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Comment by ttoinou | Hacker News Reader

If amazon overcharges sellers of a 40% fee, then why can’t I get the same object elsewhere cheaper?

Obviously if you remove from your mind all market mechanisms, then it doesn’t look like a market anymore

Amazon enforces a Most Favored Nation (MFN) condition on sellers, basically implying that they cannot sell the same product elsewhere for cheaper. Funny enough - when Amazon pushes their fees higher, it means the prices go up everywhere, that's Amazon inflation.

https://www.proskauer.com/blog/amazons-most-favored-nations-...

so does this go for companies which sell electronics like phone companies etc. or since I think resellers sell it on amazon, maybe we don't have MFN condition?

But like, my question is, Doesn't this cripple every company which sells electronics on amazon or something?

I think amazon tries doing it to say that you would only get the best price here, thus people might buy from amazon which can then increase the sales making retailers believe they need to be on amazon agreeing to MFN policy and then crippling their custom market too I suppose

Are there any loopholes to this? What if I am a seller and then I can have lets say my book be on amazon for 100 bucks as an example and I can create a website where I sell it for 110$

But when someone signs up they can get a voucher for 20$ and then they can apply it for what I am selling which for them becomes 90$

I think amazon's MFN is monopolistic especially for things like books which is what amazon first was created for.

I kinda wish if there was a service where I can buy one time right to publish a book from the authors directly for like the books price and then be able to download it or print it from local competing printing/tech service shops..

It does cripple them, but only those Amazon can strong arm. There are some companies that refuse to sell on Amazon for this very reason - one example I know is Jellycats. MFN applies at reseller level - not at product level (obviously).

Yes, it is monopolistic - some call it technofeudalism, because Amazon owns the "land" and extract land rent out of it - with questionable service in return.

That's nonsense. People actually choose to use Amazon because their service is impeccable.

The argument about Amazon requiring cheaper prices is true in theory but in practice not strongly enforced. I just bought a kettle on Amazon instead of from another seller who had it 2 euros cheaper because I combined the purchase with other stuff that the seller didn't have. I have readily told people that some items they were buying could be found for cheaper on AliExpress, but they didn't care because they wanted the convenience and fast service. By the way, many of Amazon's suppliers sell the same product cheaper on AliExpress and other marketplaces; that completely kills the argument in the first place.

Amazon is successful because other companies were complacent and ignored the upcoming internet economy. Amazon built a very complex logistic system that took a very long time and a lot of investment to build. Now that they dominate, the lazy competitors cry about monopoly. In my country (France), the traditional supermarkets are just about now coming in with alternatives to compete, and they are very far off the mark for both service/selection and often price as well…

Can be said for all monopolies. I am not arguing that Amazon is not successful. They are so successful that they are now showing monopolistic behaviour.

The MFN principle is enforced - but only for the same reseller. The same product may be sold in another channel under another reseller, Amazon cannot touch that. AliExpress is surely outside of that scope. Also, EU managed to "convince" Amazon to stop MFN in principle in EU countries, practice is different (they don't enforce it, but give credit breaks) - it's still being enforced in USA and subject to legal challenges: https://www.johnstonclem.com/news-insights/amazon-antitrust-...

It's certainly not the case that you can just buy something outside of Amazon and it'll magically be 40% cheaper. For a long time Amazon pursued aggressive strategies to drive out competition and physical stores, leaving Amazon the most convenient or sometimes the only option.

Having built an extremely strong position, they can now increase prices and fees, and leverage power over sellers to stop them from listing lower prices off-Amazon, if they want to also sell on Amazon. See page 42 of https://web.archive.org/oag.ca.gov/system/files/attachments/... for an example of this

So, a competitor could also invest a lot, drive out competition, be the most convenient, build themselves an extremely strong position then reap the rewards ? This strategy can be replicated, thus is subject to market forces

The market today is extremely different to what the market looked like at the time Amazon worked their strategy, it was dominated mainly by physical retailers that may have required a long drive, things were not always stocked, limited choice on what's stocked on shelves. And ordering over a phone from paper catalogs had long delivery times and limited information beyond just a picture and short description. Amazon disrupted the industry by changing all of this and becoming the first major online retailer.

You won't be able to just replicate their strategy, and they've spent ridiculous amounts of money on next-day/same-day delivery infrastructure that nobody's gonna be able to invest that much. But if you do have any ideas on how to disrupt Amazon and be more convenient than them in 2025 let me know :)

So they worked a lot to get to the position here and no one else wants to make the same efforts. There's no easy play here

Plenty of people do want to make the efforts and have tried. Physical retailers like Walmart have opened online retail but adoption remains limited. Startups like Jet.com, Quidsi, Fab.com, Rakuten/Buy.com, Woot and many others have tried and failed to take on Amazon, leading to bankruptcy or being sold. The reality is that nobody can take on Amazon due to their slimy tactics but also nobody can realistically provide something to customers that Amazon doesn't already provide. Fees will keep increasing and costs inflating as much as Amazon wants, while customers are none the wiser and sellers can do nothing about it.

What you say is contradictory. If fees and prices are increasing on Amazon it means more potential for the competition if they can operate with lower margins. Amazon is winning because they toe the line, not because of an innate monopoly.

If you read the parent comments we've already established that Amazon punishes sellers for pricing lower on other platforms than Amazon, and Amazon's margins affect item pricing everywhere. You could have zero margins, you could have negative margins, Amazon will see that Seller X's items are available on your Amazon competitor for $2 while it's $20 on Amazon and say that they're in violation of policy. Unless you make it worthwhile for Seller X to abandon Amazon you will not be able to compete.

Sure, "a competitor" with hundreds of billions of dollars and a few decades to burn could, in theory, do that.

But what would be the payoff? Getting to compete head-to-head with Amazon? Amazon, that's a well-established incumbent, with a well-known pattern of ruthless dealings, including leveraging their ties with governments, to protect their monopoly?

No one's going to be able to make a profit doing that.

So, the market is good with this solution then. All good. Bit Techs are not Soviets.

(Note that my personal opinion is that Amazon profits / are protected thanks to governments through unfair IP / patents though)

"The market" is not a real entity with desires and opinions.

"The wisdom of the market" only works with an ideal free market, or something close to it.

Such a thing has a number of requirements, such as low/no barriers to entry, perfect information, elasticity of demand, etc.

Those do not exist here. No useful information on how things "should be" can be obtained from the fact that Amazon cannot meaningfully be challenged.

Your position, essentially, boils down to "however things are right now, if they're even remotely stable, that's how things should be, because that's what the market wants." Worship of the status quo.

I’m only criticising Varoufakis point of view and some people arguments here. Of course I have some things to say about Amazon… and yes information is never perfect

You can't realistically compete with a Monopoly like Amazon. They'll buy you out way before you can be an inconvenience to them, or drown you by artificially lowering their price until you go bankrupt if you refuse their deal. And even in the off-chance you somehow replace them, then great. We're back to square one.

  We're back to square one.

So, all good, we're not in Big Tech are Soviets.

Depends what you are buying. In some cases you can buy it elsewhere and in other cases, Amazon may be the only option left.

Chinese stuff you can find it cheaper elsewhere most of the time. For the rest, amazon is still cheaper, faster to deliver and easier to return

Yes, but not with the same shipping speed. Often temu/aliexpress requires you to wait week(s).

I wasn't thinking of Chinese goods. Their labour laws and prison camps are even more questionable.

amazon is just a middleman for the chinese goods. your objections apply to a fantastic number of amazon sellers.

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