The Insightful Troll

Rants and ruminations.

What Happened to Amazon?

amazon

Amazon has turned into a terrible place to shop - the situation is not good for vendors or their customers. It was part of Amazon’s plan all along to undercut local sellers by sacrificing profits and offering free deliveries until they essentially eliminated all competition. Now they get to price gouge both sides - the sellers and the customers. Amazon wins, no matter what.

Brian Barrett writing for The Atlantic:

Amazon feels less like an online Target or Best Buy than it does Big Billy’s Bargain Bin, dollar-store trinkets sold for name-brand prices. The problem isn’t that it lacks what you want, but that it offers infinite permutations of often unknowable quality. Many of the brand-name items aren’t any cheaper on Amazon than they are elsewhere.

The decline of Amazon is closely tied not just to its size but to how it has chosen to grow. Amazon is now less of a store than a mall, or maybe a sprawling bazaar. Last year, nearly 60 percent of units sold on Amazon came from third-party sellers rather than from Amazon itself. Want to set up a booth? There’s a nominal monthly fee to reserve the space. From there, though, the charges add up quickly, according to a report from the ecommerce-intelligence firm Marketplace Pulse.

Amazon takes a cut of every transaction, typically about 15 percent. For front-and-center placement, you’d better pay for one of those sponsored slots. According to the FTC, advertised products are 46 times more likely to get clicks. Call it another 15 percent of revenue. Oh, and if you want to qualify for Prime—and if you want any shot of making a sale, you do want to qualify for Prime—you’ll need to use Amazon to fulfill your orders. That’s another 20 to 35 percent off the top. All of a sudden, half of your revenue is in Amazon’s coffers.

[..]

Of course this is where Amazon wound up. The company spent years sacrificing profit for scale, until it had so many customers that sellers couldn’t ignore it. Now that it extracts billions each month from those sellers, it can afford to ignore those customers—or at least prioritize them less. Amazon gets paid by all of its vendors, no matter which products go in our cart.

[..]

… but in a world where so much of online retail runs through Amazon, choice is an illusion. Dare to offer a cheaper product elsewhere online, and Amazon might bury your listing on its platform. A heavily redacted portion of the FTC suit claims that the company “deploys a sophisticated surveillance network of web crawlers that constantly monitor the internet” for such sellers. (In his response, Zapolsky says that the FTC “has it backwards” and that the company doesn’t “highlight or promote offers that are not competitively priced.”)

There is only one solution - Amazon needs to be broken up.