Amazon knew seller data was used to boost company sales • Hacker News Board

Re: Amazon knew seller data was used to boost company sales

#241

Post by cgriswald » Mon, May 03, 2021, 3:33 PM UTC

Manuel_D wrote: post #225

jasallen wrote: post #205

Earlier quoted context omitted.

The difference is between retailer and marketplace. Both Amazon and Costco are retailers, and both could use that knowledge to decide what products to self-source for better retail margins. Either way, still a retailer, but maybe also a manufacturer / wholesaler. But Amazon is also a marketplace. In that role it acts as a "rentable retail space". Using the data of the retailers in your marketplace to decide what to m…

I'm still not understanding the distinction here. Costco and Amazon both sell company-brand products, alongside non-company products. Costco and Amazon collect and analyze sales data from the sale of both company and non-company products.

You have the wrong mental model. Amazon isn’t Costco. Amazon is a shopping mall that has access to its tenants’ sales information and also owns an anchor store in the same mall.

Costco can determine that Best Brand shoes sell in its stores and decide to source shoes themselves and stop carrying Best Brand.

Amazon can determine that the Footlocker in their mall is making a killing selling Best Brand shoes and either sell Best Brand shoes in their anchor store or source their own shoes, all at a price that Footlocker can’t match. They can also advertise those shoes throughout their mall and change the layout so customers have to walk past their cheaper shoes to get to the Footlocker.

Re: Amazon knew seller data was used to boost company sales

#242

Post by BlueTemplar » Mon, May 03, 2021, 3:35 PM UTC

notyourwork wrote: post #195

chii wrote: post #193

Earlier quoted context omitted.

> To me this behavior by Amazon seems worse only seems worse because amazon is so big, and so monopolistic, that a lot of people hold them to different standards. It's the same idea that people expect a rich person to pay more taxes, or contribute more philothropically.

I'd rephrase this: "only seems worse because amazon is so big, and so monopolistic" as: "only seems worse because amazon is so big, and so dominant" I don't think monopolistic is a fair adjective because it has an implied legal connotation. Is Amazon a monopoly or just the largest e-commerce retailer today?

Monopoly does NOT mean being the only seller. According to US law, having 50% of the market can be enough.

Re: Amazon knew seller data was used to boost company sales

#243

Post by chaostheory » Mon, May 03, 2021, 3:37 PM UTC

jasallen wrote: post #205

Gasparila wrote: post #175

Thought exercise because I legitimately struggle with this. Is this fundamentally different than Costco using sales data to choose which Kirkland products to launch/sell? If so, how? If not, then why do we not pursue Costco with the same gusto as Amazon? To me this behavior by Amazon seems worse, but I can't figure out why.

The difference is between retailer and marketplace. Both Amazon and Costco are retailers, and both could use that knowledge to decide what products to self-source for better retail margins. Either way, still a retailer, but maybe also a manufacturer / wholesaler. But Amazon is also a marketplace. In that role it acts as a "rentable retail space". Using the data of the retailers in your marketplace to decide what to m…

> But Amazon is also a marketplace. In that role it acts as a "rentable retail space".

Most brick and mortar retailers also sell space to manufacturers. Product positioning in the store and even on the shelves isnt solely due to UX

Re: Amazon knew seller data was used to boost company sales

#244

Post by alfonsodev » Mon, May 03, 2021, 3:38 PM UTC

rualca wrote: post #168

alfonsodev wrote: post #142

Earlier quoted context omitted.

This can happen already to you when products go out of stock, because the company doesn’t have enough capacity to produce, or they underestimate the demand, but after the company makes profit and reinvest in the next batch, they can adjust the price to balance the demand. It’s not like you are already free to buy whatever you want, there are production limitations, and your budget limitation. Right now big companies…

> This can happen already to you when products go out of stock (...) No, it can't. Your case involves a scenario where no transaction is possible because there is no product to buy or sell. It has zero to do with my very simple and very straight-forward example of a customer wanting to buy a product indeed sold and available and on the store of a seller who already reached its 10% market share. My example is very cle…

You keep asking the same, What then? which leads me to think we are parting from very different scenarios.

Perhaps the difference comes from you thinking in a limit that applies as per number of products sold, and you could find yourself on that situation of "what then?" the product being on the shelve but you are unable to buy it.

I'm thinking in a scenario where the limit is on the production, similar to what I mention before, the EU controlling vegetable productions.

So you don't get to find the product on the shelve if it's already gone but you'll find some other brand, the ones that are better will be more scarce and more pricy as a consequence.

Now, do I want as a consumer that the best things are also cheap and available?, yes! of course!

But the question is, is that sustainable? and what happens to the market when we have this huge player that outcompete everyone else, and dictate the rules, and they are in a position to set the quality standards, long term we might be free to buy just from them under their own rules. Is that freedom?

I'm really not familiar with those proponents of the 10% market, I was just talking from my common sense, I don't think is crazy to put some limits, and we already have some in some industries, for better or worse.

I'm dropping it here, but thanks for sharing your point of view, I'll read you if you reply, always learning and open to change my opinion.

Cheers!

Re: Amazon knew seller data was used to boost company sales

#245

Post by curryst » Mon, May 03, 2021, 3:38 PM UTC

Gasparila wrote: post #175

Thought exercise because I legitimately struggle with this. Is this fundamentally different than Costco using sales data to choose which Kirkland products to launch/sell? If so, how? If not, then why do we not pursue Costco with the same gusto as Amazon? To me this behavior by Amazon seems worse, but I can't figure out why.

Amazon is pushing people towards Fulfilled by Amazon. It makes sense as a marketplace, providing a more consistent experience. However when they compete in that marketplace, it means they're charging you to get data to outcompete you (via FBA fees). It also means that if they do enter that market, they're double dipping. They're taking away your revenue stream for their own profit, while simultaneously increasing what they charge you because it's harder to get your inventory out of Amazon's warehouses via selling it. They can also almost always outcompete you, because they don't have to pay the marketplace fees (they get the service at cost). They can also use the money they make from marketplace fees to undercut you, selling their competing product at a loss (but net zero after you pay your fees) until you get off the marketplace. Amazon also has a perverse incentive to not sell your goods because they don't have to pay for them, so they're totally okay if they can ensure that no one buys your product.

Costco has to buy the goods they sell. If it's on a shelf, Costco wants it to sell. If they don't want something to sell, they stop buying it/carrying it. They can't make any money by buying a competitor's product and letting it sit in a warehouse.

The incentive structure for Amazon is bad for everyone else. Their ideal profit scenario is to have warehouses full of other companies' stuff that never sells, and to sell an Amazon branded alternative to each consumer with demand. Costco's ideal profit scenario is to never buy third party products and only sell Kirkland goods (assuming demand stays the same). Amazon needs to pick one; they're either a marketplace, where their ideal profit scenario is to sell literally anything they have without preference, or they're a retailer and their ideal profit scenario is like Costco.

Re: Amazon knew seller data was used to boost company sales

#246

Post by Closi » Mon, May 03, 2021, 3:38 PM UTC

Manuel_D wrote: post #225

jasallen wrote: post #205

Earlier quoted context omitted.

The difference is between retailer and marketplace. Both Amazon and Costco are retailers, and both could use that knowledge to decide what products to self-source for better retail margins. Either way, still a retailer, but maybe also a manufacturer / wholesaler. But Amazon is also a marketplace. In that role it acts as a "rentable retail space". Using the data of the retailers in your marketplace to decide what to m…

I'm still not understanding the distinction here. Costco and Amazon both sell company-brand products, alongside non-company products. Costco and Amazon collect and analyze sales data from the sale of both company and non-company products.

> Costco and Amazon collect and analyze sales data from the sale of both company and non-company products.

It's similar, although personally I think the relationship between the companies is meaningfully different:

Costco purchases product from manufacturers, and may choose to source product from other manufacturers (including under its own brand name). It uses it's own sales data to make this decision.

Amazon acts as a marketplace for other businesses to list and sell their own products. These businesses are online retailers which use the Amazon platform, and pay Amazon fees for this service. Amazon is then using other retailers sales data in order to inform it's own business.

The difference is with Costco it is their own sales data, while in Amazon it is the sales data of other retailers. It would be an issue if Walmart had access to Costco's sales data and not visa-versa (this would provide Walmart with an unfair competitive advantage). Similarly other smaller online retailers do not get access to Amazon's sales data, but Amazon get's access to the other retailers sales data who use their platform, and will then use this to compete with them.

Re: Amazon knew seller data was used to boost company sales

#247

Post by foerbert » Mon, May 03, 2021, 3:39 PM UTC

Manuel_D wrote: post #225

jasallen wrote: post #205

Earlier quoted context omitted.

The difference is between retailer and marketplace. Both Amazon and Costco are retailers, and both could use that knowledge to decide what products to self-source for better retail margins. Either way, still a retailer, but maybe also a manufacturer / wholesaler. But Amazon is also a marketplace. In that role it acts as a "rentable retail space". Using the data of the retailers in your marketplace to decide what to m…

I'm still not understanding the distinction here. Costco and Amazon both sell company-brand products, alongside non-company products. Costco and Amazon collect and analyze sales data from the sale of both company and non-company products.

I think the difference they are getting at is something akin to this.

In one situation you run a stall and buy products from people to sell at that stall. At some point you use what you've learned doing this to sell your own product.

In the other, you don't buy anything from anybody. Instead, you rent out a stall for other people to sell things from. You then watch the stall and use that information to open your own stall.

The first case seems pretty normal to most people, I think. The person you were buying from originally doesn't inherently get some kind of assurance that you will always buy from them in the future. There's no difference to the seller if you buy from somebody else, don't sell any of that product, or make your own. We just don't expect that buying goods from somebody inherently adds any other kind of obligation. It's two equal parties making an exchange, and nothing more.

The second case, however, I think is not so clear cut. All of the sudden you have a lasting relationship between two unequal parties. These are the sorts of situations where you tend to find more implicit or inherent obligations on the participants. It's no longer the guy you sold that thing to not buying from you again, it's your landlord competing with you.

I'm not trying to pick a side here, so much as I am trying to explain why people might not see the two situations as identical. And of course there are plenty of real-world complications too.

Re: Amazon knew seller data was used to boost company sales

#248

Post by mrandish » Mon, May 03, 2021, 3:40 PM UTC

NegativeLatency wrote: post #232

Manuel_D wrote: post #225

Earlier quoted context omitted.

I'm still not understanding the distinction here. Costco and Amazon both sell company-brand products, alongside non-company products. Costco and Amazon collect and analyze sales data from the sale of both company and non-company products.

When Costco sells a product they’ve already bought it (a retailer) on the other hand when Amazon sells something they’re just acting as a middle party for the item in most cases.

That's often not the case. Retailers like Costco, Walmart, Best Buy etc have a wide variety of different selling arrangements. I've sold products through all three and often did so on terms that gave them full right of return for any unsold product as well as significantly delayed payment.

This combination basically nets out to be financially the same as pure consignment. They won't pay me for my product until well after it has sold-thru to an end user. Everything that's unsold comes back to me (and they bill me for shipping both ways!) In the meantime, all I have is basically an "IOU" promise to someday pay IF it eventually sells (and they always drag out the payment beyond the already-extended due date).

Also, if I want to be featured in their circular I have to "buy" that just like an ad in a magazine except the retailer will (usually) DFI (deduct from invoice) the "ad" cost, which means they just owe me less (if and when the product sells and they actually pay). The same is true for getting my product displayed on an end cap or with in-store signage.

The big retailers bring in new products to "test" all the time and do so at basically no financial risk to themselves (other than the opportunity cost of the shelf space) while capturing all the sales data.

Re: Amazon knew seller data was used to boost company sales

#249

Post by dragonwriter » Mon, May 03, 2021, 3:40 PM UTC

BlueTemplar wrote: post #242

notyourwork wrote: post #195

Earlier quoted context omitted.

I'd rephrase this: "only seems worse because amazon is so big, and so monopolistic" as: "only seems worse because amazon is so big, and so dominant" I don't think monopolistic is a fair adjective because it has an implied legal connotation. Is Amazon a monopoly or just the largest e-commerce retailer today?

Monopoly does NOT mean being the only seller. According to US law, having 50% of the market can be enough.

> According do US law, having 50% of the market can be enough.

Having much less than 50% of a descriptive market can be enough, if, e.g., you have pricing power, which demonstrates that irrespective of what other players may be described as being in the same market, they are not actually competing with you.

Re: Amazon knew seller data was used to boost company sales

#250

Post by BlueTemplar » Mon, May 03, 2021, 3:41 PM UTC

an_opabinia wrote: post #177

sharklazer wrote: post #82

Earlier quoted context omitted.

“Money talks and BS walks” Consumers may not be fed up with Amazon, but if this is SOP then the sellers WILL leave and a competitor with better SOP will come in. Getting f’ed in the arse as a consumer is one thing. Getting f’ed in the arse by Jeffy B as a business is another. It is trust which makes this world go ‘round.

If sellers want their sales information to be private, they should make a compelling retail experience they control. That is where they obtain real competitive advantage. Changing from Amazon to another online retailer - that retailer will still analyze third party sales data. It still isn’t clear if it matters. You have little perspective or experience on selling easily cloned $10-100 items (Amazon Basics) anywhere.…

The issues with Amazon go further than this :

https://arstechnica.com/tech-policy/2017/08/lawsuit-amazon-s...

IMHO these websites should be disallowed to sell their own brands. (I wouldn't mind if physical retailers wouldn't be allowed to sell their own brands either.)