[prklmn]

It’s not only knockoffs. A friend of mine works in CPG and their company’s biggest problem with sales through amazon is that they sell at a loss to compete with grey market sellers who are selling stolen at a much reduced price.

[dpark]

You cannot “compete” by selling at a loss, unless you’re competing for the first spot at bankruptcy court.

Whenever I hear about someone selling at a loss, I automatically assume that either they’re buying market share as a long bet (e.g. typical new gaming console) or more commonly misrepresenting the actual economics (e.g. car dealers neglecting to mention all the rebates they get off their supposed price).

[kd5bjo]

The other common case (not applicable here) is a loss leader: sell something at a loss in the hope that the customers it attracts will buy high-margin items at your store instead of the one they usually frequent.

[unreal37]

There are going to be times (a few days or weeks) where sellers think they can "outlast" the competition in a price war.

You're basically betting that the other guy doesn't have the stamina to survive at this price.

Of course, if what the OP says is true, if the other seller has a much lower price point than you do, you can't outlast them. They could still be making a profit at $20 while you're losing $5 per unit trying to push them out.

[prklmn]

Think about inventory holding costs. Not only do you have capital tied up in that product in the warehouse, but you also have the opportunity cost of not being able to stock something else to sell.

And to your car dealership point - the way it works for GM at least is that GM sets sales goals for their dealers. Dealer X's monthly sales target is 75 vehicles. They will happily sell lets say vehicles 73, 74, and 75 on August 31st to get their $20k bonus for the month of August. They might not be misrepresenting their supposed price like you think. Also, the same concept of inventory holding costs applies really well for car dealers. It's purely an inventory turnover business. If your lot is full of fusions and you can sell 2 f150s in the time that you can sell 1 fusion at similar profit, you're going to want to get those fusions off the lot potentially at a loss so you can sell more f150s.

[zeroego]

I work at a CPG and another issue we have to deal with is an individual having an "in" at a distributor and being able to purchase our products at rock bottom prices. We can usually track these people down, but they can really throw a wrench into an ASINs profitability for a while.

[ummonk]

How does this work? By "our products" you mean products your company produces, right? Are you sending the products to the distributor at a price that is too low to make a profit? Why does it matter to you whether they products are bought directly from you on Amazon or through one of your distributors and resold on Amazon by a third party?

[zeroego]

There's a couple reasons it matters. Unauthorized third parties rarely care about representing our brand correctly. When a consumer has a problem with a product they received the first person they blame is the brand, not realizing they bought it from a completely separate entity. The product breaking during shipment, the customer buying at a price just to go back and check days later and see a lower price, the product being expired...All of these things are outside of our control, yet as a brand we take the blame.

In my particular case, there is an "anti-FBA" culture at the company I work for. No one can sell our product for as cheap as we can because we make it. However, without access to FBA, it's much more difficult to have complete control over your pricing on amazon. With complete control over pricing you can ensure that your margins will be better than whatever distributor pricing is. Also the competitiveness of our products on the platform against other brands is directly affected by how much the seller (either us or an unauth)can afford to sell the product to the consumer. If a competing brand sells the same thing for cheaper, they will get more sales and thus more market share.

I say "my particular case" but in reality I know of several CPG companies where the anti-FBA culture exists, even though it is the most advantageous approach to selling on amazon with regards to pricing. I wrote this kind of fast so I hope it all makes sense.

[plink]

This reminds me of a time I needed a blower fan for my refrigerator and Amazon’s recommended one for next day delivery seemed suspiciously underpriced. I ordered it despite my trepidation that the item was going to be made out of silly putty by a Chinese pirate. Upon receipt, I discovered the serial number was filed off and I rested assured that it was a quality OEM but probably stolen. The motor is still working great which is more than one can say for Amazon.

[vageli]

> This reminds me of a time I needed a blower fan for my refrigerator and Amazon’s recommended one for next day delivery seemed suspiciously underpriced. I ordered it despite my trepidation that the item was going to be made out of silly putty by a Chinese pirate. Upon receipt, I discovered the serial number was filed off and I rested assured that it was a quality OEM but probably stolen. The motor is still working great which is more than one can say for Amazon.

Did you notify Amazon or any authorities about this? Would be curious to hear the response.

[plink]

I didn't. My sense of disgust and disillusion was heightened by the fact that it was an Amazon recommended product. Of late, I am more and more spare about shouting into the wind.