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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

#101

Post by MChristopherson »

txcwpalpha wrote: post #59
MChristopherson wrote: post #41

Earlier quoted context omitted.

"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…

I agree, and should have expanded my "not a direct comparison" more clearly to expand on the more nuanced situation. But, I mean my point kind of at the more general level that the topic concerning Amazon often starts at: everyone's (and mine as well) first thought is to mentally compare to a grocery store with own-brand products competing with name-brand versions. In many cases, tho absolutely not all as you correctly point out, the jars of mayonnaise from Kraft and from Safeway are both bought and paid for by Safeway.

So, while that is not an absolutely example (as lots of stuff in the store is still owned by the separate vending companies), it is a good caveat to our first "grocery stores do it" thought that comes to mind when thinking about this Amazon topic.

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

#102

Post by Beached »

jdmichal wrote: post #40
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?

It's not about being scaled. It's about using your scale in one place to force scaling in another. If Amazon provides a marketplace, where people pay them to list and sell products, then using the strong position of that marketplace product to then leverage and scale up their own products is potentially troublesome.

I mean, Walmart is also mega huge, and also allows 3rd party sellers on their website. is it troublesome that Walmart also promotes their own items or the items where they make the most profit first?

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

#103

Post by robertlagrant »

shubb wrote: post #68
JumpCrisscross wrote: post #39

Earlier quoted context omitted.

> 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.

They have a data advantage- Amazon basics are just white labeled goods from some Chinese factory, warehoused and dispatched from an Amazon warehouse just like everything else on Amazon Market. The only difference is Amazon but the stock (and bet on it selling). Amazon has much better visibility on sales, margins, user behaviour than their market sellers. Where risk is high they allow sellers to take the risk, where i…

I hadn't thought of it like that. But is it any different than if they paid for analysts to provide them that info?

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

#104

Post by JumpCrisscross »

saltking112 wrote: post #54
JumpCrisscross wrote: post #39

Earlier quoted context omitted.

> 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…

> Amazon Basics has an advantage over third parties

Totally agree. But this isn’t an economy of scale advantage.

SoftBank-backed companies had a capital advantage over their competitors. That isn’t per se an economy of scale. Amazon’s products have a distribution advantage over smaller competitors. Again, not an economy of scale.

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

#105

Post by bingdig »

373uehedhd wrote: post #51
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 p…

Theoretical competition =/= actual competition. Yes, that could technically happen, but Amazon's market power makes it extremely difficult. Here, there's a two-sided marketplace (consumers and sellers) where Amazon has both sides. It's not enough for one side of the market to decide they want out. For example, see what merchants have done with Shopify and the Shop app (merchants are all on board, but consumers don't care).

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

#106

Post by _jal »

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.

Funny how people lean so far out to criticize others only to find their own butt flapping in the breeze.

Amazon does this a lot, no matter what your order looks like. The most pathological I've ever seen was at an old workplace, they shipped 20 boxes of pens (12 packs or whatever size of disposable pens) each in a separate large box. The delivery person took several trips up the elevator to deliver them.

But, of course you have an answer to this problem, right?

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

#107

Post by adventured »

ghostpepper wrote: post #97
throwaway_USD wrote: post #31

Earlier quoted context omitted.

Under Anti-trust law Company A and Company B can do the same exact thing, but 1 Company may violate Anti-trust laws while the other doesn't. >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. It is not about a "monopoly", under Anti-trust you can't unfairly leverage your market position to f…

Why don't grocery stores get in trouble then? Do you need to be effective at forcing competitors out of the market or does simply the attempt make one guilty? Don't all businesses want to force their competitors out of the market? As an aside it does not surprise me at all when I learn that a law is not worded in a way that's congruent with the popular conception of the law.

> Why don't grocery stores get in trouble then?

It would be argued that Amazon's specific point of abuse and power is related to its ecommerce market share. If a monopoly argument is going to be made against Amazon in retail, it will be about their online store (as opposed to eg in-store Wholefoods).

I think it's a fair point of separation. Amazon can simultaneously have an abusive monopoly online and a weak position in physical stores. Walmart could cultivate a monopoly in physical store retailing (hypothetically), and have a weak position online.

Other grocery stores don't attract anti-trust attention, typically, because they have no overwhelmingly dominant position.

If Kroger had 40% or 60% of the US grocery store business, they'd be a target of anti-trust focus persistently (as it is, Kroger is the #2 grocer and only has 10% of the grocery business; it's a very fragmented market, Costco is #3 with a mere 5% share). If Amazon.com only had 10% of the US online retail business, there wouldn't be so much concern about their potential monopoly positioning.

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

#108

Post by robertlagrant »

ponker wrote: post #22
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…

Lots of things that are "normal" become highly anti-human when done with Amazon's scale and lack of human review/input.

> Lots of things that are "normal" become highly anti-human when done with Amazon's scale and lack of human review/input.

This would make more sense if the consumers benefiting were not human.

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

#109

Post by panzagl »

sacred_numbers wrote: post #67
ehh2heiddn wrote: post #49

Earlier quoted context omitted.

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

What is wrong with buying a single small item online? If done correctly it should have almost zero environmental impact. The marginal environmental cost for a shipped item is the extra fuel burned by the delivery truck due to the weight of the item (in this case the weight is insignificant) plus the fuel burned while the truck is idling when the package is delivered. I would be willing to bet that the environmental c…

There's the fuel cost of adding length to the delivery route.

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

#110

Post by boardwaalk »

macspoofing wrote: post #93
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 don’t see what’s wrong with this. I'm with you from an ideological perspective, but from a practical perspective living in the current world the way it is, they will get in trouble from either the American or European[1] regulatory bodies. And I'm surprised they don't get it. It's only a matter of time. It will take only one of their platform users or competitors to get fed-up and make a big stink (and there's alr…

I’m assuming they’ve done some sort of calculus.

If you were cynical, you could say they’re pushing the bounds because they know they’ll get whacked for something eventually, even if just for owning a huge chunk of e-commerce (already the case). And if they are going to, why don’t they choose what that’ll be, and the thing that makes them hardly any money? I’m sure they’d be happy to pay basically nothing (what, use their lawyers already on retainer and wind-down contracting of white-label crap? — and maybe pay damages, which seems unlikely they’d let it go that far).

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