best things are also cheap and available?, yes! of course!

But the question is, is that sustainable? and what happens to the market when we have this huge player that outcompete everyone else, and dictate the rules, and they are in a position to set the quality standards, long term we might be free to buy just from them under their own rules. Is that freedom?

I'm really not familiar with those proponents of the 10% market, I was just talking from my common sense, I don't think is crazy to put some limits, and we already have some in some industries, for better or worse.

I'm dropping it here, but thanks for sharing your point of view, I'll read you if you reply, always learning and open to change my opinion.

Cheers!

It's not a math equation you run through a computer and get a legal result out the other end. Congress (or whatever) could use this measurement as a tool to drive investigations so you can stomp out anti-competitive behavior before it becomes a problem

> It's not a math equation you run through a computer and get a legal result out the other end.

Not really. This has zero to do with math. At all. We have a buyer and we have a seller, both the buyer and the seller wish to perform a transaction, but then we have a regulator which arbitrarily wants to force them not to execute said transaction because of reasons.

And my question is terribly simple: to those who want to force someone like me from buying what I like from a seller I chose but they arbitrarily reject, how exactly do they wish to force me from buying what I'd like from who I chose to buy from?

No math, no numbers. I'm asking a very simple question: what then?

> No math, no numbers. I’m asking a very simple question: what then?

The comment you replied to answered your question. The transaction goes through, absolutely no additional regulation or control comes into play at the transaction level.

NOTE: I am not supporting this position, or opposing it. I’m just stating what the gp post said.

> The comment you replied to answered your question.

It really didn't, instead it weaseled out by putting up a strawman that pretends to put a loophole in a straight-forward and very clear way.

In fact, it's blatantly clear by itself the fact that no one proposed a single idea or suggestion about how to enforce that mysterious 10%. No explanation was given on the impact on customers, and how the sellers would be forced to not go beyond that 10%. Why is that? Is the idea undefendable?

If they are offering, you buy it. Regulation would affect their legal ability and/or willingness (depending on the style of regulation) to make the offer.

For instance, a regulation addressing this could involve a tax on gross receipts (not profits) in a defined market segment that was 0% at up to 8% share, and 50%×(10 - share in %) above that point.

either that or the market is a really small specialized market.

on edit: to forestall anyone suggesting I think Amazon has a small market, no, just the Stallman quote doesn't take into account that monopoly can arise in a relatively small market that people would not consider worth nationalizing.

true, as I remember from last year's crises, there is only one wood mill in the world that does a very specific kind of pulp used by 3M to make those notorious masks. I wouldn't nationalize that.

RMS is right about many things but not this one. Competition naturally leads to few companies capturing a market over a long period of time. What's however important is to prevent actively regulatory capture of said markets.

That's going to be impossible if alienating one or two companies can ruin your career in the industry. And that's aside from the fact that regulators will mostly be recruited from those couple of companies, looking for jobs with those companies when they leave, and starting consulting firms and lobbying firms that will be contracting with those couple of companies. Those companies will also have Congress's ear when regulation is discussed because they are donating so much. They are the experts.

Well, obviously, if you have a corrupt government and corrupt experts, you won't be able to achieve much... why was this downvoted ?

It's a lack of competition that leads to market consolidation.

This is a compounding problem as companies that grow big enough can just buy then out or predatory price them out - like, say, Amazon and diapers.com.

In the end the only way to take down mono/oligopolies out is to take them out from a direction they're not expecting and that can take 100 years.

For one, large government software projects are almost always disastrous, even in developed countries.

Secondly, that isn’t what sellers want. Many sellers use Amazon to fulfill their orders. Amazon is far more than just a “market stall”.

> Secondly, that isn’t what sellers want. Many sellers use Amazon to fulfill their orders. Amazon is far more than just a “market stall”.

This.

Amazon is basically a huge logistics network. Their business is not selling you products, whether from their own generic brands, from high-end Veblen goods companies like Apple or from cheap chinese dropship artists. Their business is to process payment, and get that package delivered to your front door. To Amazon, their products is just a way to generate output through their logistics network.

Based on the article, the verticality of their business seems to indicate they are not merely in logistics...

> For one, large government software projects are almost always disastrous, even in developed countries.

The same tends to be true for large corporate software projects.

As a fairly recent example: https://www.theregister.com/2019/04/23/hertz_accenture_lawsu...

>The same tends to be true for large corporate software projects.

Yes, but it's not true for Amazon, the topic of conversation.

Isn't the topic of conversation that Amazon's successful software projects have had potentially disastrous side-effects?

Right, but there's a self-correction here, which is that Accenture gets fired if they do a bad job. The govt has a monopoly and so there's little self-correction - too many layers of indirection between the everyday voter and Amazon's outcome.

Governments get fired fairly regularly.

Through multiple layers of indirection and obfuscation. A democratic vote every 4 years is noisy when it pertains to one specific outcome (say, Amazon's performance right now) since that vote also contains information for numerous unrelated things. Private ownership means a very tight feedback loop between performance and governance.

It's basically why collective ownership of complicated things has never worked. Except for perhaps the army, which costs an absolute fortune.

>"It's basically why collective ownership of complicated things has never worked"

Except also the roads, railroads, airports, ports, oil pipelines, nuclear weapons and reactors, GPS and weather satellites, chunks of the energy grid, NASA, a national postal service, social security numbers, and so on

> NASA

Which proves my point. Look at the innovation that SpaceX has created with VTOL rockets. If it was left purely up to nationalized bodies this would have never happened (or maybe, it would have taken 50-100 years). The incentives and desire for economic efficiency just simply aren't there. Government wants flashy one-off wins that generate publicity and votes, if it wastes a few billion and doesn't scale there isn't any consternation. The entire mindset top to bottom is completely inconsistent with VTOL rockets.

> roads, railroads, airports, ports, GPS,

The argument for these being nationalized is that these are goods that are prone to natural monopoly and some of those are largely non-excludable in the case of roads.

None of those arguments apply to Amazon. eBay is a substitute for marketplace, Azure is a substitute for AWS, etc.

These are also much simpler than Amazon. Could a government have created AWS? Could a government create an iPhone? It's a rhetorical question because all know that the answer is no. Even if they could in terms of capability, they won't because the incentives aren't right. And if they tried, they'd do it incredibly inefficiently and be outcompeted in am embarrassing fashion by a private alternative (e.g. eBay), with the difference being subsidized by the taxpayer.

> nuclear weapons

In the case of nukes, the argument is that the government has a monopoly on force (which is also why the army should be nationalized).

And I already conceded that the army was well-run, although at a ridiculous level of cost (which is another byproduct of nationalization).

> weather satellites

Built by a private company.

> roads

Heavily subsidize car use, incentivizing urban sprawl and carbon emissions. Repairs take too long. Design is convoluted.

> railroads

Usually privately owned

> Airports

TSA

> Ports

Jones Act

> Oil pipelines

Usually privately owned

> nuclear weapons

Oh yeah, what a great thing to have around. Really provide a service to citizens.

> nuclear reactors

Often privatized

> national postal service

Junk mail. Also, have you heard of the American Letter Mail Company? They competed so well, the government essentially banned competition in the letter delivery space.

> social security numbers

Insecure, easy abusable. Not meant for identification, but used for that anyways.

"even in developed countries."

I find that UK and USA governments are worse at IT than Russia and Czech Republic. Maybe it's age of the lawmakers, or over-reliance on old sustem, I dont know

It would be really interesting to see the USPS in the USA open a market like this

I disagree. There are more and more services providing logistics, delivery, payments, etc. And they are quite reliable. Just 2 years ago I was entirely relying on Amazon as a good ecommerce. As of 2020/2021, to be honest, there is nearly no difference with some individual retailers (which don't use a 3rd party platform to sell their goods like Amazon or Ebay). Lots of websites have improved, logistics, delivery, customer service, payments, ..etc etc. They key, in my opinion, was the logistics + delivery. That's what Amazon was exceptionally good at. Now that the infrastructure is nearly the same for everyone, why would you share your profits with Amazon and risk to be out of the business in 1-2 years?

What are the Amazon level logistics and delivery service that is available to a smaller retailer? I see some nascent choices but they really aren’t that close.

It's a catch-22 ... would Amazon be this innovative had it been nationalised?

At what point do you nationalise? Is there a next technology which will be stifled if it was nationalise?

Does nationalisation sttifle innovation?

I've been wrestling with these questions as I actually don't like Amazon for all the reasons that have been well publicised ... but their customer service is excellent.

Which sets me against a string of recent bad experiences with local suppliers, getting stung, and thinking ... well, if Amazon treat me better, why shouldn't I move away from local suppliers and stick with the monopoly? Which goes against a lot I believe in.

I guess the problem is it's putting a lot of trust in Amazon. Which is itself an argument for nationalisation. I don't know.

Jeff Bezos will testify in front of congress that he will cease to be innovative if required to pay taxes.

Sounds like extortion to me.

How so? Whether or not amazon innovates should have no bearing on a decision by congress to levy additional taxes against them. If amazon decides to become shittier as a result, someone else can fill that void.

not sure which party you're talking about here

Does this imply he sees his ability to evade taxes as his only worthwhile innovation?

I think it implies that amazon can't both spend everything that would be profit on innovation while also paying the same money on taxes

Amazon pays mountains of payroll taxes, as they are one of the largest employers in the world.

The "Amazon pays no taxes" meme is a false one.

I think the meme is "Amazon pays no federal taxes on it's profits", and that is a correct statement.

If that were the meme, I wouldn't be trying to dispel it.

Even that is not really true. They paid no federal income tax in 2017 and 2018, but have before and since.

I'm no fan of Amazon, but you have to admit there is a pretty large distance between "Amazon pays no tax" and "Amazon pays billions in tax, but they didn't pay this one specific kind of tax a couple years ago".

https://www.cnbc.com/2020/02/04/amazon-had-to-pay-federal-in...

I think income tax is the most impactful and expensive tax we have in the US, it's the one everyone thinks of when someone says "doing your taxes".

The fact that Amazon just this year after not paying for 2 years had to pay a measly 1.6% in taxes does not really negate the argument.

Edit: 4 years -> 2 years

It really feels like you're twisting reality.

Amazon went 2 years without paying _income_ tax, not 4.

Amazon paid $3.5 billion in taxes in 2019 (some of which was differed, but still owed). That is over 25% of their income that year. Their federal income tax rate came out to 1.6%, but its borderline lying to say "they paid a measly 1.6% in taxes".

Amazon is an awful company. There is no reason to bend the truth to try and show how awful they are. Being disingenuous only makes your argument weaker.

I misread the article, and I'll correct the 4 to 2 years now.

Income is income though, not sales or payroll which are the expected and manageable operating costs of overhead and human resources.

If I win the lottery, almost 50% of my winnings go back to the state, and I haven't even bought anything with those winnings. What's different about Amazon having a banner year?

Because that's how lotteries work in the US. Companies don't have to be behemoths to pay no tax on income. They just have to post no profits by spending all the money they make on opex and capex.

I understand the system, I just want to be clear how broken this is.

Both are windfalls, one gets taxed immediately, the other gets taxed if they don't use up all their profits reinvesting in themselves by the end of the year.

I don't see how you can think this is broken. Think about the implications if it wasn't like this. Bankruptcy would be rampant and R&D investment would be impossible for everyone but the largest companies.

I disagree, as these companies already calculate how much they need to spend to prevent having to pay taxes.

That doesn't matter. They're still spending it, rather than keeping it as profit.

Well yes, governments tend to like their industrial bases growing and are willing to wait for bigger gains over a longer time period. That isn't broken it is by design.

How are they windfalls? For whom?

> What's different about Amazon having a banner year?

The big difference is that Amazon is a company.

If Amazon decides to pay out large bonuses or dividends with its surplus, that gets taxed at the same rate as your lottery winnings. Before that happens, the income is Amazon's and not an individual's. There is no reason to expect the corporate income tax to behave the same way as individual's income tax.

This is quite pendandic. When you calculate your tax rate do you also include GST(VAT)? Because this is essentially the same thing.

I guess it depends on the context. When I am filing my income tax, I am focused on that. But when budgeting or discussing tax liability in general, I certainly don't forget about the tens of thousands of dollars I pay in local, sales, SS, etc taxes.

I would certainly not make the claim "I paid no taxes this year" if I managed to skirt only federal income tax.

Isn't that also incorrect? It would presumably pay the normal corporate tax on it's profits. It's just that Amazon reinvests it's revenue and thus has no (or little) profit.

Isn't it the workers who (whom? I never know) pay the payroll tax? That's their money, in exchange for their time spent on work, that's not Amazon's money. This doesn't make sense to me.

In the US, "payroll" taxes are split between employer and employee. The biggest items that fall into payroll are Social Security and Medicare.

https://www.taxpolicycenter.org/briefing-book/what-are-major...

in USA it works like: pay is $100. then take home is $80 because $20 is taken out for various payroll taxes. then also the company pays $20 for their portion. employees only see the -20 from them, not the +20 from Company on wage stubs.

also, if the company has profits there is some tax on that (well, my little C-corp did)

(numbers are made up to show process)

Amazon the marketplace isn’t terribly innovative. It’s a marketplace supported by fantastic logistics, and most of it is backed by USPS anyways. There’s only so much you can do to remove the pains from buyers, sounds like we’re there.

"Innovation" refers to practices like staying in the red for a decade and bypassing antitrust laws by owning (rather than monopolizing) markets.

It has little to do with technological innovation.

Precisely. Much of the "innovations" and "efficiencies" touted (by Amazon and by many other players) are actually not any material/physical/technical improvements, but financial games, buying competitors, operating at a loss, regulatory evasion, monopolisation, etc.

I mean, business/financial innovation is a legitimate kind of innovation. I'm not harping on Amazon for that. I just think that discussions about "loss of innovation" smuggle in some irrational fears about loss of technology when there are no real reasons to.

Right. I wonder how much competition Amazon has eliminated over the years with their shady business practices. That competition may have driven innovation even further.

> It’s a marketplace supported by fantastic logistics, and most of it is backed by USPS anyways.

Not any more, USPS was only used for shipping anyway.

Amazon has shifted to vertical integration wherever they can - they run everything they can, from air freight (with https://en.wikipedia.org/wiki/Amazon_Air) over their infamous warehouses to last-mile delivery with either in-house staff or "contractor" schemes set up to avoid labor regulations.

That last bit is an "innovation" I would (and have, when I could) pay many for to avoid. My mailman knows where I live, can enter the building with a key and knows my door. Amazon contractors keep calling me an hour ahead "will I be there?" then can't deliver the parcel to a nearby post office when I'm not. Over the last year of work-from-home this wasn't much of an issue but when you have a regular office job it can take a few days to get that parcel.

It's pretty amazing to me how unsophisticated the filters and search criteria are. There are so many products where I'd like to filter or sort on weight (for instance) and it simply isn't possible.

Nonetheless as a semi-monopoly you are rarely compelled to innovate like a smaller company is.

They can do better, no doubt, but it is a problem that sounds like it should be easy to solve, but becomes really rather tricky at Amazon’s scale and with their catalogue size, speed of updates to it, and general dependency on the quality of data provided by the sellers. Try defining good filter values when you have thousands of product categories with millions of products, many of which have poorly defined attributes, while all of this is subject to constant change. Quite a task.

Nothing is trivial at that size but given the immense resources and market power at their disposal, I find it more convincing that it's just not a priority because their market position is already too secure.

I heard similar excuses back in the IE6 heyday for how improving the browser was "hard". Realistically 94% market share just meant that it wasn't broken from Microsoft's perspective.

> and most of it is backed by USPS anyways

Amazon does not do business in US only

Yes, in UK wr have royal mail, and every other functional country has it's equivalent

> Amazon the marketplace isn’t terribly innovative. It’s a marketplace supported by fantastic logistics

These two statements contradict each other. The thing that Amazon does extremely well is logistics and that is core to their marketplace, not something else to the side.

Amazon.com in my opinion is a logistics company who happens to have a Website that sells products.

Amazon moves an item from point a to point b, and they do it fast and efficient enough that people go back to them again and again.

Last month, I ordered two pairs of jeans and a t-shirt from Eddie Bauer. They arrived in three different packages after about 10 days. With Amazon, it would have been 1 package that arrives the next morning or the following day.

If Amazon is abusing its position, substantial fines or regulations are the right solution in my opinion. I’m absolutely not in favor of nationalization. Any kind of government run facility, in my experience, is mind mumbling horrible at their job. They have no incentive to compete - which might eliminate bad behavior but it also makes for a terrible customer experience. Nationalizing Amazon is no different than just killing the company entirely.

> Does nationalisation stifle innovation?

I would argue that it does not. We have a lot of innovations from the last 100 years that have come from state-run projects / endeavors.

The more I think about it the more it looks as though private ownership stifles innovation if there isn't a direct profit motive for it.

Being a monopoly of any kind stifles innovation.

It's often better for the state to react to private monopolies/oligopolies by entering the space and competing with a bare bones service. This has worked in banking, telecoms, land development, housing, etc. It often works better than taking over the monopoly directly. It's one of the reasons (IMHO) Singapore has such an effective private market.

Often private companies lobby for laws restricting the level that they can compete - this is a signal that it's an effective tactic.

If USPS were given a mandate and the cash it could absolutely build a marketplace that could compete and it would probably kick start Amazon into being a better and cheaper retailer. Unfortunately it's being whittled down to a husk of its former self.

I agree but there's one practical problem with this: other markets (e.g. the EU) need to nationalize or reproduce it too or else the US is getting significant geopolitical leverage.

If the US nationalized Amazon, I think you can be pretty sure that other countries would also nationalize their local Amazon divisions (ie. Amazon FR would become property of the french government)

Why would they repeat the US's mistakes immediately after watching it blow up on the US? People have agency and the response to a sudden theft by the government for being too successful would be to get the hell out of there as the US is no longer stable. The other subsidiaries wouldn't surrender ownership to a distant bandit government just like all of the other times it happened.

Everybody but communists know that Nationalization is a goddamned terrible idea doomed to failure - you can see it by not being in their political platforms at all. Only those with dogmas to consider the action a goal in itself advocate for it.

The goal is to democratically own ostensibly public infrastructure, do you have a better way instead of whining about communists?

We have that in Luxembourg. Problem is finding the site. You have to know it is there.

Why should the federal government steal Amazon? Surely, it is possible for the government to build another service. I will admit that this is a clever way to kill Amazon. I find the idea of a government running my compute infrastructure to be a terrifyingly bad idea and would seek out someone else.

Edit: Replaced AWS with Amazon

>Give them the municipal software infrastructure they need to do so and maintain it as a public good.

oof. Amazons actual website is frankly horrible, but i shudder to think how terrible it would be if it was run by the government. I'm cringing at the thought. There would just be an endless stream of news about gross mismanagement, incompetence, wasting taxpayers money ad nuseaum. No. The only thing that could possibly be worse then Amazon in its current format would be if it were run as a government enterprise.

And to the whataboutism; "who says Amazon doesn't have those problems etc, it's different. I don't have to be bothered so much by the internal affairs of a private company. A government company otoh, it would just be all over the news.

No. As it is I can still go to other sellers if I want to, if Amazon were nationalized then you might not have any other choice.

Every time a business gets this successful someone will inevitably come out of the woodwork and say "the government now needs to own this, there is no other option" - wat?

should they also nationalize their cloud services?

sure

any data backing that claim?

Or broken up. Its AWS and its online retail are each sufficiently large enough to be anti-competitive on their own.

Whenever someone suggests that something be nationalized, I ask myself "Why not create a public version of it?". If the answer is "it cannot compete with the private ones", maybe that's why running it privately is necessary.

Just look at how well this works out for every town trying to set up its own broadband when Comcast and others fail to invest. Lawsuits raining down for every possible reason, shared public resources blocked for months, misinformation campaigns to convince people that public broadband is a waste of their money and anyone involved in it should be kicked from their office.

Its like competing in a five hundred meter sprint if the winner of the last twenty races had a shotgun. His time sucks, but he doesn't need to actually run as long as nobody else makes it to the finishing line.

Amazon doesn't need to be nationalized, it does need to be broken up though. The dividing lines in the organization are so clear you could practically tap it with a hammer and it will fall apart into nice individual pieces.

Agreed 100%.

Should be merged with UPS.

I also believe NBA should be nationalised. All teams should be owned by cities and revenues used to fund schools etc

Like every supermarket chain in the world?

What stores are you going to that have third party sellers? A better analogy is a mall.

Nearly every grocery store in the US has third party sellers. They pay the store for shelf space, provide their own stockers, etc. It's not as different as you'd believe, because you've 'heard' of the brand names doing it.

A good example that I see at my local grocery store all the time is Coca-Cola.

Yes, especially common in the bread and chip aisles. Third-party stockers come in and replace the inventory. Same with soda.

See: https://en.wikipedia.org/wiki/Slotting_fee

I guess the best analogy would be a department store with third party stands as well as their own label stuff

Cant Costco, Walmart also do the same thing, why is Amazon being singled out here?

They already do.

And anyone selling through any platform where they've all data let it be supermarket chain or e-commerce platform, should understand the risk that their data can be used to compete with them if you realize risk is not worth pay off, prefer selling on own website - it's not hard these days. No I mean, yes it's still hard to get eyeballs on your product but to list in Amazon, you need to pay Amazon tax.

Difference is that sellers have options because none of these are monopolies. It's not abusing your size at that scale and thus not antitrust. The same rules don't apply to everyone because not everyone owns an entire market.

The difference is that Amazon said they don't use third party data to boost their own sales.

In traditional retailers like Costco, if you are a product maker and supply Costco, you don't own any data from the sale of the product--Costco owns that data. In fact, you will have to pay for that data from data brokers (Retail Solutions Inc for example) if you want it.

Can we just rule that internet marketplaces cannot offer competing products on their own platforms?

The fundamental conflicts of interest will always persist otherwise.

This is going to sound radical but I think Google Search should be broken away from everything else and/or Google products should not be accessible via the search page (or allowed to buy ad space)

If you make something and sell it in a store, does that mean you're not allowed to sell other people's products in your store?

A store is bound to a physical location, whereas online platforms seem to tend toward monopoly

Should walmart be able to produce and offer generic versions of brand name items on their shelves? Why or why not?

I don't think they're similar. There are many stores in my neighborhood, but there's only one google, only one app store on my phone, and only one Amazon.

I also think the degree to which the platform can exploit data related to producers (and consumers) is totally different with online marketplaces.

One Amazon? There many competing sites on the internet.

You're correct that they're probably not similar, but they are different in ways that undercuts your original argument.

There are almost certainly more than one search engine (Bing, DuckDuckGo) and more than one online retail platform (Shopify, Walmart.com, eBay). But unlike physical businesses, they are literally "just a click away"; whereas in the real world, you'd have to schlep to the physical location of the competing store. Moreover, the barrier to entry to actually spinning up an online retail platform is much much lower than spinning up a brick-and-mortar location (permits, employed labor per location, rent/property costs). Finally, the theoretical reach once you spin up an online retail platform is infinite; whereas one has to go through all of the aforementioned brick-and-mortar barriers for every incremental customer in the world...

IMO, the concept of abolishing generic store brands strikes me as fundamentally hostile to the poor. The other day I was at a Walgreen's picking up some Neosporin ointment, and I found the Walgreen's store brand right next to at half the price. I'm privileged enough to be able to afford the name-brand Neosporin without having to think about it, but I fully appreciate that there are a lot of people that are grateful that the store brand exists. I'm sure Johnson & Johnson would love for the government to prevent Walgreen's from selling its cheaper store brand, but I'm skeptical that this would be good for anybody except Johnson & Johnson.

Likewise, Amazon provides "generic" versions of commodity products. Insofar as it's difficult to compete with Amazon, it's because it's generally difficult to run sustainable businesses solely on the back of commodity products.

You can't square access to "aggregate sales data" of inventories that are not yours with having a policy not to use third-party sellers info for personal/internal sales gains. In this case Amazon went from being a decent host and service provider to a malicious, unfair competitor.

Either they divest themselves from being an active participant in their marketplace, or they put out their eyes and sequester Third-Party sales and transaction records into a bin to never get looked at except for reports to third-party sellers themselves. That's about the only way I can see for Amazon to ethically move forward.

Literally every retailer ever does this. From Macy’s to Target to Walmart to Shoprite

Doesn't make it right though.

Every brand must estimate their competitors market shares, sales volumes, media spend, and actively track promotional activity - while retailers have a massive slice of this information, namely Amazon. Not only that they control their own "shelves".

In my point of view they shouldn't be allowed to compete if they are using competitors data without their consent... and that's the catch, it's Amazon data as well, so the only solution is: either Amazon is a market place or a retailer.

They literally covered this in the book the everything store by Brad Stone. This is their game play. This is how they take over categories. Let over people to the sales and testing, then rip them off and undercut them.

Does this practice extend beyond retail? Do AWS product managers look at AWS usage data of their customers sass products to decide whether it's worth launching a competing service?

Usually if the answer could be evil, with Amazon it is. I'm sure GCP does the same.

Gotta love how AWS/GCP terminate your https and can read all of your api traffic.......

Seems like all big retailers do this. I know that Home Depot's HDX brand copies products, and you are more likely to find HDX in stock than the products it competes with.

News love making their headlines in a way that people get angry.

Why does this surprise anyone? What company would do anything different?

This is why I’ve never made selling on Amazon anything more than a side-hustle. You’re just a pawn, totally at someone else’s mercy, and if you are too successful you’re bound to be eaten by a bigger fish who knows how your sausage is made.

Every single discussion around this revolves around the same facile comparison with retailers, and I'm fucking sick of it, so I'll lay it out in a top level comment one last time.

These are the following ways in which Amazon is not like a (WalMart, Costco, insert retailer of choice):

* Physical retailers do not have access to the same breadth and depth of data that Amazon does. For example, retailers have no reasonable nor accurate methods of determining which advertising methods bring in the most leads. They have no idea how many people look at the product without buying it. They have no idea who puts in their cart and then lets it sit there for days on end. They have no idea who puts an item into their wishlist. They have no idea which people look at it, then come back a week later and buy it. They have no idea how many competing items, let alone which ones, the buyer compared it with before buying. They can't calculate conversion rates, nor satisfaction rates. Maybe if they're lucky, they can track returns down to the purchaser (because they might require a receipt to return), but they likely don't know much about who you are or why you're returning it.

* Retailers can't notice you looked at a product without buying it, then follow you around to your bank, your barber, your job, your home, relentlessly trying to convince you to buy it.

* Retailers can't look at your general preferences across thousands of unrelated products, perform machine learning methods to determine your likelihood of conversion for different brands and products, and then rearrange their shelves specifically for you to optimize visibility of their products for maximum profitability.

* Perhaps most importantly, retailers always have an incentive to sell their inventory. They buy it, they invest labor into presenting it, they pay holding costs to keep it in stock, they relentlessly optimize within difficult physical constraints to provide visibility to its location on the shelves, and they advertise its existence to the public. Amazon has none of these costs or incentives. If they decide to tank the listing of a competing item, they bear no cost in doing so. They are being paid for every single cost incurred, and they're making money off your stuff in FBA even when it doesn't sell. Even pure consignment stores will regularly decline to consign products that they don't think they can sell or don't think they can make enough money on to cover their costs. Amazon has no such incentive.

Does Procter and Gamble hate the fact that Costco can position Kirkland Signature right next to their products? Of course they do...but they still sell their product. The same can't be said for many private sellers of niche products when Amazon launches an Amazon Basics competitor. Their listings get tanked, their recommendations disappear, their sales effectively drop to zero almost overnight, and if they made the bad decision to use FBA, they're stuck paying holding costs and eventually shipback or disposal costs in order to exit the market.

Amazon is uniquely positioned to take advantage of marketplace data in ways that retailers could never feasibly do, and they bear no costs (and may even augment their profits) when they put their merchants out of business. They absolutely need to have their marketplace either shut down or completely separated from their retail space by legally regulated means.

I wrote about this a while back: https://medium.com/blue-poles/how-amazon-screws-third-party-...

We also use Amazon data to find/develop products to sell. I assume all sellers do.

are there no antitrust laws in the US, so that amazon could be split into marketplace, own products and aws? Thats what should have been done long ago and no need to stop at amazon either.

Why Shopify does not do the same thing?

Shopify.com isn't a marketplace that millions of customers directly visit. They make enough money as-is.

I am constantly amazed by the level of trust that people give to tech companies. how did they earn this

It's just a lack of viable alternatives.

A trustless (eco)systems is usually not efficient. So the cost-benefit analysis points to almost-blindly trusting Amazon, reap as much of the benefits as you can. And don't be surprised when it turns out that Amazon abused/exploited your trust.

Amazon should be split into separate independent companies - logistics, AWS, marketplace and whatever else they do now. We need laws that will limit growth of companies to become too big to fail and have all the money to buy laws, destroy competition and in general do as they please without consequences. It's a loophole in capitalism that has to be closed. Big businesses should follow the same rules as your mom and pops company. If small business often pay over 40% in various taxes, the same level of taxes should apply to big companies. Nice start would be looking into avoidance schemes big companies use and make them pay all they have avoided over the years. Use that money to lower the tax for small business and continue until the playing field is level.

> too big to fail

How is Amazon "too big to fail" in your opinion? That phrase "I think they're too large", it means that a business is so central to the functioning on the broader economy and to several other industries that their failure would tank the whole economy. Think Boeing or JP Morgan Chase Bank.

> and have all the money to buy laws,

What exact laws has Amazon bought?

- Well, imagine what would have happened if AWS closed overnight. It would not only affect the economy, but also governments that run their infrastructure on AWS.

- What I meant by that is also the money can ensure that new laws are not introduced, or investigations not carried out. Have you seen reports of Amazon Basics, where they ask sellers to hand over their leads and then months later Amazon introduces pretty much the same product undercutting the seller? I would imagine if that was done by a small company, they would have been closed down. Yet when you are big, anything goes.

> Well, imagine what would have happened if AWS closed overnight

What are the circumstances under which the switch is hypothetically turned off at every AWS data center all at once? It just doesn't seem like a realistic scenario. Most ways in which Amazon could fail would involve either a bankruptcy spinning out aws into one or more holdings, or years of decline where people switch off of AWS anyway. Sure, if all of those data centers blew up, then yes it would be catastrophic for a few months.

> What I meant by that is also the money can ensure that new laws are not introduced, or investigations not carried out

I see where you're coming from, but it seem a little thin and unspecific. The Amazon Basics thing seems like a bad example. It's the same model grocery stores, Walmart, Lowes, and department stores have used for decades. And no one ever really complained before. In some cases Amazon is white labeling products from the brands they're now competing with. So those companies still capture a lot of the revenue.

"too big to fail" means that a business has friends in the legislature and can keep on acting like the local affluent drunk teenager who somehow manages to crash all their parents cars without getting a DUI.

If we have businesses that are "too big to fail" then why bother having a market economy?

That's not what people meant in 2008 when the phrase "too big to fail" came into the lexicon. The phrase meant that there was systemic risk. You're moving the goal posts to mean "big companies are behaving badly," which is different.

That's certainly how it was sold but I think even then it meant what I said.

I really didn't though. There was real fear at the time that if auto makers went under it would ripple through their supply chains and gut the economies of numerous states, then leading to a cascading series of state and local budgetary crises. How correct that assessment was is up for debate.

The fear with banking was that the industry had become so consolidated and interleaved that a failure of one mega-bank would bring down the whole financial system and cause a liquidity crisis that would tank any industry that relied on credit for ongoing operations, which is most industries.

None of this was about companies' behavior it was about how they had become so large that their failure would destroy huge segments of the real economy. Arguably though, the bailouts are a form of moral hazard that make more companies too big to fail.

Its commentary on the system.

I keep seeing stories like this that prey on readers' ignorance to push an unfair agenda.

Retailers using their data as an advantage to improve sales of own brand products, at the cost of suppliers, is totally standard. It's happening right now in every supermarket (and plenty of other places). Pretending otherwise is silly.

Amazon having a policy of not doing that is exemplary. Amazon failing to meet that in one case is amazon meeting it in 99.9999% of cases.

But people are very quick to see the devil in amazon while others (Walmart for instance) are much worse and get a free pass...

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