[wiremonger]

But Amazon isn't doing this so that they can make the other retailer's customers pay more. They're doing it to make sure their own customers pay the lowest price that prevails in the marketplace. It's just that this is the only mechanism they have for accomplishing that. Amazon can't control what a seller does elsewhere, but if a product is on sale elsewhere, they can basically tell the seller that they refuse to list it on Amazon unless the seller reduces the price to match the other retailer.

So far most of the discussion is about pricing on Amazon vs. other retailers, but Amazon also does this between sellers of the same product on Amazon. If there are multiple sellers of the same product, Amazon will funnel their customers to the seller offer with the lowest price. The jargon term for this is "getting the buy box".

[barelysapient]

> But Amazon isn't doing this so that they can make the other retailer's customers pay more. They're doing it to make sure their own customers pay the lowest price that prevails in the marketplace. It's just that this is the only mechanism they have for accomplishing that. Amazon can't control what a seller does elsewhere, but if a product is on sale elsewhere, they can basically tell the seller that they refuse to list it on Amazon unless the seller reduces the price to match the other retailer.

Nonsense. Selling on Amazon takes a 18-33% markup on the price of the product. Amazon forces this margin consumers by requiring sellers to not sell cheaper elsewhere; even though selling elsewhere may cost the seller less.

[wiremonger]

> Selling on Amazon takes a 18-33% markup on the price of the product. Amazon forces this margin consumers by requiring sellers to not sell cheaper elsewhere

Amazon charges a referral fee on all 3rd party transactions. It varies by category, but is typically 8-15%. All retailers take similar margins. For instance, the largest retailer in the US is Walmart. Here is a list of their 3rd party referral fees: https://marketplace.walmart.com/referral-fees/.

Given that the retailers all take similar margins, I think it's crazy to somehow paint this as Amazon forcing a markup on customers. All Amazon is doing is refusing to show products if the price on Amazon is higher than at a competitor. It's the seller who chooses what to do about that. They can either raise the price at the competitor, or they can lower the price on Amazon.

Again, the retailer's margins are similar, so it shouldn't matter.

[barelysapient]

Fees are even less if they sell direct on Ebay or Shopify.

> Given that the retailers all take similar margins, I think it's crazy to somehow paint this as Amazon forcing a markup on customers. All Amazon is doing is refusing to show products if the price on Amazon is higher than at a competitor. It's the seller who chooses what to do about that. They can either raise the price at the competitor, or they can lower the price on Amazon.

Think of it this way: If that was the case, then why does Amazon require them to sell it for the lowest price on Amazon?

Amazon has a dominant market position, extracting more margin then competitors, yet they engage in this anti-competitive and consumer damaging behavior of requiring sellers to sell products at low or below cost in order to 'play' on the amazon.com marketplace.

Shameful.

[wiremonger]

> Fees are even less if they sell direct on Ebay or Shopify.

eBay charges similar fees: https://www.ebay.com/help/selling/fees-credits-invoices/sell...

Shopify is not a meaningful comparison, since it is not a marketplace. They don't bring customers to you. They're essentially a hosting and payments provider. You have to get traffic yourself.

> yet they engage in this anti-competitive and consumer damaging behavior of requiring sellers to sell products at low or below cost

Is your position that they are increasing the prices consumer pay or that they're decreasing them?

[dh2022]

Re: "consumer damaging behavior of requiring sellers to sell products at low or below cost in order to 'play' on the amazon.com marketplace."

How does this damage the consumer?

[CogitoCogito]

> But Amazon isn't doing this so that they can make the other retailer's customers pay more. They're doing it to make sure their own customers pay the lowest price that prevails in the marketplace.

Those two statements sound like the same thing from different perspectives.

[AbrahamParangi]

But by doing so they raise the price which prevails in the marketplace to their benefit and at a cost to consumers.

[wiremonger]

They (as in, Amazon) are not setting prices. The 3rd party sellers decide what the prices are: they can either lower the price on Amazon or raise the price at the other retailer. Amazon doesn't really care; they just want to sell stuff and take their cut. And ensure that customers don't develop a habit of price shopping everything after they do all their research on Amazon.

[AbrahamParangi]

By insulating themselves from price competition they indirectly increase prices seen by consumers.

Consider the counterfactual case: if there was an Amazon competitor with higher efficiency they could compete by offering a lower take-rate. Sellers could then sell the same product with the same margin at a lower price, and buyers would benefit from those lower prices.

Instead, Amazon is using its market power to prevent alternative stores from competing with it on price by hamstringing sellers. This means that while the sellers’ margin is exposed to competitive pressure, Amazon’s margin is not. And that means higher prices.

[wiremonger]

Counterfactual is a good term for the scenario you described since it is counter to the actual facts in this situation, which are that Amazon's referral fees are in line with all the other marketplaces and it's the 3rd party sellers who are setting prices, not Amazon.

[AbrahamParangi]

Does it seem relevant that other marketplaces with lower marketshare can't reduce their take-rate to lower consumer costs and gain marketshare because sellers would have to raise their prices a corresponding amount if they want to stay on Amazon?

[wiremonger]

How would another marketplace lowering their referral fee cause sellers to raise their prices? They can either keep the extra margin at the marketplace with the lower fees, or they can reduce their prices at Amazon.