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Amazon’s New Competitive Advantage: Putting Its Own Products First

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Re: Amazon’s New Competitive Advantage: Putting Its Own Products First

#51

Post by 373uehedhd »

bingdig wrote: post #42

The main problem is that current antitrust law doesn't clearly prohibit anti-competitive behavior like this. Modern antitrust law has largely been created by judges (often without any economic training) interpreting early 20th century laws. This is a great summary of how regulations could be adapted to stop this sort of activity: https://www.yalelawjournal.org/pdf/e.710.Khan.805_zuvfyyeh.p... In short, competition ne…

There's nothing stopping an increase in competition is the problem. Sellers want the visibility of Amazon's platform with the benefits of rolling their own. There's nothing physically preventing a merchant alliance from forming its own platform, merchants (that aren't Walmart) simply don't do this because they know they're still getting more value by being on Amazon instead. Online retail isn't new or novel at this point, merchants have had all the time in the world to figure out a more favorable system.

Re: Amazon’s New Competitive Advantage: Putting Its Own Products First

#52

Post by aeturnum »

saltedonion wrote: post #13

I don’t see what’s wrong with this. Many retailers reserve some of their best shelves paces for their private label products, both as a form of differentiation and to extract higher margins. You could argue that Amazon is unique in that it is large and potentially has a monopoly over eCommerce, but it is hard to say that in the end, consumers are on the loosing end. Most amazon basic products are commodities, and pri…

I think it's easy to describe why it's problematic without even referring to antitrust.

Amazon's brand (as a store / marketplace) is that it helps you sort through many options to select the product they believe you will like the best. This is different from the service offered by traditional grocery stores which offer many different products, but are not arranging those products in relation to a particular request.

This means that, when Amazon is operating as a store, any re-ordering of the display results disrupts the value they provide to consumers. It also, of course, disrupts the value they provide to the products they sell. Any other product that receives poor reviews would be punished by being displayed later, but Amazon branded products will never suffer that fate. The same is true of any other algorithmic sorting.

Amazon is, with one side of its mouth, suggesting a business model that it claims will benefit both sellers and buyers (that the best products will win and consumers will be shown the product best matched to them) and also explicitly excluding itself from that system.

To return to the supermarket situation, you might imagine a supermarket which stocks all brands, but the first item in every row is the store-brand equivalent of that product which you must remove to get to the branded one.

Re: Amazon’s New Competitive Advantage: Putting Its Own Products First

#53

Post by koheripbal »

bingdig wrote: post #42

The main problem is that current antitrust law doesn't clearly prohibit anti-competitive behavior like this. Modern antitrust law has largely been created by judges (often without any economic training) interpreting early 20th century laws. This is a great summary of how regulations could be adapted to stop this sort of activity: https://www.yalelawjournal.org/pdf/e.710.Khan.805_zuvfyyeh.p... In short, competition ne…

I don't believe the bottleneck here is the law or judicial interpretations.

The problem (IMO) is that there is no political pressure for the Justice Department to seek corrective action against these near-monopolies.

The lack of action (IMO) comes from two motivations...

1. The desire for US politicians to see US companies attain global near-monopoly status as a mechanism to help propagate US policy & surveillance.

2. The campaign finance influence these corporations buy through lobbying in Congress and their local/state officials.

1 & 2 aren't even all that independent. Amazon didn't setup HQ2 in DC for nothing. Bezos even literally bought the largest mansion in DC explicitly to host congressional networking events.

The solution is simple, in principle. Nurture, fund, and support alternatives to these companies. Realistically, globalization means there is little hope for regulatory breakups in America's future.

Re: Amazon’s New Competitive Advantage: Putting Its Own Products First

#54

Post by saltking112 »

JumpCrisscross wrote: post #39
saltking112 wrote: post #35

Earlier quoted context omitted.

but some industries clearly needs economies of scale in order to provide the consumer with cheaper and better products. Can you truly argue just because a firm is large they are no longer allowed to offer the same product for cheaper simply because they have a strong foothold in distribution?

> some industries clearly needs economies of scale in order to provide the consumer with cheaper and better products This isn't an economy of scale. The component that has scale is distribution. A third-party seller selling through Amazon gets those advantages the same as Amazon. What's different is the sourcing and manufacturing of the product. Amazon has an edge. But it's not one of economies of scale.

With commoditized products the brand/manufacturer has no pricing power, so in order to go down the cost curve the firm would need to deploy more capital. This means making things in bigger batches, more efficient shipping, more advertisement investment taking ads out on Amazon to get initial reviews etc...

In each of these components Amazon Basics has an advantage over third parties whom are often mom and pop and are undercapitailized.

The points of contention are

1) If amazon competes fairly in Ad bidding so Basics products shows up first on the paid search results, is this anti-competitive?

I don't think so. They just have more capital. Any other well capitalized firm can do the same.

2) Is it fair for amazon to display their products more prominently?

I don't think so. How is this any different than Walmart refusing to carry a product? Or putting their private labels more prominently?

Re: Amazon’s New Competitive Advantage: Putting Its Own Products First

#55

Post by theplague42 »

ehh2heiddn wrote: post #49
nullandvoid wrote: post #34

Earlier quoted context omitted.

My girlfriend had nail varnish delivered in ana Amazon box 30x30cm it was ridiculous! So I wouldn't be singing too many praises on their packaging stance

Funny how people buy a single small item have it shipped to them then have the gall to complain about shipping waste.

Plenty of small things get mailed in small packages or envelopes; ever ordered a cable off eBay? Amazon prioritizes shipping speed and low labor cost more than packaging waste.

Re: Amazon’s New Competitive Advantage: Putting Its Own Products First

#56

Post by pstrateman »

ehh2heiddn wrote: post #49
nullandvoid wrote: post #34

Earlier quoted context omitted.

My girlfriend had nail varnish delivered in ana Amazon box 30x30cm it was ridiculous! So I wouldn't be singing too many praises on their packaging stance

Funny how people buy a single small item have it shipped to them then have the gall to complain about shipping waste.

even if you buy a bunch of things at once they'll often ship them in nonsensical ways, presumably it reduces their shipping costs

Re: Amazon’s New Competitive Advantage: Putting Its Own Products First

#57

Post by ABeeSea »

mokanfar wrote: post #50
ABeeSea wrote: post #8

I just did the “ground coffee” and melatonin searches. Entire first row was an ad for bulletproof coffee and sugarbearhair vitamins. Second row had the amazon brand on the left with prominent amazon logos on the coffee bag and the pill bottle and a tag that says “featured from our brands” and the first word in he title for both items was Amazon. The next three items were sponsored ads. I don’t see amazon being decept…

Amazon is is doing with sponsored listings the same thing that Google did with its organic search results. "Oh your site is not the top 3 in search results for this keyword? You have a chance to stand out if you buy these ads." The shady difference here between the two is that Google did not try to show results from their own company, Amazon is.

When I search “email”, “maps”, “video”, and “cloud” through google on iOS safari, I get as the first non-ad result; Gmail, google maps, YouTube, and google cloud respectively.

Re: Amazon’s New Competitive Advantage: Putting Its Own Products First

#58

Post by heavyset_go »

mikepurvis wrote: post #25
saltedonion wrote: post #13

I don’t see what’s wrong with this. Many retailers reserve some of their best shelves paces for their private label products, both as a form of differentiation and to extract higher margins. You could argue that Amazon is unique in that it is large and potentially has a monopoly over eCommerce, but it is hard to say that in the end, consumers are on the loosing end. Most amazon basic products are commodities, and pri…

I've found the "basics" products to be a little hit and miss, at least as far as electronics— USB cables, network hubs, and the like. However, one thing I really do like about them is the minimal packaging. So much other e-commerce stuff still arrives in retail-style blister packages, which is absurd.

An Amazon Basics power strip I bought failed and took some of the hardware hooked up to it with it.

Re: Amazon’s New Competitive Advantage: Putting Its Own Products First

#59

Post by txcwpalpha »

MChristopherson wrote: post #41
saltedonion wrote: post #13

I don’t see what’s wrong with this. Many retailers reserve some of their best shelves paces for their private label products, both as a form of differentiation and to extract higher margins. You could argue that Amazon is unique in that it is large and potentially has a monopoly over eCommerce, but it is hard to say that in the end, consumers are on the loosing end. Most amazon basic products are commodities, and pri…

"Many retailers reserve some of their best shelves paces for their private label products" A key difference is that in those situations (a grocery store, for example), the marketplace owners have already purchased all the products on the shelves. It's the grocery store's decision to choose what and how the products that they have paid for are presented to customers. This is not a hundred-percent comparison, of course…

It might work like that in a mom-and-pop corner store, but for most retailers it is much more complicated than that. Larger stories like Target don't just buy a truckload of Playstations and then put them on the shelf. Instead, one of the ways it happens is that Target works out a specific deal with Sony where Sony essentially 'rents' the shelf space, and Sony then gets to design where on the shelf their products go and is responsible for filling the shelves.

Other agreements might be to for Target to purchase a certain amount of Playstations but only as long as Target places them on the top shelf. These are just two of the many different ways that the shelves get filled. In these examples, it's much much harder to draw a comparison to Amazon without knowing how Amazon makes similar agreements with its sellers.

(Target and Sony are just examples, I don't know if Target actually does contract specifically with Sony in this way)

Re: Amazon’s New Competitive Advantage: Putting Its Own Products First

#60

Post by obvthrowaway2 »

saltedonion wrote: post #13

I don’t see what’s wrong with this. Many retailers reserve some of their best shelves paces for their private label products, both as a form of differentiation and to extract higher margins. You could argue that Amazon is unique in that it is large and potentially has a monopoly over eCommerce, but it is hard to say that in the end, consumers are on the loosing end. Most amazon basic products are commodities, and pri…

I agree. As far as I can see, this is good for the consumer.
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