Amazon Prime inflates prices, using the false promise of ‘free shipping’
mattstoller.substack.com
mattstoller.substack.com
That seems like legitimately monopolistic behavior and something that is illegal and should be stopped. The post is still misleading in that it doesn't mean Amazon is raising prices across the board by 30-45%. But they are raising prices across the board by whatever the delta is between their fees and WalMart's fees, or some other marketplace that charges even less, minus the difference in shipping.
Normally, market forces would solve this problem without any need for legal intervention, because some other marketplace like WalMart can just offer lower seller fees and attract all the sellers. But that doesn't happen precisely because Amazon's massive subscribed user base represents so much of the market that no can afford not to sell there, which is seemingly the definition of a monopoly and why legal intervention is called for. Lower-cost marketplaces can only compete if Amazon is not allowed to blackball sellers from access to the only customer base that matters.
I'm glad this was stated. It is new insight for me.
I got in the habit of only buying from the actual manufacturer store on Amazon, thinking it was benefiting the company. For example: buying Bose speakers on the Amazon Bose site, instead of the bose.com. Now I realize that Bose loses a lot of money going through amazon. I should just be going to the bose.com store and cutting out amazon. I never really need anything I buy online "tomorrow".
The only thing I've run into is the vendor site saying out of stock, but the vendor -store- on Amazon in stock. E.g., I bought a PixHawk4 flight contgroller from HolyBro. The HolyBro site was out of stock, but Amazon's HolyBro store had it in stock. /bangs head on wall/ I understand why, it's just... weird.
That’s another point of the article. Amazon forces Bose not to sell at a lower price anywhere else. So the price you pay at Bose is also the 30-40% Prime premium that Amazon charges. Although you are right that premium goes to the manufacturer as opposed to Amazon but overall a significant loss to all customers prime or non-prime
If you buy the headphones at a brick and mortar store, you’re still forced to pay the Amazon shipping surcharge, even if the money is not going to Amazon. This puts brick and mortar stores at an unfair disadvantage, and it is directly traceable to Amazon’s anticompetitive behavior.
That's not even mentioning the network effect, where a service has to have enough adoption or demand to "force" other merchants to accept it
I know how returns work with Amazon. If I buy directly, are they going to give me the run around if there's a problem?
With more and more adoption of ApplePay and GooglePay to power the checkout experience this advantage might away..
I had this revelation too when I started buying food from farmers direct and was surprised at the low prices. Its kinda obvious, when you think about it.
Same deal for online retail. You've gotta have a warehouse, someone to box orders, a website to take orsers, customer service, etc. This all costs money and Amazon has the scale to do it all a lot cheaper than you can.
Most people forget that the transaction might not have taken place were it not for said middleman.
Which raises an obvious asymmetry: Amazon makes no guarantee that it is not offering more favourable terms for bigger suppliers – and although mere speculation, I would be surprised if that didn’t go on, because I seem to remember traditional retailers doing similar things.
I’m not saying this is good or bad, just pointing out that with all retail there has been almost a phase transition once the supplier is a household name, and the dynamics change almost to the point where retailers would offer their products at cost price or even a loss just to make sure that their customers could buy the household name through them.
I'm not sure what, but there's a story on lower end, too.
A lot of crap on Amazon is from no-name brands like MAKNO and TURBLEX which don't even exist outside of Amazon. If I sell $19.99 TURBLEX kitchen knives on Amazon and the $11.87 MAKNO version through AliExpress, then I've not violated the policy.
Gifts generally have strict deadlines. Sadly, Amazon has stopped offering any shipping speed guarantees -- there is no longer even an option in the purchase flow. It will get there when it gets there.
They won't refund if they miss their own self-imposed shipping deadlines, either.
Prime customers get pretty much anything delivered in two days.
I still haven't figured out how they do it. I ordered two obscure oil filters, and they were delivered within a day. I think they had driver go into a local automotive store, and buy them?
Anyhoo, they were cheaper than the store price.
(I don't hate Amazon. I'm pretty amazed how effient they are. I never thought I would pay for Prime, but that MGM buy was brilliant. Local retailers need to up their game. I'm getting tired of being quoted a cheaper price online, just to pay more if I go in to buy. Automotive parts stores are notoriorious for this behavior.)
If they miss their shipping deadline, just select the return reason as defective, or item "not as described" or whatever, and it will let you return it for full refund.
If you order before 3pm, same day delivery is available for $9.
If you're a procrastinator, yes. About 10 years ago I started buying winter holiday gifts in August. :) But only for my partner.
There is one significant negative with going direct, which is the fact that online stores are often hacked. Amazon has yet to be hacked (afaik) so leaving your data with Bose is a higher risk than with Amazon.
I'll do that if these websites will stop assaulting me with GDPR popups 5 seconds into the site and then newsletter popups 10 seconds into the site, require me to search 10 different coupon websites to find 49 fake "no coupon needed" coupons and 1 real coupon that actually gets me the same price as listed Amazon, and then requiring me to register an account with email (or in some cases $#$*& SMS verification before making a purchase, and then unsubscribe from the goddamn newsletter after making the purchase.
Until they can learn to not annoy me, I'll buy from Amazon, and they will pay the price.
Oh and also, pay for return shipping. Amazon does.
Amazon can do more QC if it goes through them.
The last thing I accidentally bought from a non-Amazon shipper arrived in a semi-destroyed box, inside a too-small bubble-wrap envelope, apparently shipped from someone's condominium (I guess they bought in bulk and repackaged?)
I don't see any consumer benefit from Amazon forcing sellers to change their Walmart.com prices.
But the capitalist notion of buyer/seller/market, with government as referee, gets wobbly when a seller buys the market.
It's almost as though Amazon behaves with impunity toward the market, having already purchased the referee.
The same thing would still apply now too: "if sellers are able to offer their goods elsewhere for cheaper, they should be able to", instead of being forced to raise prices everywhere.
It fits with my understanding of traditional retail as pretty brutal for new entrants, taking more of a cut and putting up a much higher barrier to entry than Amazon.
Ebay may have lower fees, but Amazon is where many people go for convenience.
Back in the 80s, I used to sell Datalight C and Zortech C++ through mail order distributors. I was shocked to discover they paid us about half, or even less, of what they sold it for.
But they were all like that. It's what the manufacturer has to pay for distribution.
Just try running a store, or a mail order house, without doubling what you pay for the merchandise. You'll go bust if you don't.
If a customer called us direct to buy, it was priced at about the same as what the resellers sold it for. But, of course, then we had to pay the expenses of fulfillment staff, space, etc.
Many people are outraged by this doubling of price from manufacturer to retailer, and start a business believing they can undercut the other retailers and cash in. They get a rude awakening with how much it costs to run a retailing operation. They confuse "margin" with "profit".
WalMart does offer lower seller fees and (at least sometimes) lower prices than Amazon. The problem for me is that those lower prices are usually on things I don't want. I've bought a few times from WalMart's online store, but more often I look for what I want there, can't find it, go to Amazon, find it quickly, and buy it there. Many other comments in this thread indicate that my experience is not atypical.
Breaking up a monopoly is not a good thing if it results in worse outcomes for us as customers. If we end up finding what we want less often, or having to pay more for it, how is that a win?
The type of contract you are describing is common in many industries. They’re known as “full content agreements” in the airline industry for example, and they’re a continual source of tension between the distribution networks and travel agencies (who want these rules) and the airlines (who would like to be able to sell cheaper on their own direct channels). The same thing exists for hotels etc
I guess the question boils down to whether Amazon can be considered to have a monopoly position in the indirect distribution of the specific type of goods being considered. I imagine that might be possible for books, not sure about other goods
It seems monopsonistic to me, I believe it should be illegal but not sure it actually is?
But that's not how it works, you have to actually violate some law on the books, and I'm not sure what laws against monopsony we have -- for example, Apple is ruthless in driving down prices (for itself) due to its market power, and if it forces vendors to agree to never charge Apple more than what they charge another customer, this would not be illegal, even though the end result might be vendors raising prices for everyone except Apple, and thus seeming "unfair" to everyone else forced to compete with Apple. Demanding the best possible deal is not unfair competition.
Most of us live in a democracy, laws aren’t black and white and can be changed on a whim with little more than a single election cycle, or interpreted by courts in any arbitrary fashion. Sure, a large company can push unfair practices to a point, and can throw lawyers at it to a point but I think some large companies fatally underestimate the danger of flouting their position; the US government or a pissed off Judge could shut down Amazon’s entire operation in a day if there was the political will or some scandal came about. So it is absolutely in their self-interest to make sure their practices are “fair”.
Pretty much in agreement with everything else, but had to note that people viewing the world that way would not have much experience with real HR departments. Maybe there is another reason for the misconception.
Walmart does offer a 3rd party seller market and its largely junk in comparison - however, I don't know their fees.
0% is an imaginary fee btw... It costs money to staff/warehouse/sell/distribute/ship/package - i'm willing to bet the 30-45% fee includes amazon warehouse sellers who use prime shipping...
per the post below, a company like bose knows they only make 50% if even that much selling to any retailer, if they can make 55-65% selling direct on amazon and reach the market of people who just default to amazon then they're ahead of other sellers... Prime now for a speaker company is a godesend considering UPS shipping rates and last mile for heavy items are why they depended so much on brick and mortar retail traditionally.
I don't think the system is perfect by anymeans, but Amazon is just playing in a market that was previoulsly dominated by others and a market where fixed 30-45% is much cheaper, than everyone doing payperclick and hopoing for coneversions (googles market)
IIRC they do something like it with books through Kindle Direct Publishing: you have to sell on Amazon at the lowest price available anywhere, or else they take a much bigger cut.
It will probably be argued that Amazon isn’t actually a monopoly in these areas, therefore it’s not an abuse of monopoly. I’m only half joking.
Some have a clear statement on the website like "10% discount for ordering by phone", others will apply a similar discount when ordering in person, or will put a 10% off coupon (must order by phone / their own website) in with every delivery.
You ought to see what b&m retailers charger their suppliers !
The size of the fee they charge on top of this doesn’t matter.
how would Amazon know if a particular seller is also selling elsewhere?
Of course that is hard to prove because they have plausible deniability.
If instead this is a war between corporations and society, then we would expect to see a huge number of people feel like amazon exploited them in a time of weakness, furthered an already bad state of wealth inequality and classism, and accrued an order of magnitude more power over everyone than they had before.
Which outcome do you think is a better reflection of reality?
How is that hurtful for the consumer? You’re calling that “punishment”, but in fact as a shopper I just want to see the lowest price with the fastest shipping.
The seller fee bit part isn’t relevant. Wal Mart and Target or any other site could well offer lower seller fees - in fact, they’d HAVE to undercut Amazon in order to catch up with Amazon. But that doesn’t mean Amazon has to bring their prices down. I don’t buy that.
One other thing - as a shopper, no other shopping website comes close to Amazon’s customer service.
There is quite a bit to this article that’s disingenuous, for example -
> How do sellers handle these large fees from Amazon, and the inability to charge for shipping? Simple. They raise their prices on consumers. The resulting higher prices to consumers, paid to Amazon in fees by third party merchants, is why Amazon is able to offer ‘free shipping’ to Prime members. Prime, in other words, is basically a money laundering scheme. Amazon forces brands/sellers to bake the cost of Prime into their consumer price so it appears like Amazon offers free shipping when in reality the cost is incorporated into the consumer price.
If pricing on Amazon is too high, consumers won’t buy those products at Amazon and get rid of their Prime memberships too. But this isn’t quite true. Using hyperbole like “money laundering” also doesn’t help the case.
> Amazon also uses its bazooka of cash from Prime members paying high consumer prices, laundered through third party sellers, to distort industries across the economy.
Again, hyperbole. The author merely brushes off the fact that these sellers don’t HAVE to sell on Amazon in the first place. Presumably, Amazon is growing because more and more sellers flock to their website. If it’s a bad deal for sellers, they can sell on other websites. The article makes a one line claim - representing it as a ground truth - that a new business HAS to sell on Amazon. So this is clearly stating that no business can survive if they only have their own store presence or sell on Amazons competitors. I don’t believe this is true (based on a very successful family business). Yes my data point is anecdotal, but if we’re saying no business can survive without the ability to sell on Amazon, then the entire article is moot - the simple reason for breaking up Amazon is that no small business can survive without Amazon.
Again, I don’t think that’s true, and the author knows that - hence, the long wordy article to come at the issue from other angles while sprinkling in hyperbole.
You as the customer are being tricked.
I sell for 15 on Amazon, 10 on my own site and someone else sells the same product for 20 everywhere. Guess what price goes in the buy box. 20.00
"One other thing - as a shopper, no other shopping website comes close to Amazon’s customer service"
Where is the chat button? Where can I ask a question? Where can I let Amazon know something was wrong with the refund they sent?
There's no dark pattern involved here. When the buy box doesn't show you the lowest price, you usually see something like "Available for a lower price from these sellers" or some wording like that. In my 15+ years as a Prime customer, I've seen this quite a bit where I can find a competing offer for a lower price, often though with a longer delivery time.
>Where is the chat button? Where can I ask a question? Where can I let Amazon know something was wrong with the refund they sent?
I'm going to assume you're not writing this in bad faith and that this isn't a rhetorical question. From Amazon.com, I see "Customer service" is the second link from the left just below the search box. From that page, I see a big box in the center titled "Returns and Refunds".
You're also making the assumption that the buy box always offers the lowest price, which isn't true if Amazon are factoring non-price variables like is the manufacture undercutting Amazon on their own site. So as a seller you could be offering the lowest price with the fastest shipping, but still lose the buy box because you had the audacity to offer a better price on your own site or at Walmart.
This in turn creates a very strong incentive to sell your products everywhere for the same price, regardless of your actual costs. So your prices at Walmart and your own site go up.
If pricing at other stores wasn't a factor in the buy box algorithm, then consumers could find lower prices else where if they wanted to. Thus allowing competitors to slowly loosen Amazon strangle hold on online retail, and reduce prices for consumers.
> If pricing on Amazon is too high, consumers won’t buy those products at Amazon and get rid of their Prime memberships too.
How can this ever happen if selling cheaper elsewhere loses you the buy box on the biggest online store?
> If it’s a bad deal for sellers, they can sell on other websites.
Again you're completely ignoring the size of Amazon market share here. Who is voluntarily going to give up 50%-60% of all online sales? It's a bit like US ISPs, if Comcast screws with fees stupid prices on your cable contract you can just go to a competitor right, we'll just ignore the fact the competitor is selling 2mb DSL.
I'm on Amazon page right now. It tells me that I can get a product the fastest with the buy box offer, or I can get a cheaper price from other "offers". And when I click that link, it shows me higher and lower prices, but the lower prices have a delivery date (actually a range, between X and Y) more than a week out.
Let me start just by saying that the offer is still shown. It's not immediately in the buy box, but as a shopper, I have access to the lower prices and can buy from a different seller. This information is not obfuscated from me or hidden through some dark pattern.
>This in turn creates a very strong incentive to sell your products everywhere for the same price, regardless of your actual costs. So your prices at Walmart and your own site go up.
>If pricing at other stores wasn't a factor in the buy box algorithm, then consumers could find lower prices else where if they wanted to. Thus allowing competitors to slowly loosen Amazon strangle hold on online retail, and reduce prices for consumers.
The incentive goes away if you don't sell on Amazon, right? Any Amazon "strangle" (your word, not mine) only exists because people choose to sell on Amazon, right?
>How can this ever happen if selling cheaper elsewhere loses you the buy box on the biggest online store?
See my previous point. Don't sell on Amazon.
>Again you're completely ignoring the size of Amazon market share here. Who is voluntarily going to give up 50%-60% of all online sales? It's a bit like US ISPs, if Comcast screws with fees stupid prices on your cable contract you can just go to a competitor right, we'll just ignore the fact the competitor is selling 2mb DSL.
I don't agree with this. Companies like Comcast are deemed monopolies because their customers don't have a choice. Just as you stated, Comcast gives me high speed broadband. But my choice is limited to Comcast, and the only competitor (if there even is one in my neighborhood) will offer 2MB DSL.
This is NOT the case with online shopping.
I can purchase an iPad from Apple, Amazon, Best Buy, and a bunch of other websites.
I can purchase my razor blades online from Target, Amazon, Gillette, etc. including several of the grocery stores in my city (who will ship them.
Yes people shop at Amazon, but it's because they choose to. I have the option of not shopping with Amazon. As a matter of fact, I bought 10 "5 Star" brand notebooks on Amazon. I saw later that Wal-Mart had them for $3 instead of $7/notebook. I sent them back to Amazon and got them from Wal-Mart instead.
With internet service, many people don't have a choice but to go with Comcast, Cox, or whichever single provider offers the service in their neighborhood.
I also buy on Ebay, Craglist, Walmart and diverse retailers that are entering the eCommerce game.
The thing here is that markets take longer to work but if you look around, there is plenty of competition.
Like this article says, prices are increased across the board because of how Amazon acts.
The yelling comes from the Amazon sellers side, not from the customers.
There is plenty of competition for me to shop around, and if there are none, I'd rather buy from Amazon as I trust that they reduce the costs , fees and taxes effectively.
I would argue that the government should do less and not more. If they really want competition to grow, they could stop charging capital gains on every item a seller flip.
For example, when I was selling on Ebay, after the platform fees, the shipping fees, and the government taxes, it's just not worth it to enter the sector as a small guy.
This means that if I buy the product from say Walmart or Target, then I am paying 25 to 35% more for it. This is because the merchant cannot list it anywhere else cheaper than they list it on Amazon.
That is a clear violation of monopoly laws and I applaud that AG for his efforts to abolish these "most favored nation" status agreements.
And the buyers will move towards it.
I haven’t found any sites where I can get cheaper small items anymore. I’m up for suggestions for other online retailers.
Yes, and more and more counterfeit goods.
They must feel really confident with their market position (ie, monopoly), because they just don't seem concerned about counterfeit products.
I’ll usually let a slight increase in price slide for the convenience, but I’m always looking for a reason not to use Amazon if I can - and a rip off price is a good trigger for me to be patient and get the product next week with a smaller shop.
Correct, but besides the point. The relevant laws are not just about monopolies.
>but if you look around, there is plenty of competition.
Also correct, but again not really relevant.
Maybe not relevant for the lawsuit specified in the report, they are certainly entitled to sue for any reason. But the classic theme still show its nose.
On an other note, if amazon has 128 million prime subscribers and they like the service, it is something politicians need to be aware if they still want to be elected.
And it's pretty clear that Amazon has led to much lower prices and a consumer surplus compared to alternatives in the market.
And for all the shit AMZN gets on HN and over social media, broadly it is still one of the most widely respected and popular companies in the US across a broad spectrum of consumers.
You can argue whether that's overall good or bad, but I'm talking about the law as it is and has been enforced vs. what people WISH the law said.
As a general point, it's not even close to being true.
You didn't read the article, which demonstrates how Amazon's actions raise the prices at Wal-Mart.
When a single entity in the market can control and set the prices for the entire market it indicates an uneven shift in market power. Amazon has such market power at the moment, and this puts them at risk of committing monopolistic behaviors.
Further, even if it's a hair more expensive, I'll still pay it for the no hassle returns. I recently purchased a knife I saw on Amazon, but decided to go through the seller's official site to save a couple dollars. It was not worth it, and not something I'll do again.
Amazon simplifies my life. To be blunt, I don’t care about the “cost” (fiscal or otherwise).
[1] https://en.wikipedia.org/wiki/United_States_antitrust_law#Th...
In a functioning democracy, not for long
Many of us , myself included, after filling up a prime-enabled cart then go to walmart.com or some other such e-commerce retailer and then do exactly the same process you described still to check the price against Amazon.
Many times I go with the other retailer due to cost savings.
If Amazon prices things and incorporates shipping costs in such ways that people know they must double check them against other e-commerce vendors, where does the convenience and time savings come in?
What i'm saying : You're taking for granted that your convenience comes at a cost, in most cases.
Usually, if it is cheaper at all, it's for a week plus delivery and only a few percent cheaper in total. Most of the time though, it's actually still more expensive.
I've also bought from sellers off of Amazon as they offered coupon codes and paypal purchases. It's not ideal, but it seems possible to get around this. I think it's easier for manufactures that sell direct than resellers though.
We're talking about a difference of seconds in the checkout experience. It adds to the perception of convenience, but but I don't see the miniscule time savings of the Amazon experience as being worth a higher price on the same item I could get for less elsewhere.
I've wasted far more time with Amazon trying to decide if an item is legitimate, and dealing with returns of broken, counterfeit, or misrepresented goods, than I have saved in their checkout experience.
The cost is high though. Amazon is already much lower quality than they were 10 years ago.
Could you expand on 'lower quality'? I personally have not noticed this.
The review/rating system has become untrustworthy.
It's extremely common (>50%) for me to see a 4+ star rating that turns out to be dominated by 1 star reviews and tons of complaints.
It's not unusual to find that what positive reviews there are, are for a wholly different product.
Even more frequent is that reviews for several different products are all bundled together.
Just looking for an item and finding 15 of the same one at wildly different price with different description really makes you scratch your head. What's the difference, is there one?
Then the killer for me is how they mix inventory from sellers. It doesn't matter how much I trust a certain vendor, what I buy may not be their inventory anyway, so a single bad apple can mess it up for everyone.
Bought some windex, didn't pay much attention to price, 10$, because it was amazon, I assumed the price was for a concentrated solution. Turns out it was the normal kind (3$) but the seller put this price and it landed in the search results quite high.
The benefits of lower prices online can also mean you spending more time checking things.
Now I'm seeing so many sponsored results to brands I've never heard of and seemingly only exist for drop-shipping or rebranding some OEM product. Worse, the non-sponsored results would also be no name brands, where I'd gravitate towards the ones with high reviews. Then I buy the product and see a little gift card I could monetize if I was to review the product with 5 stars, so seemingly most of those reviews are fraudulent. Worse again, the quality on this product is below, sometimes even way below, a normal brand I could get retail locally but priced about the same. I must return 1/4 of the products I buy because of poor QC or later breakage from normal, if not, light use. Support or customer service for these brands is almost non-existent too and this brand will disappear in a year anyway, so why bother trying to build any sort of reputation. Amazon is always happy to do a return so it solves that problem, but its a still a big hassle and I'm sure the carbon footprint of all these returns is scary. Then I'm playing random OEM roulette again with a similar product that will also have fraud reviews and 5 star review coupons inside of it.
I also dislike the dark pattern format of the site, which shows sponosered results in very small text and puts it in between related items. I'm not sure what Amazon's Choice really is, but its almost never a product or brand that I would consider trustworthy and I imagine is just a product that is giving Amazon good margins. In a curated department store model, recommended items would be actually recommended by staff and taste-makers at the cost or benefit of the reputation of the store. If Macy's is recommending a Braun coffeemaker, then its probably going to be a good coffeemaker as Macy's wants to please me as a Macy's customer. If Amazon recommends one, its just going to be some in-house rebrand or random OEM brand with lots of suspicious reviews (tons of 5 stars but also tons of 1 stars, with not much in the middle) and with positive reviews being either "amazing i love it!!!" or referring to an entirely different product (bots?) and negative reviews being in competent English and verbose and detailed about all the things wrong with this product.
I think like with any capitalist endeavor, without proper oversight and regulation, it naturally falls into a race to the bottom and "low road" capitalist outcomes. Amazon has been left more or less alone by legislators and its, of course, gone as bad as it can and I imagine will only get worse over time. Amazon moving from the department store model to the random street bazaar model is good for the bottom line but every year it gets harder to shop there as no-name brands with no support and fake reviews dominate its marketplace.
I only need their great customer service because of the poor quality products they are shipping. With other retailers, I don't know how good their customer service is because I almost never need to utilize them.
Amazon delivers stuff to my place for "free" and very fast. They also make returning things as painless as possible since I don't even need to re-package my item when dropping off at UPS. It's easy to underestimate the hassle (from other merchants) of re-packaging your items and possibly paying for return shipping.
Whatever degree of effect that building shipping costs into pricing has given them is negligible in comparison. And it is dead simple for even small retailers to do this with most e-Commerce tools including Shopify.
Ie, it's fine that a retailer charges $15 + free shipping, instead of $10 + $5 shipping. It's not fine to them force the price on all other retailers to sell at a minimum of $15. Especially not since they probably have to charge shipping.
The argument that this violates anti trust is because it raises the prices for everyone, not just the people who are fine with hasslefree free shipping
No. That just wastes your time, not the seller's. And some of these people will just buy the product anyway.
In the short run amazon makes more money (commission on the sale) but in the long run this hurts Amazon's brand.
I manage an amazon business account where this is a particularly bad issue because buyers are not spending their own money. They will literally spend $500 on something that is $50, because they like Amazon's reliability around delivery, the purchasing is very smooth, returns are smooth etc. I feel like they cracked down on this maybe 4-5 years ago? But still stuff slips through.
So yes, I very much like that they don't allow sellers to mark up crazily on Amazon's site.
I tried to avoid Amazon a couple times, to give other stores a change and all. Wasn't that great, and it was more expensive.
Bought something on Best Buy, thought about returning it. On the product page and invoice, didn't say the date I could return. It only said the return periods where on a FAQ. FAQ didn't have a specific category for that product. I thought it was something (with 30 day), but when tried to return it, got a 'no' because it was 14 days. Why not add how many days in the product page? Why not show me the exact date on my order details?
Also tried the same with books, buying on Indigo. Bought an extra book to get free shipping. The price of the books where already a dollar or 2 higher than Amazon. 10 days delivery, and one of the books has some marks like someone put a paper over the book and scribbled on it. Never had a problem with Amazon, and it's cheaper and delivery is like 2 days.
As far as using AMZ logistics, that makes complete sense. I've come to expect a high standard from items I buy from them regarding when I'll get the item. If that starts varying wildly...well what's the point of Prime? Fast delivery is AMZ's entire schtick.
The price fixing I can't defend or make an argument about.
It's logical that they add the cost of shipping to the item price, but their cost must be much lower than alternative sellers, as it is hardly noticeable on low-cost items, and comparable to prices charged by Walmart, etc. who charge extra for shipping.
This depends a lot on where you are (or at least, it did). I canceled Prime a couple of years ago, because among other things, I hardly ever got things on time, whether it was next day or two day.
I don't really use Amazon much anymore. I go out of my way to find other retailers whenever I can.
I always try to look elsewhere .
> Versus some indy site
This is a false dichotomy. Nothing prevents showing both the item price and the shipping-included price next to each item.
Nothing prevents the sites from doing that, but most sites don't do give you an option to see total price on the product page.
The same item, if you look at it logged out, will show 15$ + 8$ shipping, but when logged in will show 23$ free shipping with a nice big Prime logo next to it. That's the issue at play, not what some other sites do. This is plain misleading and deceptive.
This was the missing piece for me. Would like to see more specifics about how Amazon does this.
They mentioned the "algorithm" which seems to imply this isn't an agreement entered into by the seller. Is Amazon crawling other market places to check seller prices against their site? Couldn't sellers circumvent this by using a different name?
This allegation is put forth without any supporting evidence and, considering the amount of crummy things sellers do on Amazon already, it seems trivial to circumvent.
I didn't sell directly on Amazon for long enough to find out, but from talking to other merchants, I understand that they were/are doing this.
IMO, even if the merchants enter into those terms willingly, it's still anticompetitive. Amazon is effectively creating a protectionist trade zone like the British used to enact in the 1760s and 1770s. The merchants enter into it because the alternative is "don't trade with a huge portion of the market" and also maybe face predatory attacks from Amazon-friendly merchants.
I run a print-on-demand company, dropshipping for merchants. For me to deliver a product next day (or even two-day) costs many tens of dollars. The fact that I can buy a $7.95 item on Amazon and have it profitably delivered in a day or two is absolutely incredible. It should be lauded, not punished.
Is it profitable though, or is this a loss leader to get more people shopping at Amazon?
Same for the other stages of delivery. They've already got something set up to move large amounts of goods between their warehouses to where the delivery vans are loaded. The marginal cost of one more item should be low.
When they have that kind of distribution/delivery infrastructure set up and essentially providing an almost continuous delivery pipeline, I'm not sure it makes a lot of sense to ask whether or not an individual item was profitable.
That is, if Amazon didn't offer it, I may check out Walmart or Overstock or somewhere else, and find other things at good prices.
I don't even trust Amazon for buying books any more. Of the last batch I bought, about 30% have blotchy, blurry font, making me suspect they're knock-offs printed from imaging the original. Often it's the same imprint but one book has crisp clean lettering and the next has varying fuzzy blur around every letter.
Except I never asked for everything to cost more in exchange for getting it next day.
Imagine if everything cost $20 more but all came with next-hour shipping. That's a miracle of logistics but it's a terrible consumer experience. And forcing that price onto people should definitely be punished.
I haven't had the ability get next day shipping for a while. Anymore my order won't even ship for a few days. A little over a year ago next day or 2 day was the norm.
That's not entirely accurate.
France has disallowed free shipping for books. Every other category of product at Amazon qualifies for free shipping.
While the article the author links to makes this clear near the end of that article, to write that France has banned free shipping is barely accurate.
Hard to imagine they (bureaucrats drawing up the regs) didn't see that coming. I'm guessing they did, but saying they enacted legislation to protect small sellers was their real goal.
I disagree. I can't speak for everyone, but for me I want to know the full price of something as soon as possible. Most online/mail order retailers used "shipping" as an opportunity to milk customers for a few more dollars as the amount charged really didn't reflect how much it cost to ship an item.
Customers are well aware today that "free shipping" just means "shipping included". I think this is one thing Amazon has pioneered that is actually GREAT for customers. I would rather see a law passed that makes it illegal to add more fees than the first price you see (after choosing a non-specific shipping location). It'd still be legal to subtract from that to combine on shipping of multiple items, but never add.
Yes, shipping can be used as an opportunity to milk customers for a few extra dollars. Let's flip it and build it into the price of the item. You buy two of these items. The seller ships them together; there's a few cents in cost due to extra weight, but otherwise, they're pocketing that extra $X the 2nd item had set aside for shipping.
Upfront priced shipping literally only and exclusively benefits the consumer when you buy one thing (or, if the seller is an idiot and ships one item per box, which never happens). And even then, it doesn't benefit the customer more than backside-calculated shipping, its just slightly more convenient.
My Etsy shop makes hundreds of dollars just on this oddity in consumer behavior; that they're more likely to buy something if it has free shipping, so we'll just tack on $4 to the price of each item. A consumer comes along and buys three things; they just paid $12 for "shipping". We put them all in one box, pay USPS $3.50, and pocket the remaining ~$8.
How much does your shipping cost you per year? Set your profit margin high enough to cover that.
Why do anything more complicated than that?
People don't want to be bothered with shipping costs. They just want to get the item.
His point is all online stores can do the same thing as soon as they have your address. That’s not what the market wants.
Right… so agreeing then?
In many cases, that is because local law requires the sales tax to be listed separately on the receipt. (For example, in GST and GET jurisdictions, the tax charge must be broken out separately to be passed on to the customer.)
However, if the price you see is the price you pay and it's a round number, that concessions stand probably isn't bothering to collect sales tax at all. A lot of times that's because they sell items that are not subject to sales tax alongside items that are, and don't bother to keep track of the separate buckets.
For an example of why they wouldn't: cold prepared foods can be taxed differently from hot prepared foods; packaged items are taxed differently from prepared foods; foods prepared on-site can be taxed differently from freshly-prepared foods prepared at another location; a food that includes a particular ingredient may be subject to sales tax but that same food without the ingredient may not be, etc. A large concessions stand, like the kind you would find at a baseball stadium, has the resources to figure this out. The mom-and-pop stand does not.
I feel like college economics classes teach you a version of perfect competition (like kiosks in Santiago) that is what I would call "hyper-lubricated." Profits lead to competitors instantly, without any friction or delay. You can't raise your prices long enough to profit. And that's not real, many businesspersons can raise prices and profit from it for a period of several years thanks to this friction. But eventually people figure out you're giving them a bad deal in a way they can't forgive.
That happened to me with Amazon. They sold me some fake shit, not much fake shit, not expensive, but that was it, after all that bluster about how I'd never do business with a company that did x or y, I found out x and y consist specifically of selling counterfeits.
I do agree that Amazon shouldn't be allowed to force sellers to price match on Amazon, though.
This pattern seems to be showing up more and more. Maybe it's just that the FBA marketplace is flooded with too many choices, but my "best" often seems to be not searchable any more.
In the carabiner example I present, there are plenty of tiny carabiners or those with weird shapes, or expensive ones. Just not low cost, non-tiny, normal shaped carabiners
for things I need to work I generally buy from walmart if posible.
I'll wager this is due to sites that won't let shoppers see shipping charges until they get to the end of checkout.
You can build a feature for that but it adds complexity both in development, and (more importantly) the user experience.
Helpful sites handle this by offering to compute shipping at any point in the order, using my supplied postal code. Rockauto is one.
Less helpful sites make me finalize the order as far as possible. I've seen sites withhold shipping amounts until I submit my payment info.
Crap like this is what drives me back to Amazon and Ebay.
Exactly. Some sites have an input field on the product page, under the product price, so you can add your postal code and see the total price
Ordering somewhere else has a higher enough threshold that I avoid it.
The rest of the behind-the-scenes stuff is appalling.
I fear that doing anything about this relies mainly on bad experiences. The harder it is to find a good product or the more commonly a low-quality knock-off makes people unhappy, the more they will actually listen to these other complaints about all the problems with Amazon. If Amazon can figure out how to keep customers having mostly positive experiences of finding things they want and being happy with them, it will be very difficult to get the public support needed to push back on all the problems.
Lousy bread and boring circuses make it much easier to build movements for change. Artisan bread and excellent circuses really are probably enough to keep people from wanting to rock the boat (sorry for the mixed metaphor).
Conditions like "don't sell cheaper elsewhere" are gross across the board, but the fundamental point doesn't seem valid.
MFN is going to be a thing whether I want it to be or not.
It's Matt Stoller. The point is the tone, not the facts/interpretation being valid.
Did the DA say that?
Like this deodorant. $1.88/oz with Prime and you have to buy at least a 4 pack. $1.15/oz on Fresh, and you can buy just one.
Prime: https://www.amazon.com/Dove-Advanced-Antiperspirant-Deodoran...
Fresh: https://www.amazon.com/Dove-Antiperspirant-Deodorant-Fresh-2...
> Now, if this were all that was happening, sellers and brands could just sell outside of Amazon, avoid the 35-45% commission, and charge a lower price to entice customers. “Buy Cheaper at Walmart.com!” should be in ads all over the web. But it’s not. And that’s where the main claim from Racine comes in. Amazon uses its Buy Box algorithm to make sure that sellers can’t sell through a different store or even through their own site with a lower price and access Amazon customers, even if they would be able to sell it more cheaply. If they do, they get cut off from the Buy Box, and thus, cut off de facto from being able to sell on Amazon.
>Amazon has between a half and three quarters of all customers online, so not being able to sell on Amazon is a nonstarter for brands and merchants. As a result, to keep selling on Amazon, merchants are forced to inflate their prices everywhere, with the 35-45% commission baked into the consumer price regardless of whether they are selling through Amazon.
[...]
> Amazon also uses its bazooka of cash from Prime members paying high consumer prices, laundered through third party sellers, to distort industries across the economy. Amazon spent some of it to build out a Hollywood studio, offering its original content ‘free’ to Prime members, who are of course indirectly paying for it with higher consumer prices. Prime also offers free video games and millions of songs. But none of this is actually free, it’s paid for by Prime members in ways that Amazon disguises with its coercive arrangements.
Screams monopoly. I think if the regulators and courts are just they'll sunder Amazon's "flywheel" and force them to deal honestly.
It's the only reason I'm still strongly with them.
I'd pay higher prices elsewhere for "local" or "indie" or whatever ... but have been stung so many times that I return to Amazon.
I'm p!ssed off about that, as I recognise Amazon as the monopoly, but don't take kindly either to get ripped off elsewhere.
Personally, yes, a monopoly is in the house. But the rest of retail has to up their game.
If Amazon get broken up, which causes their prices to rise, which helps competition. That competition will still need to "customer serve" as well as Amazon for me to consider them.
How exactly does Amazon achieve this? How can they tell that CheapGoods4u on Amazon is the same seller as BargainStuff4Less over on Walmart?
If they can't tell the sellers are the same company, they can't punish one for selling cheaper on another platform.
Creating a market by attracting customers with something they want and charging rent in the market is no more a monopoly in the digital world than it is in the real world. It’s like saying the mall can’t put free rollercoaster rides inside because then the stores that rent retail space would have to pay more and then pass that cost onto the customer and that inflates the price of goods. Would those stores spread the costs of that operation into the rest of their business, absolutely. Is there something wrong with that, nope.
I’m saying the article fails to make the case for monopoly to me the reader.
I can't claim to know the average amount of orders but it is not that hard to meet the hurdle for free 'standard' shipping and (pre-covid) most deliveries now are already in a two to three day window.
Think it will be difficult to prove that the existence of Prime actually inflates the price of goods, net net, absent Prime.
https://www.youtube.com/watch?v=2qanMpnYsjk is a pretty good Youtube video about Amazon's shipping system.
https://www.youtube.com/watch?v=y3qfeoqErtY is a good Youtube video that discusses how overnight shipping systems like Fedex etc. have works.
Their normal ship time was up to 7 days in the past, and even using their non-prime shipping today that is still true.
Even cheap items alone on an order are often available same/next in many markets -- it has to do with where the inventory is and how they're going to get it to your home.
As the OP noted, 3-7 days is common. Amazon shopping in an unauthenticated/private window is an easy way to see shipping differences.
While not directly analogous, the Supreme Court believes that agreements by duo/tri-poly players mandating businesses charging specific prices (or the lack thereof), don't cause consumer harm.
So consider my proposal to add to the lexicon of common market regulations: Same Price for All. You can't charge one customer any different unit price than another. (You can add a flat transaction/processing cost and maybe price-proportional fraud-insurance fee.) Volume, customer non grata, negotiated deals...nothing changes the advertised price.
Believe me, I'm one of the most laissez-faire people you're going to meet. But I think this ends up being healthy for all for the same reasons that other anti-monopoly laws do.
Amazon has the same bully-ish behavior in India through its own sellers. I dealt with one of these - cloudtail - to list our products online. (There are at least two such "preferred" entities). As a pre-requisite for listing, they force you into selling your products to cloudtail at a much deeper discount than any of our other offline sellers get. And if you are "caught" selling the product cheaper than amazon anywhere they will ship all unsold inventory back and charge you a penalty. We eventually chose not to sell on amazon and set up our own online storefront, fulfilled by our existing offline sellers.
I mean, I can imagine this situation is driven by Amazon's largest resellers more than anything -- if they spot a cheap copy of, say, Stewart's calculus, they just buy it and resell for triple the cost.
It's a bummer though -- Amazon used to be excellent for finding deals like that. Now I have to scour several different sites to find them.
You do lose some things. There are store-brand hearing aids that are equivalent to some popular brands but missing a few features, and you don’t get a 30-day trial period.
I tried buying through them but went with Kaiser since service is better and I had insurance that would pay the extra cost.
The scale at which Amazon operates at improves many aspects of the online shopping as a whole for every consumer even if not on Amazon. For example the shipping efficiencies resulted from FBA have distribution centers close to consumers, moving products much more efficiency across the country than if there were many small e-commerce stores each doing it their own way causing massive friction. The true cost wouldn't be apparent in the later case since the added friction would seem just normal and part of life as there wouldn't be anything as efficient as Amazon to compare it to.
There are other inefficiencies that would result in having competing online stores on various platforms making it harder to find a product at a reasonable price without spending more time searching various stores and truly understanding the offered price after all the fakeries of promotions, cash-backs, pay later but with insane interest that we won't disclose to you at the times of purchase, hidden subscriptions fees instead of a one time payment and other scams used to be employed by numerous online stores before the days of Amazon.
The cost of products sold to run a successful operation like amazon must be very close to the real cost that those products should be sold at when taking into account the shipping costs, supply logistics, cost of warehouse operations, etc. any devision from that by increasing prices and people see you as a monopolistic evil and your days are numbered, any lower than that and you wouldn't be able to scale as fast as economically possible.
Also working for Amazon seems to be a dystopian adventure [0] and [ ..]..
> Those sellers are effectively saying that Amazon dictates what happens on shopping sites all over the internet, and in doing so makes products more expensive for all of us.
I think this is also due to cementing their monopoly power. Now that everyone is addicted to Amazon, myself included, they can use lower-cost shipping whenever they want and don't have to ship everything in 2 days, thus increase their margins.
Also you the problem with the meme is that consumers have been trained to mentally adjust prices higher than $2 for shipping. The cheapest non-envelope mail is like $6.99.
Racine is the U.S. Attorney for Washington, D.C. As a U.S. Attorney, he has the authority to enforce Federal law. His is a unique position. All other U.S. Attorneys are appointed by the President via the Attorney General. He's an elected official.
(This comes from the unique status of Washington, D.C. as a creature of Congress, and the law that gives D.C. some self-governing power. D.C. was run directly by Congress until the 1970s, and residents could not vote for anything. Racine considered prosecuting Trump after the Jan. 6 riots. He could have done that and Trump could not have fired him.)
I already filter product lists based on whether they are eligible for Prime.
The second question is when did poor little Walmart need help competing against Amazon? Walmart failed because of execution not because of a “monopoly” and definitely not because they don’t have the money to go against Amazon.
Little did they know I would have always paid a premium to never see them again
Amazon can change the wording about price/shipping and keep everything else
The market chooses it and I never have to find out how employees at a retail shop are going to lie to me today
I’ve stopped buying anything other than food at my local grocery store because it’s cheaper to have Amazon ship it to my door then to pick it up off the shelf.
There's no free lunch. Loyalty programs, free offers, limited time discounts, etc.. are all "priced in" some how.
Of course that doesn't mean Amazon won't inflate FBA rates and squeeze sellers further, but it seems like currently the issue is about higher (non-FBA) seller fees forcing higher prices on competing services with lower seller fees because of Amazon's most favored nation clause. Unfortunately, Stoller doesn't break this down with enough detail to get a good understanding of its impact. In fact, this is pretty misleading:
"Now, if this were all that was happening, sellers and brands could just sell outside of Amazon, avoid the 35-45% commission, and charge a lower price to entice customers."
Sellers will always have shipping and fulfillment costs, whether or not they use the in house service, so the real consequence seems to be over the fee portion Stoller quotes as 5-10%, and it's unclear how much more this is relative to Amazon's competitors. Amazon's behavior is still anticompetitive, but MFNs aren't rare or illegal, and they're typically enforced by a business with more market power over its competitors (how else could you get someone to agree!).
TLDR; It seems clear that Amazon is inflating market prices, but not to the degree Stoller suggests, and I suspect it will be a much more difficult case to make for the same reason. IANAL.
But what's nicer is that I usually get my stuff in 1-2 days.
Price parity meant hotels simply charged more on their website as well.
That said Booking and Amazon are providing value to customers so be it. We pay for our collective laziness and high demands.
With hotels you can at least call and get a discount or book with the right cancellation policy to get a cheaper price than booking.
Someone should write an app to automate that.
The complete, utter idiot is a strawman model of the common person. (Quite literally, since a shirt stuffed with straw is a complete idiot.)
E.g. the last time I entered into a mortgage, I was supposed to get free lawyer fees as a gift from the bank. Oops, that little offer was pulled right off the table when I informed the bank I'm going for a cheaper variable-rate mortgage.
That's a really nasty example of "free": you pay tens of thousands of dollars more in interest over the lifetime of the mortgage because you didn't have to pay a $600-something out-of-pocket expense at the outset.
That said, though the shipping may not actually be free, it seems fair to say that Amazon is competitive in that area.
> To most consumers, Prime looks like a lovely convenience offering free shipping, and it’s hard to find better prices elsewhere. But the reason you can’t find better prices isn’t because Amazon sells stuff cheap, but because it forces everyone else to sell stuff at higher prices.
How does Amazon force "everyone else" to sell stuff at higher prices? If Amazon offers some $50 item with no-additional-charge shipping, how does that raise the price elsewhere? If someone wants to match Amazon, they have to also sell that item for $50, which may appear to raise the price. But they also have to provide no-additional-charge shipping, the same as Amazon. If it's $50 with $15 shipping, the business goes to Amazon.
If we accept the premise that Amazon is a leader in cheap and fast shipping, it follows that Amazon exerts pressure on everyone else to cheapen and speed up their shipping.
The author's premise seems to be that shipping is actually cost-free with other online venues, and so they just jack up their prices to the Amazon level, and then put the shipping portion of that straight into their pockets that Amazon would have applied toward the costs of shipping. How ever does Amazon complete with all these other venues that just teleport items to your door using pennies' worth of energy?