Amazon scooped up data from its own sellers to launch competing products • Hacker News Board

Re: Amazon scooped up data from its own sellers to launch competing products

#171

Post by sacks2k » Thu, Apr 23, 2020, 4:29 PM UTC

I saw this happening a decade ago, but I had no real proof.

I had a profitable Amazon store in 2010. I found niche products that Amazon didn't sell. As soon as I started getting traction on any one product, Amazon would start undercutting me, and my sales would drop to almost zero over the course of a couple of weeks.

I had near 100% feedback and I had a single customer complaint that I sold them the wrong product. Within a few minutes of me receiving this claim, my account was suspended. I had no chance to rectify the situation.

No amount of calling or emailing Amazon could get me in front of someone that could help me. All responses were an automated rejection.

This was a rough time for me as it was my only form of income and Amazon held almost $30,000 of my money for 3 months. I ended up having to close my business and move on, though I did eventually get all of my money back.

I've built multiple successful businesses since then and Amazon has recently had many business reps try to get me to sign up with a business account, because we purchase lots of items on Amazon/month. I always try to get them to re-investigate my old seller account and our email correspondence stops shortly after this. It's crazy to me that after 10 years and in a completely different industry, I still can't open a seller account.

It taught me a valuable lesson not to build my entire business on someone else's platform.

It only gives them more control over you and they will most likely use your customers, data, and more resources to out-compete you, if you get too big. Twitter has also done this to their app developers.

My wife runs a small business on Etsy and it's just as bad. They make random code changes, which bumps listings up or down and you suddenly have no orders for weeks at a time.

What's even scarier is if a handful of companies run everything we use online. Will I suddenly not be able to get a home loan for a decade because of an account closure?

Re: Amazon scooped up data from its own sellers to launch competing products

#172

Post by archgoon » Thu, Apr 23, 2020, 4:29 PM UTC

dd36 wrote: post #161

thoraway1010 wrote: post #123

Earlier quoted context omitted.

This is totally false - the number of retailers who have testified before congress that they don't use seller data to compete against sellers - and then who go ahead and do just that is basically zero. Additionally, most other retailers actually BUY the third parties products and take the risk of promoting and selling it. On Amazon third parties take the inventory and many other risks and may have to pay amazon to pr…

How would Amazon not use sales data of comparable products to evaluate the launch of a new white label product?

Amazon agrees that what is being reported goes against their policies.

'"However, we strictly prohibit our employees from using nonpublic, seller-specific data to determine which private label products to launch." Amazon said employees using such data to inform private-label decisions in the way the Journal described would violate its policies, and that the company has launched an internal investigation.'

Re: Amazon scooped up data from its own sellers to launch competing products

#173

Post by sinayev » Thu, Apr 23, 2020, 4:29 PM UTC

chairmanwow1 wrote: post #76

MichaelApproved wrote: post #25

The solution isn't hoping the free market would solve this with a competing platform. The solution is to create regulations & laws that prevent this behavior. You're either a platform/retailer or you're a manufacturer. You don't get to be both because we see the perverse incentive that happens when it's allowed.

What really is the issue? That Amazon is leveraging its success to be successful? It's unfair that Amazon is able to see that a product category is doing well so it invests its own money into manufacturing a product to sell through its site? Do you really think that if Amazon couldn't use the data from its own site that it wouldn't procure it elsewhere? Before any product is developed there is extensive market resear…

The issue is that Amazon is lying to Congress.

Re: Amazon scooped up data from its own sellers to launch competing products

#174

Post by vntok » Thu, Apr 23, 2020, 4:29 PM UTC

Shivetya wrote: post #73

MichaelApproved wrote: post #25

The solution isn't hoping the free market would solve this with a competing platform. The solution is to create regulations & laws that prevent this behavior. You're either a platform/retailer or you're a manufacturer. You don't get to be both because we see the perverse incentive that happens when it's allowed.

Disagree, what I do think we need is any retailer who has their own product lines in store must clearly identify that they are store brands.

That's what Amazon Basics is and does.

Re: Amazon scooped up data from its own sellers to launch competing products

#175

Post by johnqpub » Thu, Apr 23, 2020, 4:29 PM UTC

Tiktaalik wrote: post #33

The key difference between what Amazon does and Costco/Walmart etc does, is that regular retail takes the risk of buying the product to resell, prior to gathering data and considering whether to clone it. Amazon is able to snoop on all the sales data without any risk.

That's not entirely true. Plenty of retail items are sold on consignment.

Re: Amazon scooped up data from its own sellers to launch competing products

#176

Post by ardy42 » Thu, Apr 23, 2020, 4:29 PM UTC

whoisjuan wrote: post #17

Stating the obvious I guess. All retailers do this and create their own white-label brands to squeeze profit from well-performing categories. Target, for instance, is very upfront about it and they have like a gazillion white-label brands that compete in hundreds of categories, which makes it very gray for the customer. Does anyone really think that any retailer launches a competing product in a category without look…

> Stating the obvious I guess. All retailers do this and create their own white-label brands to squeeze profit from well-performing categories. Target, for instance, is very upfront about it and they have like a gazillion white-label brands that compete in hundreds of categories, which makes it very gray for the customer.

IIRC, many traditional white label brands are actually manufactured by the name brands themselves, and they're part of a strategy to segment the market.

The difference here seems to be that Amazon has been cloning relatively unique products made by smaller companies, while traditional white label brands are fungible commodities made by large players with little differentiation. From the OP:

> Because of the limitations of shelf space, traditional retailers stock far fewer products than Amazon’s hundreds millions of items. Typically, they create private-label products to compete in generic categories such as paper towels, rather than copycat versions of items created by smaller entrepreneurs, private-label executives said.

Re: Amazon scooped up data from its own sellers to launch competing products

#177

Post by toasterlovin » Thu, Apr 23, 2020, 4:30 PM UTC

hanniabu wrote: post #66

MichaelApproved wrote: post #25

The solution isn't hoping the free market would solve this with a competing platform. The solution is to create regulations & laws that prevent this behavior. You're either a platform/retailer or you're a manufacturer. You don't get to be both because we see the perverse incentive that happens when it's allowed.

Wouldn't solve anything. They'd just split their company to be separate entities but still share all the information and operate as if nothing has changed.

What they would probably do is form special relationships to give certain brands special placement and/or endorsement, but charge those brands a larger fee for the special treatment. The end result is basically the same.

Re: Amazon scooped up data from its own sellers to launch competing products

#178

Post by maxwell » Thu, Apr 23, 2020, 4:30 PM UTC

leonardteo wrote: post #126

kharms wrote: post #98

Earlier quoted context omitted.

>What really is the issue? That Amazon is leveraging its success to be successful? The issue is that over the long term, Amazon is lowering the ROI on innovating and taking risks in the consumer goods space. It's able to do this because of its dominance as a marketplace.

Where it gets grey is when stakeholders privately invest or start companies that sell on the platform. Amazon chose to do it upfront with Amazon Basics but there’s nothing stopping them from creating house brands/labels even at arms length to give the impression that it’s not Amazon.

> there’s nothing stopping them from creating house brands/labels even at arms length to give the impression that it’s not Amazon

They already did this years ago. Amazon has 80+ private-label brands.

https://www.businessinsider.com/amazon-owns-these-brands-lis...

Re: Amazon scooped up data from its own sellers to launch competing products

#179

Post by ChuckMcM » Thu, Apr 23, 2020, 4:30 PM UTC

The obligatory, "I'm shocked I tell you, shocked!" but unlike say the "Kirkland" brand at CostCo, this is more like UPS using the data it has on what is being delivered to peoples houses to start stocking their trucks with things people order often[1].

[1] Maybe the next step after food trucks is "mini-mart" trucks.

Re: Amazon scooped up data from its own sellers to launch competing products

#180

Post by stcredzero » Thu, Apr 23, 2020, 4:31 PM UTC

freepor wrote: post #163

stcredzero wrote: post #128

Earlier quoted context omitted.

Does anyone really think that any retailer launches a competing product in a category without looking at all their supplier data? So, if cars are inevitably becoming computers with wheels, what's going to happen to insurance companies? The major weapon of underwriting is data, and a company like Tesla is going to have a huge advantage in data over external insurance companies. Is it really a societal good for big com…

There are insurance companies who already sell trackers that plug into your car's OBD-2 port and have onboard hardware so that the insurance company sees your acceleration, handling, sudden braking, times you drive, miles you drive, etc. Right now, very safe and low risk drivers can use these companies to get discounted insurance. Eventually, every safe driver willing to install these trackers will do so for the lowe…

I know. So again here's the heart of my point: Even with the OBD-2 port, the data available to these apps is nothing compared to the data available to Tesla. Tesla can figure out how often you get close to bumping into something, exactly how far, how fast you were going, and what the lighting/weather conditions were like at the time. That data is orders of magnitude better than the stuff coming out of the app.