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Amazon forces sellers to divulge COGS, won't reimburse other costs

sellercentral.amazon.com

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Re: Amazon forces sellers to divulge COGS, won't reimburse other costs

#21

Post by mtnGoat »

empathy_m wrote: post #14

I remember reading in Reader's Digest in the 1990s that if you're in a store and you break something which the merchant asks you to pay for, you should offer to pay their cost to replace the item, which is of course often much lower than the sticker price. Later in life I wondered whether this was really fair, as things cost money to order, process, and store. (Though this is normally baked into retail pricing in the…

No it’s not fair at all, if you break something you don’t actually have to buy it. It’s the merchants liability for allowing things to be within reach of customers. Just walk out and don’t negotiate at all.

Re: Amazon forces sellers to divulge COGS, won't reimburse other costs

#22

Post by echelon »

warkdarrior wrote: post #20
echelon wrote: post #17

Earlier quoted context omitted.

That's diabolically clever. At scale, you can squeeze your merchants for every last penny. Should the DOJ be hearing about stuff like this?

How is this illegal in any way?

Amazon is 40% of online sales in the US, and is probably closer to 100% for some subsets of goods. They effectively have monopoly power and they're using Standard Oil tactics to shake down merchants.

They can use COGS to squeeze margins and even decide which merchants and products they can compete with directly.

When a trillion dollar company is stepping on ten million small merchants, that's robber barron behavior and calls for DOJ intervention.

Re: Amazon forces sellers to divulge COGS, won't reimburse other costs

#24

Post by DannyBee »

m_ke wrote: post #5

I had one of the largest retailers to reach out to my company with an interesting problem. Given a weight and ingredients of packaged food they wanted to predict the content of each ingredient so that they could calculate the suppliers COGS so that they could use it as negotiating leverage against the suppliers...

Interesting - seems like you might just be able to throw an multi-ILP solver at it?

(maximize individual ingredient weights given ordering on package must be in weight order, must add up to total end weight, and must be in the following rough proportions in order to be anything like the end product)

Curious what you did.

Re: Amazon forces sellers to divulge COGS, won't reimburse other costs

#25

Post by DannyBee »

echelon wrote: post #22
warkdarrior wrote: post #20

Earlier quoted context omitted.

How is this illegal in any way?

Amazon is 40% of online sales in the US, and is probably closer to 100% for some subsets of goods. They effectively have monopoly power and they're using Standard Oil tactics to shake down merchants. They can use COGS to squeeze margins and even decide which merchants and products they can compete with directly. When a trillion dollar company is stepping on ten million small merchants, that's robber barron behavior a…

I think the comment you are responding to means the GP comment, not the story. IE the retailer trying to estimate their supplier's COGS, not Amazon forcing people to just give it to them.

Re: Amazon forces sellers to divulge COGS, won't reimburse other costs

#26

Post by freedomben »

fidotron wrote: post #3

“Your margin is my opportunity” - Bezos

Mind blown.

That quote was originally talking about him undercutting competitors on price because they were greedy about margins, and building a huge and loyal business on it, back when Amazon was much smaller. but in light of this new policy and its ability to gather data in an asymmetrical way That leaves Amazon significantly more powerful, it really sounds bad.

Re: Amazon forces sellers to divulge COGS, won't reimburse other costs

#27

Post by AnthonyMouse »

m_ke wrote: post #5

I had one of the largest retailers to reach out to my company with an interesting problem. Given a weight and ingredients of packaged food they wanted to predict the content of each ingredient so that they could calculate the suppliers COGS so that they could use it as negotiating leverage against the suppliers...

Not very obvious how this is even helpful. You're getting an approximation at best, meanwhile most suppliers will have a net margin of something like 5% to begin with. If you're trying to figure out if it's currently 2% and you can't squeeze them anymore or they'll balk, or it's currently 7% and you can get some more, that kind of approximation doesn't tell you.

Also, how's it better than the strategy of just putting it out for bids? If their margin is 7% at a bid that causes them to lose the contract then they'll lower it rather than lose to the other guy, and so will the other guy.

Re: Amazon forces sellers to divulge COGS, won't reimburse other costs

#28

Post by rlpb »

mtnGoat wrote: post #21
empathy_m wrote: post #14

I remember reading in Reader's Digest in the 1990s that if you're in a store and you break something which the merchant asks you to pay for, you should offer to pay their cost to replace the item, which is of course often much lower than the sticker price. Later in life I wondered whether this was really fair, as things cost money to order, process, and store. (Though this is normally baked into retail pricing in the…

No it’s not fair at all, if you break something you don’t actually have to buy it. It’s the merchants liability for allowing things to be within reach of customers. Just walk out and don’t negotiate at all.

I imagine this being the case every time I am forced to walk through the retail area in an airport to get to my gate. They should expect some travellers to be in a hurry and they deliberately put things in their way. I understand their reasons but it should definitely be at their sole risk for any accidental damage.

Re: Amazon forces sellers to divulge COGS, won't reimburse other costs

#29

Post by EGreg »

mtnGoat wrote: post #21
empathy_m wrote: post #14

I remember reading in Reader's Digest in the 1990s that if you're in a store and you break something which the merchant asks you to pay for, you should offer to pay their cost to replace the item, which is of course often much lower than the sticker price. Later in life I wondered whether this was really fair, as things cost money to order, process, and store. (Though this is normally baked into retail pricing in the…

No it’s not fair at all, if you break something you don’t actually have to buy it. It’s the merchants liability for allowing things to be within reach of customers. Just walk out and don’t negotiate at all.

Can a customer deliberately destroy something? The proverbial bull in a china shop?

Re: Amazon forces sellers to divulge COGS, won't reimburse other costs

#30

Post by outside2344 »

mtnGoat wrote: post #21
empathy_m wrote: post #14

I remember reading in Reader's Digest in the 1990s that if you're in a store and you break something which the merchant asks you to pay for, you should offer to pay their cost to replace the item, which is of course often much lower than the sticker price. Later in life I wondered whether this was really fair, as things cost money to order, process, and store. (Though this is normally baked into retail pricing in the…

No it’s not fair at all, if you break something you don’t actually have to buy it. It’s the merchants liability for allowing things to be within reach of customers. Just walk out and don’t negotiate at all.

Exactly, they should have insurance to cover this
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