[rweba]

The author does not offer ANY evidence for Amazon's supposed "dominance".

How exactly is Amazon dominating?

What percentage of online retail sales does Amazon have? What percentage of TOTAL retail sales (online and offline)?

And more importantly, how is Amazon's market position harming consumers?

It's remarkable that Tim Harford wrote this entire article without citing a single figure or statistic.

What seems to be going on is that there is a PERCEPTION that Amazon is totally dominating and monopolizing retail, but retail is so big that you can grow massively and have revenues of a $100 billion without coming close to being a monopoly.

Points to note:

(1) Amazon has no MOAT. Anyone can set up shop and start delivering things to people. There is no switching cost.

(2) Amazon has MASSIVE well-funded competition in all of its areas: online retail (Walmart), Cloud (Google), video streaming (Netflix), Books (the big publishers who own the content)

(3) You can live quite comfortably and cheaply and conveniently get almost everything that Amazon has to offer without having to use Amazon if you don't want to (books, retail items, cloud services, etc.). This is not the case with pure monopolies like utilities, or monopolies like Intel or Microsoft where completely avoiding them is a big pain for the average person.

[rocqua]

Just to counter the statement:

> Amazon has no MOAT.

Consider the following:

- Distribution. Amazon has their own distribution system, and has deals with third-party distributors

- Data. Amazon has a lot of data on consumer buying patterns.

- Books. When selling books online, amazon is apparently a requirement for success.

These aren't the best moats, but they are something.

[gaius]

Data. Amazon has a lot of data on consumer buying patterns

I have a folder of screenshots I keep of hilariously bad Amazon product suggestions. I have been a regular Amazon customer since the '90's and I can say with a high degree of confidence that their consumer data isn't that valuable. All the recommendations that make sense are directly off products, if I buy one flavour of food for my cats it will suggest another but hell, anyone can do that. It's not even smart enough to suggest other cat-related products.

[guitarbill]

It's not even smart enough to realise most items I buy are items you only need one of. E.g. if I buy a screwdriver set, or desk, or frying pan, I'll keep getting recommendations for other similar products. I'm pretty sure a random product suggester could do better.

[p0rkbelly]

Their competition has data too. Maybe not as much, but plenty. Walmart sells more than they do, I bet they have more data...

[adventured]

Walmart has dramatically more data on retail sales than Amazon.

They're famous for having an extraordinary logistics and purchase data system. It's how they've survived on 2%-3% net income margins for decades.

[joncrane]

But any business has the opportunity to smart small and grow organically. Nothing has changed about the market since Amazon started, as far as barriers to entry. In fact if anything, in some sense barriers to entry are lower because it's easier than ever to make an ecommerce website.

[elhudy]

While google is a cloud competitor, azure remains a larger competitor. Regardless, AWS is positioned to hold the large majority of the cloud market for a while. Not to say that any of this is unhealthy.

https://imgur.com/a/TA5zg

[guitarbill]

That graph seems to be from this Techcrunch article: https://techcrunch.com/2017/10/30/aws-continues-to-rule-the-.... It also has another graph showing the growth of Azure and Google being much higher than AWS. AWS has a head-start, but others are driving pricing down. Yay competition!

With 30-35% of the market (if that graph/article is to be believed), it's not even really fair to say AWS has a majority (majority being usually used for >50%).

[elhudy]

The graph I posted shows Azure and Google growth being much higher as well. Think of it like this though: if you have 100 pennies and your growth rate is 75% then next year you will have 175 pennies. If you have 700 pennies and your growth rate is 35% then next year you'll have 945 pennies. Amazon offers a stronger product and just isn't going to "lose" market share at any point soon. I'm surprised IBM is even on there - I'd guess 90% of their cloud revenue is current customers that they converted over.

[guitarbill]

IBM acquired Softlayer, because otherwise their "cloud" offerings were basically marketing wank. Softlayer offered dedicated hardware, which a few years ago might have been appealing because of compliancy issues or lack of beefy machines on other cloud providers. In classical fashion, IBM snoozed and the competition has caught up (<insert IBM being morons rant here>). Great post if you want more detail: https://thehftguy.com/2018/01/15/the-inevitable-demise-of-ib...

[elhudy]

That's interesting - thanks for sharing!

[fnl]

Fully agree to all but (3). From personal experience (here in Spain), every year it is getting more difficult for me to not buy from them (yes, I "religiously" avoid giving companies I consider harming society a dime, if I can...)

[sah2ed]

How is Amazon harming society? I don't see how they harm consumers since either way, consumers are the biggest winners of those low prices.

If you are referring to self-published authors distributing ebooks being forced to take 35% on < $3 sales and 70% on > $3 sales on their platform; or merchants leveraging their reach to sell to a larger audience being undercut by Amazon on price then yes, they are harming society in some way.

But even their "harm" is as debatable as the "harm" of Henry Ford's mass produced cars displacing horse-drawn carriages mostly because they were more efficient at transporting people over the same distances as horses.

https://www.quora.com/How-long-did-it-take-to-get-horse-draw...

[fnl]

Plenty, here is a selection:

- Nice jobs with plenty of human interaction at local stores get replaced by low-wage, brain-dead jobs in sweatshops (distribution centers) and employees get replaced with self-employed gig workers (transportation services)

- Amazon makes huge profits it immediately keeps reinvesting, so it pays no taxes on gains, reducing the redistribution of wealth

- Of the taxes that would apply, Amazon, like all multinationals, makes use of legal loopholes only the privileged can "access"

- Amazon's data-centers are probably one of the world's largest consumer of electricity - which in turn mostly comes from fossile fuels and atomic energy, therefore polluting the world and driving global warming

- Having a large, controlling piece of the "job pie" means such companies can push wages and prices down, ultimately eliminating the middle class, that was built around SMEs

a.s.f.

[pad-throw]

I disagree with all your points:

>> Nice jobs with plenty of human interaction at local stores - Cashiers and other such store jobs are nice? Most such jobs at least here in the US are minimum wage, dead-end jobs which includes having to deal with rude customers and managers who would replace you in a heartbeat with two others for half your pay. What may be 'nice' to you the customer isn't necessarily 'nice' for the employees. Amazon offers convenience and time savings instead of human interaction. If this niceness of human interaction was that important or valuable to everyone, they would have voted with their wallets and gone to the stores instead of shopping on Amazon which means they value convenience and time more than the niceness of human interaction with strangers. So Amazon's popularity means capital is just being redirected to the most valuable actions.

>> self-employed gig workers (transportation services) - I believe it's the lack of healthcare and good social security (more so a problem in the US) that is the main 'problem' or 'risk' with the gig economy. Otherwise I am hard-pressed to see why people working on their own terms is really not better than long-term employments especially for commodity jobs like driving and transportation.

>> Amazon makes huge profits it immediately keeps reinvesting, so it pays no taxes on gains, reducing the redistribution of wealth - It keeps reinvesting its profits which means the money and capital is going back into the economy - in the means of cheaper prices, more services that startups and businesses be more efficient which means a whole order of more people than just the shareholders, benefit in some way from this capital. How is this reducing the redistribution of wealth? In fact companies who take and store profits (like Apple) and/or use them for share buybacks (like Google) are using this money less efficiently by returning it to only a small number of people who are Apple/Google share owners.

>> Of the taxes that would apply, Amazon, like all multinationals, makes use of legal loopholes only the privileged can "access" - You mention that all multinationals do this and that these are 'legal'. I really don't know why only Amazon is the one harming anyone here. I agree that everyone, including Amazon should pay their fair share of taxes. I am not a tax expert, but I just think that the fact that these 'legal loopholes' exist means that in todays world of global economies and multi-national companies, defining 'fair taxation' is very complex and not a simple black and white decision.

>> Amazon's data-centers are probably one of the world's largest consumer of electricity - which in turn mostly comes from fossil fuels and atomic energy, therefore polluting the world and driving global warming. - I can actually argue that Amazon's cloud would be a net positive for world pollution and energy consumption. Amazon's cloud data centers pack multiple millions of customer workloads from what would have been many, inefficient data centers into smaller number of very large, but also highly efficient data centers. Amazon has whole teams working on green/renewable energy sourcing for their data centers as well as designing more efficient hardware which means millions of businesses are automatically gaining the benefits. This is an important business effort for Amazon too because of their scale and visibility. I doubt that smaller businesses running their own hardware or data centers would ever care about their efficiency and/or the cleanliness of their source of their power.

>> Having a large, controlling piece of the "job pie" means such companies can push wages and prices down, ultimately eliminating the middle class, that was built around SMEs - Most if not all of Amazon's services have been built up on enabling others to do business and create more value - be it authors, sellers, or tech companies. Plenty of SMEs have leveraged and built on top of Amazon's services and had access to opportunities that they could never have. The SMEs that are getting 'eliminated' (like bookstores and such) need to adopt to the new situation where the value/services they provide are simply not in demand or the market has moved on and they have not adapted. Yes, there is a risk of having a large number of businesses depending on a single company but that is not the same discussion as Amazon being harmful.

[prepend]

Amazon dominated author’s mindshare; therefore must be same for all others.

This is just OP’s solipsism and projection.

[returnInfinity]

Amazon has a strong triple moat according to Ben thompson's exponent podcast. A moat around a moat around a moat. Its unbeatable.

Network effects, AWS, data, large distribution, tv network, alexa and finally customers love it.

They are getting into ad business now and they also do the amazon basics. They even have an amazon clothing label in India.

[guitarbill]

> and finally customers love it.

I think this expresses everything that's wrong about a lot of other companies. And if they can't figure this out, they deserve to fail. How this can even be considered a "moat"? You'd think customer trust/experience should be at the root of good business, especially repeat business.

[intopieces]

Worth considering that Netflix is both a compeititor and customer of Amazon.