[hnuser847]

The TL;DR is that the “hidden tax” is onerous advertising fees paid by third-party retailers to have their products appear high in search results.

I don’t really see the issue here, since this appears to be a win-win for both consumers and sellers. Consumers get the cheap stuff they want with free shipping, and sellers get access to hundreds of millions of customers and the volume of sales needed to survive in a low-margin business. The fact that sellers are willing to pay these fees suggests that’s it worth it for them to be on Amazon. If it wasn’t worth it, they would be somewhere else.

[zb3]

You pay these fees so the products aren't cheap. And Amazon (using its size) made it impossible for sellers to sell their products cheaper elsewhere. This is anticompetitive.

[hnuser847]

> You pay these fees so the products aren't cheap.

Except they are, otherwise consumers wouldn't use Amazon. Whenever I want to buy anything, I check Amazon first. 9 times out of 10 it's the same price as every other retailer with the added benefit of free shipping and free returns. If that wasn't the case, I would have no reason to use Amazon.

[pahkah]

> Whenever I want to buy anything, I check Amazon first. 9 times out of 10 it's the same price as every other retailer with the added benefit of free shipping and free returns.

That's the problem! The issue is that Amazon forces sellers to raise their prices elsewhere, so that Amazon is the best deal for a shopper. But if Amazon didn't have the power to do that (if it didn't have a monopoly as the gateway to online shopping) then other retailers would be able to lower their prices.

That's the "tax" referred to in the article. By inflating prices across the board, but still ensuring that they're the least expensive option, Amazon retains customers and increases profits. Individual consumers choose it because it's the best deal, but the system as a whole loses out because prices are higher than they "should" be.

[hnbad]

I'm a consumer who uses Amazon for 90% of their online shopping and let me tell you: I'm not doing it because Amazon is cheap. In recent years more often than not, Amazon isn't actually the cheapest option except for the occasional deal for a subpar product they want to remove from their inventory (but these would be cheap in brick and mortar stores too). Even the deals are largely bogus: "Prime Day" largely exists to buy Amazon equipment at a more reasonable price point and the rest of the time the deals are either for "stocking fillers" (i.e. the kind of stuff you'd find in the discount bin at the supermarket) or noname white label dropshipping products you can barely tell apart from the real deal until they arrive.

I don't use Amazon because it's cheap. I use it because it's convenient. I can do 99% of my non-groceries shopping on Amazon and I get 30 day free returns on most products and next day delivery for some of them, not to mention free shipping on most things I buy (or near-free shipping if you consider the cost of Prime).

What's been pushing me away from Amazon recently is that they're not very good (or even increasingly worse) for some categories of products and in many cases search results are cluttered by Chinese dropshipping products to the point I can't find trustworthier brands at all or for categories I'm less familiar with have to do research to figure out which brands actually exist outside of Amazon's Chinese dropshipping hell. And again because of the free returns (and in the case of non-free returns the A-to-Z guarantee still often resulting in free returns or full refunds) this is not a cost issue but more about the reduction in convenience.

Mind you, I live in Germany and German Amazon is likely different. But Amazon is still the biggest online retailer here despite not being the cheapest. Arguably it still maintains the illusion of being the cheapest because of the free shipping (if you pay for Prime) and the constant barrage of "deals".

[midnightclubbed]

And that is why this case is being brought. Amazon are requiring that the price on Amazon is the cheapest price, even if the retailer would like to sell it on their own store (or eBay, Walmart, etc) for cheaper. If it’s sold on Amazon you won’t see it cheaper elsewhere.

[jononomo]

You don't realize that the price could be cheaper.

[globalnode]

did you read it all? it claims the prices are higher due to the hidden tax and that amazon is price fixing by threatening to block 3rd party sellers if they sell at a more reasonable price elsewhere. this doesnt necessarily mean that consumers will get a better deal elsewhere but it is probably unhealthy to put all that price setting behaviour in the hands of one company.

[proamdev123]

This is an excellent point.

I’m extremely curious to see if the evidence shows that Amazon’s practices actually drive up prices in the market or whether there’s not much impact.

I suspect the answer may vary drastically depending on the product category.

[fallingknife]

That doesn't really sound like price setting power. They are saying you can set whatever price you want, but it has to be the same as other sales channels.

[Qwertious]

"Other sales channels" being Amazon's competitors - suppose you sell a... cup that costs $1 to produce, and you sell it on Amazon and Bmazon. Amazon charges $2 in fees, and Bmazon charges $0.50 in fees.

In this hypothetical example with demonstration numbers for effect, you could sell your cup for a minimum of $1.50 on Bmazon and $3 on Amazon - everything above that is pure profit. In such a scenario, you would obviously much prefer selling at $2.50 on Bmazon over selling for $3.50 on Amazon, since you make 2x the profit, and the average customer would much prefer to buy the device at a ~30% discount! Unless the customer legitimately derives an extra $1 worth of value from using Amazon instead of Bmazon, in which case Amazon gets the sale anyway.

But, if 90% of your sales are on Amazon, then you can't offer this deal that both you and the customer are legitimately incentivized to do, because you'd lose 80% of your revenue.

In such a scenario, Amazon has no competitive incentive to reduce their fees! It suppresses market signals towards lower-overhead sales platforms, i.e. you have no way to signal to your customers that a sale on Bmazon benefits you twice as much as on Amazon.

Basically, Amazon is trying to abuse a network-effect instead of actually competing with their competition. They're deplatforming anyone who doesn't voluntarily price-fix for them. It's insane.

[stale2002]

The rule means that a seller cannot pass the savings onto the consumer, by giving the consumer the fee that they would otherwise pay amazon.

Thats the issue.

[rk06]

Nope, the core issue is Amazon has monopoly on advertisement and distribution. And Amazon is abusing it to suppress competitors.

Consider the scenario:

Amazon executive want more bonus, so they decide to increase retailer prices by 10x.

Now, retailers cost have increased for Amazon by 10x. But other distribution channels remain the same.

So, retailers should increase prices on Amazon only. But Amazon forces them to increase prices everywhere.

This interference of Amazon on other business is the issue

Amazon sees that it's profit is lower

[hnuser847]

If Amazon did that, sales would drop to zero and retailers would leave Amazon. eCommerce is a low-margin business. Sellers will only stay on Amazon as long it's profitable for them.