Amazon seller/distributor/agency here; I've been in the space for over a decade.
The title is a little clickbait-y. As far as I understand it:
1. Think of Amazon as a search engine for products.
2. Amazon wants its site to be the lowest-price destination for products.
3. If Amazon finds your product on another website for lower than its own website, it'll just hide your listing from the search -- this is meant to be pro-consumer (when you go to Amazon you'll get the lowest price).
This is where it gets a bit more complicated:
4. Amazon sells ~40% of its goods under its own purchasing arm, known to sellers as Vendor Central. (These are items shipped and sold by Amazon.com). This purchasing arm wants X% margins from *brands, based on whatever their internal targets. From what I've experienced personally -- their terms are generally better than their competitors (Walmart/Target/Costco/Sams), so it's generally a no-brainer to sell directly to them when I can instead of selling direct.
So when 4 has a conflict of interest with #1-3, you get the systemic effect that in order for the sellers to get their **sweet purchase orders from Amazon, they now need to raise prices elsewhere so the purchasing arm gets their cut. The sellers don't HAVE to sell to Amazon, but then they'd miss out on giant POs from Amazon at good terms.
Designing a system to incentivize sellers to have their lowest prices on Amazon... I'm not sure if calling it a "widespread scheme to inflate prices" is the fairest thing.
*edit: Historically, Amazon VC basically ran at near break-even under Jeff, "your margin is my opportunity" and all that. Since Andy took over there's been a reshuffling of chairs and the different business units have different margin requirements now.
**edit2: the price inflation mostly affects big brands that sell 8+ figs/yr on Amazon, because smaller sellers don't get POs from VC (too small to bother).
> 1. Think of Amazon as a search engine for products. 2. Amazon wants its site to be the lowest-price destination for products. 3. If Amazon finds your product on another website for lower than its own website, it'll just hide your listing from the search -- this is meant to be pro-consumer (when you go to Amazon you'll get the lowest price).
Stockholm syndrome at its finest -- reinterpreting "punishing a seller if an item is cheaper anywhere else on the internet, even a site they don't directly control" as "pro-consumer".
If Amazon really were a search engine for their own products, they should just give an accurate answer for their own site. If they really wanted to be pro-consumer, they'd say "Available cheaper here: ..."
ETA: Showing competitor's prices could still be a strategic win for Amazon. It conditions users to always first check Amazon; and most of the time if it's cheaper, the ease of one-click ordering and/or batching deliveries should make it worth ordering from Amazon even if it's a few dollars cheaper elsewhere.
This reads like propaganda. Amazon has no business de-listing products because of their price elsewhere.
If it wanted to be pro-consumer, I don't know, it could warn the consumer the price is lower somewhere else, and point them there, like a good search engine of products! Sounds ridiculous? Yeah, because those claims are a bit ridiculous too.
I don’t like it, but it is Amazon’s web property and they can do whatever they want. They could put up political banners on the top of their website, but I wouldn’t recommend it with how divided the country is.
This doesn't make sense; these days it seems like the majority of products on Amazon can also be found on AliExpress for a third of the price, both of them sold by FWHZHW. From what you're saying, these things should disappear from Amazon's search listings, but in my experience they're the ones promoted straight to the top, and anything else gets buried under that mountain.
So consider the alternative (because this happened to us): 5-6 years back, one of our brand stores sold a thing (https://www.amazon.com/dp/B08DKG3NX7) that created an entire niche of products, and 6 months after our success, a buncha clones came out of the woodwork.
On Amazon, they created listings that imitated our copy and images. On AliExpress/Taobao/etc., they ripped off our images and pretended to be us. Deciding which product/listing is the original product is super nontrivial especially when there's international trademarking and IP law (or lack thereof) involved.
Agreed. The only explanation is that people don't want to use aliexpress so it's not counted as a direct competitor. If you're prepared to wait even a week, you can get less than 1/3 the price and this has been true for over a decade!
This is just not true. Sure if you want trash you can get it on Aliexpress and Amazon, but lots of good quality stuff is not available on Aliexpress at all.
Even some Chinese manufacturers have a broader range on Amazon than Aliexpress.
yeah, that seems like the easiest pitch of all times. Trump wanted to do tariffs, especially on China anyway, Amazon likely just nodded trying to hide their grin.
of course it's hard to know what went through the heads at Amazon, the initial tariff news were crazy and Amazon doesn't want a recession, as it's bad for business
> 3. If Amazon finds your product on another website for lower than its own website, it'll just hide your listing from the search -- this is meant to be pro-consumer (when you go to Amazon you'll get the lowest price).
Most favored nation clauses are often considered anti-competitive.
Indeed, I don't know in what world you would call that pro-consumer behavior. In fact I thought I recall Amazon already got sued for this kind of agreement in their contracts, but maybe it's now merely a non-contractual agreement for doing business with Amazon?
> Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.
Here’s an example where Amazon strait up increases prices.
There’s a great deal of self published fiction posted online for free. Amazon is happy for people to sell bundle that into a book and sell that.
Kindle Unlimited specifically requires authors to remove earlier copies of their own works to become part of kindle unlimited. Thus increasing the minimum price for everyone above what it would otherwise be.
Some authors make the transition and win, but many destroy their audience and thus current and future revenue sources like donations and patron subscribers. It’s a tempting infusion of cash, but the long term consequences can be devastating making the whole thing really predatory.
What you mean it is not fair?
Imagine you are huge company that will not fail, you can enter any market, dump the prices, gather market share, make that the main stream of revenue, and suddenly you can click to kill someone whole business. This is a vendor lock-in based on a dumping model.
On the other hand, don't tell that prices are not personalised anywhere. 4 is destroying the economy with gray area tactics
Anyone working there should be ashamed of being part of that
If Amazon finds your product on another website for lower than its own website, it'll just hide your listing from the search -- this is meant to be pro-consumer (when you go to Amazon you'll get the lowest price)
Yeah, no, this is meant to be pro-Amazon, not pro-consumer.
> Think of Amazon is a search engine for products.
> [Amazon's] own purchasing arm
...so we can't think of Amazon as just "a search engine", right?
You might as well hand someone a toy and say "Think of this as a toy gun. But this is where it gets a bit more complicated: 40% of these have a trigger that shoots bullets." Whom are you kidding?
Clearly with the scheme you described, these are morally two separate entities colluding with each other to use each others' huge powers in the market to raise prices and pocket more profit for themselves.
That is probably part of the court case: does Amazon.com searches favor VC purchasing in any way, shape, or form. This would require disclosure of their algorithm weights and what not, which they would then need to redact so people can't reverse engineer their algos to SEO Amazon's search.
My understanding is they got caught with this in the mid 2010s and as a result had to come very clean on some of this inter-departmental stuff. Most people who've worked at/with Amazon know its fief-like bureaucracy and clean delineation of business units (as both a strength and a weakness), so I'd be curious if there was more to it.
Then the other question would be: if you run a system that has certain emergent behaviors coming from it, without direct collusion -- how much would you be on the hook for various things that do end up happening? It makes sense that Amazon search wants lowest prices on Amazon, and it makes sense that Amazon VC wants margin, so when the two effects result in price inflation is that Amazon's problem.
In cases like this I like to suggest to remember Microsoft's case with IE bundling. The mere act of using monopolistic power of one arm of the business is enough to trigger anti-monopoly laws.
Hiding listings that are found cheaper elsewhere would be very much suspect under these laws.
> 1. Think of Amazon as a search engine for products.
That's difficult to do when their search is so atrociously bad. It ignores keywords and places matches well down the page, if it displays them at all.
Plus the classic 'choose a department to enable sorting' prompt. 30 years and their programmers can't work out how to order items from different 'departments'. Why should a customer have to know about their internal taxonomy?
It's probably better to think of Amazon as a product promotion engine. What the customer thinks they want is less important than what Amazon wants to sell.
Thank you for your insight and sharing of your perspective. This system leads to some interesting conclusions and observations. One is, that it explains why big brand products made a significant dive in quality. My decades old bose QC25 where of superb quality at 250 € while my somewhat new Bose quiet comfort ultras priced at 350 € are of comparatively very poor quality.
It also opens the market for cheap knockoffs. If some chi-fi headphones for 60 bucks are almost as good as the big brands and the big US brands are forced for high prices despite the bad build quality by Amazon, another big seller website should emerge. Oh wait, this already happened with AliExpress and temu.
I wish ebay would hide listings that are more expensive than amazon. It's extremely frustrating getting amazon packages from ebay purchases. I make sure to 1 star all of them.
Some peoolle have automated ebay/amazon leveraging set ups - for eg the cheapest I could find a brand name snorkel set on ebay was £19.99 - and since i often find ebay the cheapest, I bought without futher searching.
3 days later the package arrived from amazon, complete with packing slip, where I found it cost £16.
Searching the sellers account they had thousands of random listings - where I assume they can leverage a small profit. Items came and went quickly from their inventory, I assume as amazon prices fluctated.
So If Amazon wante to be the lowest price Destination, but Takes fees for Listings, FBA etc, then the product price needs to include that fees. That will make the product more expensive and since amazon wanted to be the cheapest Destination, the price does need to gonup everywhere?
It's maybe the Fairest Thing, but is it good for the Overall Economy?
1. Average American spends THREE THOUSAND DOLLAR year at Amazon. That’s staggering.
2. As of now the trial is not scheduled to begin until January 2027 (although the discussed injunction is meant to address that). I believe the length of time required to get a decision in court is the single biggest impediment to justice being served. It usually waters down the final judgment, makes costs prohibitive for plaintiffs, and allows perpetrators to continue benefiting from illegal behavior indefinitely. In some cases, the defendant can be elected President in the interim eliminating any chance of facing a court decision.
> 1. Average American spends THREE THOUSAND DOLLAR year at Amazon.
Where else would americans be getting home goods like soap, appliances, electronics? Vitamins, perscriptions, etc?
The answer to almost every one of those, for the vast majority of Americans, is one of like 5 megacorps. Target, Walmart, Kroger, CVS, Amazon. Things have largely stopped being available retail because of all this consolidation. If I want to go buy a multivitamin, its no joke like $25 a bottle at my grocery store, and $8 on amazon. It is just kinda... a part of people's lives now, and the alternatives all involve either spending more money or time.
It’s funny: a loved one gifted me a book knowing I’m opposed to Amazon’s practices. They let me know they bought it elsewhere and the act of paying more was part of the gift’s charm (they’ll use Amazon otherwise.)
You can buy used books, they sell extremely cheap and are perfectly readable. There is a lot of seller, at least in France, but I guess it must be similar in usa.
Books are staggeringly affordable (aside from hardback), and if even they seem too expensive, libraries exist and offer ebooks. I would honestly be embarrassed to announce this – it reveals something very unflattering.
Staggeringly affordable? Last time I checked ebooks were roughly the same price as physical books. That's ridiculous. If they were like 20% of the price I'd buy them.
I don't care man. It doesn't matter to the world whether I spend money on books or not. It only matters to me. Or I guess it's more correct to say it matters much more to me than to the rest of the world.
So yeah, I'm not worried about it. I don't tip either, by the way, unless I see a very good reason to. Given the choice, I prefer to keep my money rather than give it away. Couldn't care less what you or anyone else thinks about it.
For vitamins/supplements specifically, there's Costco, iHerb, nootropics depot.
While they might not be the absolute cheapest options, they're usually a pretty good price and at least with those sources I'm not too concerned with counterfeit or tainted supplements, unlike Amazon [0]
There used to be 6 Walgreen's in my city. Now there are 2. I've used Amazon to fill some of that gap because the 30 minute drive is bonkers for toothpaste. COVID hit this economy like a Mack truck and helped the monopolists grab even more of a share.
Average American spends THREE THOUSAND DOLLAR year at Amazon. That’s staggering.
Is it? That’s by households, not individuals. Is it really crazy to imagine a household spending $200-300/month at Costco, Walmart, Whole
Foods—or Amazon?
If it brings you moral discomfort, why do you shop at whole foods? Shopping at Walmart (or whole foods!) would also bring me moral discomfort, so I just ...don't do it.
Be that as it may, the point at issue was the Amazon spending of the average US household. I’m not sure what point relevant to the discussion you’re trying to make, other than reflexively arguing with any use of means in economic analysis. OK, sure, tell Matt Stoller.
I guess it's just always important/helpful to keep in mind that the average is almost certainly going to be misleading when the distribution is extremely skewed, as is the case for household income. It's usually a mistake to talk about averages in these cases, when the median is almost always going to be more meaningful.
Agree, but can't we just include both average _and_ mean? And maybe min/max while we're at it? Seems like that could give a much clearer picture (without even needing a graph!?)
Sure, but I’m certain US household income is not normally distributed, and I’d bet all the money in my pockets that US household Amazon spend isn’t normally distributed, either.
You're conflating two different things, but what you point out is still useful because it suggests that there are a few people on the higher end who make a LOT more and are dragging the mean up when compared to the median. The mean is probably not as indicative of the fortunes of most Americans as GP suggests. $3000 is a lot of money for most families, but there are a few for which it's increasingly not only inconsequential, but more like a rounding error.
This is very bad math on the part of the article. You can’t just take total revenue/number of households. I mean have they not heard of a little side business Amazon has called AWS?
Amazon is not just a US company either.
They also have an ad business. You could rightfully argue that ad spend gets passed on to the consumer.
The number Matt’s quoting doesn’t include AWS, AFAICT. It’s “North American segment” revenue in AMZN accounting. AWS is accounted separately as a global unit.
Though now that I write that, I wonder if Matt divided by the total number of North American households or the number of US ones.
EDIT: Amazon North American segment revenue divided by aggregate North American household count is roughly $2,300. But I’m guessing the real number is closer to Matt’s estimate as US households are wealthier and likely represent a disproportionate fraction of that revenue.
Have you not heard of a little organ called brain that can be used to understand what you read? There is even a link to the latest quarterly report there (have you heard of links and financial reports?).
This is sadly typical arrogant HN commentary jumping off to sound clever, cynically playing on the 'engineer mentality' fallacy, having put no effort to discredit the argumen as witnessed by the now clearly stupid argument presented, yet selfishly putting the onus on others to correct. It's quite sociopathic.
I dunno, going in with the starting assumption that Matt Stoller is innumerate and/or will twist statistics to support his otherwise specious arguments is not a terrible approach.
On the particulars of this number, he seems to be close enough, but it’s not nearly as shocking with any context: The average American household Walmart spend is comparable, Apple captures almost half that with a handful of devices and services.
Lol, that sounds about right. I checked, our household spent $2700 last year on amazon. Only 3 things above $100 though, so it's just accumulation of lots of smaller purchases.
I don't know about the USA but in France all essential things and most non-essential things can be found outside of Amazon. Why in hell would Amazon account for 6% of people's revenus, on average?
I wouldn't ascribe averages to mean much. I expect there is a small minority that buys everything on amazon (everything meaning groceries, holiday gifts, prescriptions, etc) that would jack up the average significantly.
It is a well-documented fact that Amazon forces it's sellers to "fix" their prices to match the Amazon price. If you sell on Amazon, you're not allowed to sell the same item for less ANYWHERE. This- coupled with Amazon's insane fees- should be a huge red flag to the Consumer Financial Protection Bureau, and maybe a Attorney General can get them to do their damn job and crack down on it... I wouldn't hold my breath though.
The biggest mistake we've made is allowing Amazon (and now Walmart) to both be a seller and to operate what is supposed to be an open marketplace
It's insane that the landlord of the mall is also running the biggest store in the mall
It's led to this scheme, but also just the general enshittification of buying things online. You can never trust what you buy from Amazon because their "marketplace sellers" will send you a counterfeit, and it's hard to find some brand names because they don't want to be in that cesspool
As low rent and lowest common denominator as Walmart was in the 90s, at least I could go in and know that a) I probably was getting the lowest price on that Rubbermaid trash can b) it was legitimately a Rubbermaid trashcan and not someone who ripped off the molds, used plastic that was 50% as good, and sells it under the brand Xyxldk, and c) could reasonably expect to find that trashcan offered for sale in the first place
Doesn't this (except for the counterfeits) apply to Costco too? Is the difference just that Costco never pretended to be an open marketplace, just like how Apple never pretended that iOS is an open system?
No. When you go into a Costco, Costco is a retailer who bought merchandise to sell to you. When you go to Amazon, a large amount of the products are being sold by third party vendors while Amazon is taking a large cut.
I think a bigger mistake is just allowing Amazon (and Walmart) to even exist at their current size. There simply shouldn't be any sellers that large, or any marketplace operators that large.
Similar to the shit they're doing on Audible, too. If you want to be part of their subscription service, then you cannot sell your book anywhere else, including your own website, or have it available in libraries. And if you're not part of their subscription service, then part of your sale proceeds gets diverted to authors who are part of the subscription service [0].
Why amazon sellers have not opened up a class action lawsuit is beyond me. This case, succeed or fail will surface enough documentation that they may find cause.
ackshually I don't think that's the best case, but indeed very likely. SCOTUS judges (politicians in robes, really) are first selected for their pro-business bent.
Small companies and individuals cannot pursue expensive lawsuits. It risks their livelihood while it goes through courts over years. And even if you win other big marketplaces may stop doing business with you. Plus class actions are prohibited in many contractual agreements - you’re forced into individual arbitration. It shouldn’t be legal but that’s normal today.
> Small companies and individuals cannot pursue expensive lawsuits.
The fact that lawsuits are won by whoever has more money and time is so deeply problematic. I have no idea how you’d go about equalizing it. Spending limits with devastating consequences if it can be proven that you broke them?
Simple, just make it public. You don't bring a lawyer, a lawyer is appointed.
This way everyone is on equal footing. Doesn't matter if you're a homeless bum or Jeff Bezos. Both just get an appointed lawyer.
If a suit is found frivolous, you are on the hook for the costs, as long as it's reasonable it's paid for by the state and if a party is found at fault they may also be required to cover the costs.
This is why Andy Jassy was a big supporter of BLM in the Biden era and is now funding the Melania documentary in the Trump era. Amazon bribes each administration to avoid the law. Many companies do this though, not just them. Companies worth more than a trillion shouldn’t exist, yet here they are corrupting our entire system.
> sued Amazon for prohibiting vendors that sold on its website from offering discounts outside of Amazon... to make sure that sellers can’t sell through a different store or even through their own site with a lower price...
First, this is not new. It's been stated policy for years.
Second, manufacturers get around it in a clever way. They always list their items on their own site at the same price as at Amazon... but then magically almost always seem to have a 20% or 25%-off sitewide coupon available, whether it's for first-time customers, or "spinning the wheel" that pops up, etc.
So I don't know how much this is really raising actual prices in the end.
Otherwise, I'm not sure how to feel about it, because pricing contracts are common on both ends. Manufacturers frequently only sell to retailers who promise they won't charge less than the MSRP, and large retailers similarly often require "most-favored-nation" pricing, so they can always claim they have the lowest prices. If you want to end these practices, then it's only fair to have a law prohibiting it across the board, rather than singling out Amazon.
On the one hand, this is good to see. On the other hand, like basically every such thing, it's too late and way, way, too little. It is pointless to try to chip away at Amazon by saying "oh you did this, oh you did that, oh you harmed people this way, oh you cheated this other way". It's like if a house is on fire and you try to stop it from spreading to nearby houses by catching each flying ember individually. You need to put the fire out.
Companies with as much market power as Amazon simply cannot be allowed to exist. It was a mistake to ever allow it and every response that is not aimed at a total shattering of the company is another mistake. No retail business of any kind can ever be safe when companies like Amazon exist. (And although this article is about Amazon, the same is true of many other companies as well, like Walmart.)
Cancelled my Prime subscription last month after the past year of worsening experiences with Amazon:
Received several orders that were returned items, with broken open packaging and sometimes the item was something else entirely, purely put there for weight by whoever returned it.
When I went to return some things at a major Amazon distribution center, the return area was closed for the week for some sort of construction or renovation, with no indication of that anywhere on the site. The only messaging was a piece of paper in the window once you got there.
At another separate major distribution center, the return area was a small room with pieces of paper taped to a door with an arrow pointing to the Amazon lockers where the returns are accepted.
Orders are now often so delayed that it makes the Prime subscription pointless. Have had multiple orders over the past year that didn't ship for 3 or 4 days.
Amazon listings are almost half Sponsored listings now, and there are unrelated ads on the side of listings.
Half of the listings are some random made-up brand name, like XIJGNU, which is just a Chinese seller selling low-quality products, and when the reviews get bad enough, they re-list the product under another made-up brand name.
Fake reviews were already rampant before LLMs, but now reviews are effectively useless because they are so easy to fake.
At least in the past the sellers branded their whitelabel products correctly. These days you get some random "brand" when you order from an alphabet soup name. It's fun when you have to install apps with it as you have to get the right "brand" app without knowing what "brand" it is as the whitelabel manufacturer has locked it down (though usually only by obfuscation).
In my experience I've received a box for a different brand than the device inside with the wrong app listed in the box for a different unrelated brand. Fun times we live in. And don't bother getting a refund as the listing and company will be gone by the time you try.
Author is missing a big chunk of what selling retail product requires, which is shipment and delivery costs. For a $5.49 laundry detergent, the cost to ship it your may very well exceed the price of the product if you're small retailer.
At least by paying Amazon I can avoid dealing with all that. While I may pass the price to the consumer for Fulfilled-By-Amazon fees, which tends to be around $5.18 ~ $3.5 (quick google search), it's still a lot cheaper than using something like FedEx where it costs $10-12 per order.
The takeaway here is that Amazon has democratized fast and cheap delivery by building a monopoly. As the scale of things go up, the cost of operations can really go down. Think of meal prepping, when you cook food in bulk vs each meal separately, you're saving costs on power, gas and produce.
The only question is whether we can build a public benefit corporation, just like Amazon.
I saw through the Amazon Prime scam about four years ago and canceled my membership. Counterfeit products, obviously returned/resold products, and failure to meet delivery date promises. And prices steadily rising.
I just go to Walmart now. And Walmart is no choir boy either but at least I can see what I'm buying.
What's interesting is how their recommendation algorithm plays into this. I've been digging into how these systems work (Netflix's specifically), and there's a pattern: the algorithm doesn't optimize for what you'd rate highest, it optimizes for what keeps you engaged.
Amazon does something similar but with pricing layered on top. Their rec system pushes higher-margin products, sellers notice which items get promoted, then they raise prices knowing Amazon will keep showing them anyway. So it's not just "algorithm adjusts prices" - it's more like the recommendation layer creates conditions where sellers can safely jack up prices without losing visibility.
Basically the algorithm creates artificial scarcity by only showing certain products, which gives sellers pricing power they wouldn't have otherwise.
I can say how this worked for books. Used to be Amazon didn't enforce their pricing policy. So a bookseller could price their book's list price lower on a different site than on amazon. Amazon would discount to match, but pay the bookseller based on the list price.
It was effectively a way to get an excess commission out of amazon if you printed through their printing arm, Createspace/KDP. Not sure if this worked the same for non print on demand books but if you printed through createspace you could set a higher list price and get royalties that were about 100% of the actual sale price.
No idea if the same mechanic is in play with the FBA rules but it seems very plausible to me that the largest impact is has is closing exploits like this.
That doesn't mean it doesn't also entrench market position, raise a few prices at the margin etc but it's very easy to miss the potential for gaming rules, legally, unless you're actively in the system. If an incentive is there the market incentive will be to use it.
Individualizing systemic failures to regulate businesses is counterproductive. Meaningful change will only come by regulation.
Give me one example, where consumer behavior really changed anything. Usually what follows from large boycotts is political action or the company succumbing to pressure.
Just stopping to spend your money there might make you feel good but don't kid yourself, it barely does anything if you're not turning it into an organized action.
It doesn’t. They’re sociopaths. They get to where they are because they’re willing to do things others are too nice to do. Otherwise they’re no better than many other talented business people.
The article cites Amazon prohibiting sellers from selling their products for less on other platforms as anticompetitive behavior. I don’t doubt that this is happening, nor that it’s anticompetitive.
That being said, anyone who’s operated a two-sided marketplace knows that one of the biggest problems is consumers using your site as an index, and then seeking to dodge your fee by meeting with the seller on another platform, where they don’t have to pay it. This was a big problem for my startup.
This is a negative externality, because they’re extracting value from your platform (the list of sellers, products, prices, ratings, etc.), without paying for that value. If left unchecked, this could make running the platform financially unviable. One way to prevent this is to paywall your platform, but not every consumer wants to pay a subscription.
I think it’d be fair for Amazon to prohibit sellers advertising other platforms on its own, but prohibiting them from offering lower prices outside of Amazon outright definitely seems anticompetitive.
> That being said, anyone who’s operated a two-sided marketplace knows that one of the biggest problems is consumers using your site as an index, and then seeking to dodge your fee by meeting with the seller on another platform, where they don’t have to pay it.
There is a company that operates an index where people can search for things and doesn't charge the site or the customer for things that rank well in organic search results. I think they're called Google. From what I understand they make quite a bit of money by selling ads next to the listings.
That model seems like it would work pretty well for such a platform, unless there was some major company preventing anyone from offering a lower price than they have on their own site so that everybody goes to their site instead of using a price search engine to find a site with a lower price.
I mean come on. If they're really using your site just to find a product, you think that's a problem?
Meanwhile a platform's fee should be going to things like payment processing, warehousing and shipping, and then if you're offering a competitive price for those services they should want to be paying you because they need those things and can't get a better deal on them somewhere else. If they can get a better deal on them and are only using your site because you're forcing them to with a dirty trick, maybe they're right to object?
The problem is this is all rent seeking and the leverage of moats like capital and network effects. It’s not actually valuable to society to defend. For a time it was new - now it’s not, and is just damaging fair competition. Amazon and other megacorp need to be taxed a lot more and broken up.
The fact that California is pushing this gives me some hope.
Walmart and Pepsi engaged in a blatant decade-long price fixing scheme designed to raised prices and punish small local competitors and were sued for it by Lina Khan's FTC, but - surprise - the case was thrown out the minute Trump took office.
> Vendors, cowed by Amazon’s overwhelming bargaining leverage and fearing punishment, comply—agreeing to raise prices on competitors’ websites (often with the awareness and cooperation of the competing retailer) or to remove products from competing websites altogether
Amazon has been openly doing this for years. They scrape other competitor websites, even though it’s against their terms of service, and if you sell for less elsewhere they find out and punish you. It’s blatantly anti competitive.
How? It seems constructed so that despite the high costs of doing business on Amazon (seller fees), you have to not charge more there. If you raise prices everywhere, your sales elsewhere drop. What’s the loophole?
By giving their scrapers false signals using dummy ecomemrce stores with artificial/dummy prices. If done constantly, it might render their scrapers useless or less reliable for buy-box algorithms.
I just don't believe this is the case. Bonta acknowledges in his press release that Amazon's prices intuitively seem to be cheap, and the concrete examples of alleged price fixing are all so redacted that it's impossible to process them. Like, this is the complete available text of example 2:
> Amazon, vendor [...] fixed prices on [...] This is also an example of Breaking the Price Match, but here, Amazon [...] The plan was memorialized in an email from [...] In other words [...] In response, Amazon insisted on [...] The plan was realized [...] The result of Amazon, [...] price fixing agreement was to increase the retail prices
I don't know how you could even understand what's being alleged without seeing the unredacted version.
The title is a little clickbait-y. As far as I understand it:
1. Think of Amazon as a search engine for products. 2. Amazon wants its site to be the lowest-price destination for products. 3. If Amazon finds your product on another website for lower than its own website, it'll just hide your listing from the search -- this is meant to be pro-consumer (when you go to Amazon you'll get the lowest price).
This is where it gets a bit more complicated: 4. Amazon sells ~40% of its goods under its own purchasing arm, known to sellers as Vendor Central. (These are items shipped and sold by Amazon.com). This purchasing arm wants X% margins from *brands, based on whatever their internal targets. From what I've experienced personally -- their terms are generally better than their competitors (Walmart/Target/Costco/Sams), so it's generally a no-brainer to sell directly to them when I can instead of selling direct.
So when 4 has a conflict of interest with #1-3, you get the systemic effect that in order for the sellers to get their **sweet purchase orders from Amazon, they now need to raise prices elsewhere so the purchasing arm gets their cut. The sellers don't HAVE to sell to Amazon, but then they'd miss out on giant POs from Amazon at good terms.
Designing a system to incentivize sellers to have their lowest prices on Amazon... I'm not sure if calling it a "widespread scheme to inflate prices" is the fairest thing.
*edit: Historically, Amazon VC basically ran at near break-even under Jeff, "your margin is my opportunity" and all that. Since Andy took over there's been a reshuffling of chairs and the different business units have different margin requirements now.
**edit2: the price inflation mostly affects big brands that sell 8+ figs/yr on Amazon, because smaller sellers don't get POs from VC (too small to bother).
Stockholm syndrome at its finest -- reinterpreting "punishing a seller if an item is cheaper anywhere else on the internet, even a site they don't directly control" as "pro-consumer".
If Amazon really were a search engine for their own products, they should just give an accurate answer for their own site. If they really wanted to be pro-consumer, they'd say "Available cheaper here: ..."
ETA: Showing competitor's prices could still be a strategic win for Amazon. It conditions users to always first check Amazon; and most of the time if it's cheaper, the ease of one-click ordering and/or batching deliveries should make it worth ordering from Amazon even if it's a few dollars cheaper elsewhere.
If it wanted to be pro-consumer, I don't know, it could warn the consumer the price is lower somewhere else, and point them there, like a good search engine of products! Sounds ridiculous? Yeah, because those claims are a bit ridiculous too.
On Amazon, they created listings that imitated our copy and images. On AliExpress/Taobao/etc., they ripped off our images and pretended to be us. Deciding which product/listing is the original product is super nontrivial especially when there's international trademarking and IP law (or lack thereof) involved.
Even some Chinese manufacturers have a broader range on Amazon than Aliexpress.
Am I a conspiracy theorist to believe that Amazon is behind Trump’s decision to end the de minimis?
of course it's hard to know what went through the heads at Amazon, the initial tariff news were crazy and Amazon doesn't want a recession, as it's bad for business
"The purpose of a system is what it does" (https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...)
it's pro-Amazon and anti-competition, surely. (Amazon doesn't care about consumers except as profit sources)
> The sellers don't HAVE to sell to Amazon, but then they'd miss out on giant POs from Amazon at good terms.
So they have to sell to Amazon?
> I'm not sure if calling it a "widespread scheme to inflate prices" is the fairest thing.
It's fair if it's true, effectively or otherwise.
Most favored nation clauses are often considered anti-competitive.
https://www.ftc.gov/news-events/news/press-releases/2023/09/...
> Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.
There’s a great deal of self published fiction posted online for free. Amazon is happy for people to sell bundle that into a book and sell that.
Kindle Unlimited specifically requires authors to remove earlier copies of their own works to become part of kindle unlimited. Thus increasing the minimum price for everyone above what it would otherwise be.
Some authors make the transition and win, but many destroy their audience and thus current and future revenue sources like donations and patron subscribers. It’s a tempting infusion of cash, but the long term consequences can be devastating making the whole thing really predatory.
On the other hand, don't tell that prices are not personalised anywhere. 4 is destroying the economy with gray area tactics Anyone working there should be ashamed of being part of that
Yeah, no, this is meant to be pro-Amazon, not pro-consumer.
Fellow traveller that gets dark patterned to death once a corporate position of power is established (we are here).
> [Amazon's] own purchasing arm
...so we can't think of Amazon as just "a search engine", right?
You might as well hand someone a toy and say "Think of this as a toy gun. But this is where it gets a bit more complicated: 40% of these have a trigger that shoots bullets." Whom are you kidding?
Clearly with the scheme you described, these are morally two separate entities colluding with each other to use each others' huge powers in the market to raise prices and pocket more profit for themselves.
My understanding is they got caught with this in the mid 2010s and as a result had to come very clean on some of this inter-departmental stuff. Most people who've worked at/with Amazon know its fief-like bureaucracy and clean delineation of business units (as both a strength and a weakness), so I'd be curious if there was more to it.
Then the other question would be: if you run a system that has certain emergent behaviors coming from it, without direct collusion -- how much would you be on the hook for various things that do end up happening? It makes sense that Amazon search wants lowest prices on Amazon, and it makes sense that Amazon VC wants margin, so when the two effects result in price inflation is that Amazon's problem.
IANAL
In cases like this I like to suggest to remember Microsoft's case with IE bundling. The mere act of using monopolistic power of one arm of the business is enough to trigger anti-monopoly laws.
Hiding listings that are found cheaper elsewhere would be very much suspect under these laws.
Hahahahaha you lost me
That's difficult to do when their search is so atrociously bad. It ignores keywords and places matches well down the page, if it displays them at all.
Plus the classic 'choose a department to enable sorting' prompt. 30 years and their programmers can't work out how to order items from different 'departments'. Why should a customer have to know about their internal taxonomy?
It's probably better to think of Amazon as a product promotion engine. What the customer thinks they want is less important than what Amazon wants to sell.
It also opens the market for cheap knockoffs. If some chi-fi headphones for 60 bucks are almost as good as the big brands and the big US brands are forced for high prices despite the bad build quality by Amazon, another big seller website should emerge. Oh wait, this already happened with AliExpress and temu.
3 days later the package arrived from amazon, complete with packing slip, where I found it cost £16.
Searching the sellers account they had thousands of random listings - where I assume they can leverage a small profit. Items came and went quickly from their inventory, I assume as amazon prices fluctated.
Have you not used target.com or walmart.com recently?
> there's been a reshuffling of chairs
Hmm.. I think those two things are in conflict.
> The title is a little clickbait-y.
The attourney general of California disagrees with you.
1. Average American spends THREE THOUSAND DOLLAR year at Amazon. That’s staggering.
2. As of now the trial is not scheduled to begin until January 2027 (although the discussed injunction is meant to address that). I believe the length of time required to get a decision in court is the single biggest impediment to justice being served. It usually waters down the final judgment, makes costs prohibitive for plaintiffs, and allows perpetrators to continue benefiting from illegal behavior indefinitely. In some cases, the defendant can be elected President in the interim eliminating any chance of facing a court decision.
Where else would americans be getting home goods like soap, appliances, electronics? Vitamins, perscriptions, etc?
The answer to almost every one of those, for the vast majority of Americans, is one of like 5 megacorps. Target, Walmart, Kroger, CVS, Amazon. Things have largely stopped being available retail because of all this consolidation. If I want to go buy a multivitamin, its no joke like $25 a bottle at my grocery store, and $8 on amazon. It is just kinda... a part of people's lives now, and the alternatives all involve either spending more money or time.
I don't care man. It doesn't matter to the world whether I spend money on books or not. It only matters to me. Or I guess it's more correct to say it matters much more to me than to the rest of the world.
So yeah, I'm not worried about it. I don't tip either, by the way, unless I see a very good reason to. Given the choice, I prefer to keep my money rather than give it away. Couldn't care less what you or anyone else thinks about it.
While they might not be the absolute cheapest options, they're usually a pretty good price and at least with those sources I'm not too concerned with counterfeit or tainted supplements, unlike Amazon [0]
[0] https://news.ycombinator.com/item?id=20499808
Is it? That’s by households, not individuals. Is it really crazy to imagine a household spending $200-300/month at Costco, Walmart, Whole Foods—or Amazon?
Frankly, I think a lot of people have lost perspective on just how rich the average American household is: Around $145k annual income.
Not shocking that Amazon is capturing 2% of that gross.
https://dqydj.com/household-income-percentile-calculator/
http://www.sellersprite.com/en/blog/most-expensive-thing-on-...
Amazon is not just a US company either.
They also have an ad business. You could rightfully argue that ad spend gets passed on to the consumer.
Though now that I write that, I wonder if Matt divided by the total number of North American households or the number of US ones.
EDIT: Amazon North American segment revenue divided by aggregate North American household count is roughly $2,300. But I’m guessing the real number is closer to Matt’s estimate as US households are wealthier and likely represent a disproportionate fraction of that revenue.
https://www.johndcook.com/blog/2021/01/18/gell-mann-amnesia/
If you can’t trust someone’s analysis about something you know about, why trust him about something you don’t?
On the particulars of this number, he seems to be close enough, but it’s not nearly as shocking with any context: The average American household Walmart spend is comparable, Apple captures almost half that with a handful of devices and services.
My relatives use it for ordering office supplies for their business.
It's insane that the landlord of the mall is also running the biggest store in the mall
It's led to this scheme, but also just the general enshittification of buying things online. You can never trust what you buy from Amazon because their "marketplace sellers" will send you a counterfeit, and it's hard to find some brand names because they don't want to be in that cesspool
As low rent and lowest common denominator as Walmart was in the 90s, at least I could go in and know that a) I probably was getting the lowest price on that Rubbermaid trash can b) it was legitimately a Rubbermaid trashcan and not someone who ripped off the molds, used plastic that was 50% as good, and sells it under the brand Xyxldk, and c) could reasonably expect to find that trashcan offered for sale in the first place
- Central and Aeon own malls;
- Tesco owns multi-story shopping complexes including banking, retail, fast food, etc;
- and for that matter, Walmart, Target, Costco, and some grocery stores in the US operate multiple smaller businesses inside, eg banks or fast food.
It’s really not that uncommon for a corporation to operate part of their commercial space as a subsidiary marketplace.
[0] https://kindlepreneur.com/audible-royalty-changes/
Why amazon sellers have not opened up a class action lawsuit is beyond me. This case, succeed or fail will surface enough documentation that they may find cause.
The fact that lawsuits are won by whoever has more money and time is so deeply problematic. I have no idea how you’d go about equalizing it. Spending limits with devastating consequences if it can be proven that you broke them?
* More juries, and maybe something jury like for civil suits.
* Simplify the law and legal proceedings to the point where the extra time preparing won’t lead to better outcomes.
This way everyone is on equal footing. Doesn't matter if you're a homeless bum or Jeff Bezos. Both just get an appointed lawyer.
If a suit is found frivolous, you are on the hook for the costs, as long as it's reasonable it's paid for by the state and if a party is found at fault they may also be required to cover the costs.
First, this is not new. It's been stated policy for years.
Second, manufacturers get around it in a clever way. They always list their items on their own site at the same price as at Amazon... but then magically almost always seem to have a 20% or 25%-off sitewide coupon available, whether it's for first-time customers, or "spinning the wheel" that pops up, etc.
So I don't know how much this is really raising actual prices in the end.
Otherwise, I'm not sure how to feel about it, because pricing contracts are common on both ends. Manufacturers frequently only sell to retailers who promise they won't charge less than the MSRP, and large retailers similarly often require "most-favored-nation" pricing, so they can always claim they have the lowest prices. If you want to end these practices, then it's only fair to have a law prohibiting it across the board, rather than singling out Amazon.
This is irrelevant.
Companies with as much market power as Amazon simply cannot be allowed to exist. It was a mistake to ever allow it and every response that is not aimed at a total shattering of the company is another mistake. No retail business of any kind can ever be safe when companies like Amazon exist. (And although this article is about Amazon, the same is true of many other companies as well, like Walmart.)
Received several orders that were returned items, with broken open packaging and sometimes the item was something else entirely, purely put there for weight by whoever returned it.
When I went to return some things at a major Amazon distribution center, the return area was closed for the week for some sort of construction or renovation, with no indication of that anywhere on the site. The only messaging was a piece of paper in the window once you got there.
At another separate major distribution center, the return area was a small room with pieces of paper taped to a door with an arrow pointing to the Amazon lockers where the returns are accepted.
Orders are now often so delayed that it makes the Prime subscription pointless. Have had multiple orders over the past year that didn't ship for 3 or 4 days.
Amazon listings are almost half Sponsored listings now, and there are unrelated ads on the side of listings.
Half of the listings are some random made-up brand name, like XIJGNU, which is just a Chinese seller selling low-quality products, and when the reviews get bad enough, they re-list the product under another made-up brand name.
Fake reviews were already rampant before LLMs, but now reviews are effectively useless because they are so easy to fake.
In my experience I've received a box for a different brand than the device inside with the wrong app listed in the box for a different unrelated brand. Fun times we live in. And don't bother getting a refund as the listing and company will be gone by the time you try.
At least by paying Amazon I can avoid dealing with all that. While I may pass the price to the consumer for Fulfilled-By-Amazon fees, which tends to be around $5.18 ~ $3.5 (quick google search), it's still a lot cheaper than using something like FedEx where it costs $10-12 per order.
The takeaway here is that Amazon has democratized fast and cheap delivery by building a monopoly. As the scale of things go up, the cost of operations can really go down. Think of meal prepping, when you cook food in bulk vs each meal separately, you're saving costs on power, gas and produce.
The only question is whether we can build a public benefit corporation, just like Amazon.
This is true for other sellers too.
I just go to Walmart now. And Walmart is no choir boy either but at least I can see what I'm buying.
A product on the shelf, I don't have the slightest idea if it'll break in a month or have a feature that doesn't work right.
When I start browsing Amazon reviews, I feel vastly more confident I know what I'm buying.
Only exception is clothing, since it's next to impossible to judge fit and texture and often even color online.
Amazon does something similar but with pricing layered on top. Their rec system pushes higher-margin products, sellers notice which items get promoted, then they raise prices knowing Amazon will keep showing them anyway. So it's not just "algorithm adjusts prices" - it's more like the recommendation layer creates conditions where sellers can safely jack up prices without losing visibility.
Basically the algorithm creates artificial scarcity by only showing certain products, which gives sellers pricing power they wouldn't have otherwise.
It was effectively a way to get an excess commission out of amazon if you printed through their printing arm, Createspace/KDP. Not sure if this worked the same for non print on demand books but if you printed through createspace you could set a higher list price and get royalties that were about 100% of the actual sale price.
No idea if the same mechanic is in play with the FBA rules but it seems very plausible to me that the largest impact is has is closing exploits like this.
That doesn't mean it doesn't also entrench market position, raise a few prices at the margin etc but it's very easy to miss the potential for gaming rules, legally, unless you're actively in the system. If an incentive is there the market incentive will be to use it.
Give me one example, where consumer behavior really changed anything. Usually what follows from large boycotts is political action or the company succumbing to pressure.
Just stopping to spend your money there might make you feel good but don't kid yourself, it barely does anything if you're not turning it into an organized action.
That being said, anyone who’s operated a two-sided marketplace knows that one of the biggest problems is consumers using your site as an index, and then seeking to dodge your fee by meeting with the seller on another platform, where they don’t have to pay it. This was a big problem for my startup.
This is a negative externality, because they’re extracting value from your platform (the list of sellers, products, prices, ratings, etc.), without paying for that value. If left unchecked, this could make running the platform financially unviable. One way to prevent this is to paywall your platform, but not every consumer wants to pay a subscription.
I think it’d be fair for Amazon to prohibit sellers advertising other platforms on its own, but prohibiting them from offering lower prices outside of Amazon outright definitely seems anticompetitive.
There is a company that operates an index where people can search for things and doesn't charge the site or the customer for things that rank well in organic search results. I think they're called Google. From what I understand they make quite a bit of money by selling ads next to the listings.
That model seems like it would work pretty well for such a platform, unless there was some major company preventing anyone from offering a lower price than they have on their own site so that everybody goes to their site instead of using a price search engine to find a site with a lower price.
I mean come on. If they're really using your site just to find a product, you think that's a problem?
Meanwhile a platform's fee should be going to things like payment processing, warehousing and shipping, and then if you're offering a competitive price for those services they should want to be paying you because they need those things and can't get a better deal on them somewhere else. If they can get a better deal on them and are only using your site because you're forcing them to with a dirty trick, maybe they're right to object?
Sounds great to me!
https://oag.ca.gov/system/files/attachments/press-docs/REDAC...
Walmart and Pepsi engaged in a blatant decade-long price fixing scheme designed to raised prices and punish small local competitors and were sued for it by Lina Khan's FTC, but - surprise - the case was thrown out the minute Trump took office.
Amazon has been openly doing this for years. They scrape other competitor websites, even though it’s against their terms of service, and if you sell for less elsewhere they find out and punish you. It’s blatantly anti competitive.
> Amazon, vendor [...] fixed prices on [...] This is also an example of Breaking the Price Match, but here, Amazon [...] The plan was memorialized in an email from [...] In other words [...] In response, Amazon insisted on [...] The plan was realized [...] The result of Amazon, [...] price fixing agreement was to increase the retail prices
I don't know how you could even understand what's being alleged without seeing the unredacted version.