[mountainofdeath]

Much of what Amazon does is what other retailers already do. Amazon just does it more overtly and with smaller businesses. In fact, various aspects of this where pioneered by WalMart and Costco. 1. WalMart determines the expected product and expected price and tells vendors to take it or leave it. The agreement often has a stipulation that the same product can never be cheaper elsewhere which is sometimes easy as WalMart gets specific SKUs. 2. On the other side, Costco makes the majority of its money from memberships. The membership is a significant sunk cost and maintains brand loyalty from a mass affluent customer base (notice the similarity to Amazon Prime). Existing vendors will work closely with Costco to tailor products to this desirable market (see Costco specific SKUs for TVs, routers, etc). Upstart brands will go even further to get their wares in front of an audience with ample disposable income.

The Amazon policy basically says that the vendor must offer free shipping. Coincidentally, nobody can offer shipping for less than what Amazon offers therefore Amazon(FBA) is by default the lowest price. The only other company that can fight this with a logistics network of its own is...WalMart.

Then you have Chinese vendors who sell through networks of dropshippers and resellers at Amazon and other venues. It's why you see many vendors of seemingly the same item.

One thing to note is that it's mostly small and medium vendors of relatively low margin items that are the most hurt by Amazon's policies. Seller's of high margin items just eat into their margins while large vendors push back at Amazon and sometimes win e.g. Toilet Paper that comes directly out of a Georgia Pacific warehouse instead an Amazon warehouse despite being labeled as Prime and sold by Amazon.com, not a third party.

[_uhtu]

I hate that every discussion of reigning in abusive companies has to come with 1000 comments about how other companies are also being abusive, which should apparently make us just wave the white flag. Nah, let's deal with all the monopolies, and Amazon is a good place to start since like you said, they are just incredibly blatant.

[araes]

It's obvious astroturfing.

The top two posts with the most upvotes are "Ebay is just as bad" for the startoff line, and "Everybody's just as bad as Amazon. Why are you being so mean and cruel to Amazon?"

Obvious astroturfing, just like the entire Amazon review ecosystem. Surprise? No.

https://mkorostoff.github.io/1-pixel-wealth/ Bezos' wealth relative to "normal" shown as 1-pixel comparisons. Be careful once you get to the $Trillion portion (you'll be scrolling for the rest of your life.)

[bbor]

I LOVE that link, but I think serious accusations like that need better justification/explanation.

Are you saying that Amazon is buying upvotes for comments they like, or that that comment was written by a shill? The former is very possible but hard to prove either way, but the latter seems really unreasonable. In this example, it's a poster that's been here since 2017, talking about things like startup culture, Covid-19, and investment banking. They even say they're ex-AWS in their HN bio, which would be a very unconventional move for an Amazon-corporate-operated fake account.

[danielmarkbruce]

Almost every claim of astroturfing is from someone who doesn't understand the basic argument opposing their position.

[marcod]

Unless it's Amazon reviews, where almost every glowing 5 star review is paid for.

[therealdrag0]

Based on what? You’ve never given a 5 star review? I sure have and I’m sure many many other people have too.

[unmole]

> It's obvious astroturfing.

Are you really suggesting that Amazon is paying people to post comments on HN of all places? That sounds utterly deranged.

[yterdy]

Found one.

[cm2012]

I think this lawsuit is dumb and anti-consumer. I've also been active on HN since 2008. Not astroturfing :)

[marcod]

I still don't get how for me as a consumer it's bad that I see the full price and don't have to add the shipping on top only at the end of an order pipeline.

Doesn't showing the total price make it much easier to compare? Aren't politicians pushing on other service industries (airlines, ticket sales) to do just that with all their stupid hidden fees?

[yetanotherasian]

It's not astroturf. It's pointing out you've been living with this stuff for years, Amazon isn't new and special. If you want the problem solved then it shouldn't be about Amazon, it should be about entire process.

If Amazon can't sell an "Amazon Brand" that competes with other sellers on it's site, the Trader Joe's should not be able to sell wine that competes with the other branded wine in it's own stores. Nor should Target be able to see it's Good Stuff brand (or whatever it is) that directly competes with other things it stocks.

Similarly, if Amazon is going to be barred from having people pay to be the top of search results than Safeway should be barred from having companies pay to have their items placed on the end shelves.

This shouldn't be about just Amazon.

[AndrewKemendo]

There’s no “entire process” you can target. You going to pass a law on how every company can raise prices? Impossible

No, the actual way is to go company by company and dismantle them. And by Starting with the biggest it sends a message to others that perhaps they should change before they too get broken up.

So by killing a few prominent hostages the system ends up changing “on its own.”

[tekknik]

> No, the actual way is to go company by company and dismantle them. And by Starting with the biggest it sends a message to others that perhaps they should change before they too get broken up.

You will never finish if you go company by company, there’s just too many. Additionally no company ever stops anything until forced to. Your suggestions will not solve anything.

[zelphirkalt]

If they are all so interchangable, then I guess no one should care too much about them being split up either. Just need a high enough frequency of splitting to keep the market sane.

[AndrewKemendo]

Basically you just said it's hopeless

So what's the solution?

[mycologos]

In what sense is Costco an "abusive" company? They squeeze their suppliers, but their suppliers legitimately have other options. I'm not aware of any market what Costco is the only game in town.

[marcod]

I can see this both ways. Obviously, nobody is forced to sell to Costco, Amazon, or Walmart, but in a business with thin margins, like Retail, the only way to stay afloat is to sell high numbers. A quasi-monopoly does force vendors to comply in a way.

[danielmarkbruce]

Costco meets no reasonable person's definition of monopoly. Not quasi, not sort of, not anything. They do a couple hundred bill of sales in a multi-trillion dollar market. Sub 10% share.

[mardifoufs]

Legal precedent exists for a reason. It's not waving the white flag, it's having actual standards and rules. I think Amazon is a shithole of a website and one of the worst examples of downward spirals into mediocrity, but there has to be some semblance of fairness.

Targeting amazon for something Walmart or Target does, but without targeting them too is just wack. You can't just handwave that issue by saying that we can just start there! Because it's been decades, it's standard industry practices, and the law hasn't changed (I know that the FTC has a wide executive mandate, but conjuring a rule is still not great).

Even if you want Amazon broken down, you don't want such a process to start on super shaky grounds like this. I don't know how to explain exactly what I mean here, but it just feels off!

[bbor]

The basic question is "does the FTC have the right to make rules about our society". I think you're answering "no, it should be the legislative only", which sounds great but I think is a serious status-quo bias. The FTC makes rules about our society all the time, both _de jure_ and _de facto_.

There is no moral justification for "starting here", but there is a definite practical one. It would be quite hard for the FTC to open 3-5 different massive lawsuits at the same time, each of which would require tons of funding at a time when funding is seeming scarcer by the day.

[mardifoufs]

Actually, I think I agree with most of your points! I wasn't trying to advocate for the status quo or even a legislative only approach. I think what I would prefer is more of an "EPA" like approach of setting progressive timelines for compliance to a new standard or rule, then strict enforcement. Instead of grand and "bomb shell" one off attempts that sometimes feel just bizarre. Maybe the FTC does not have the power to implement something similar to the FTC , but it definitely would help more imo.

[danielmarkbruce]

"all the monopolies"

[bdw5204]

The precise term would be the oligopolies.

[danielmarkbruce]

There is no oligopoly in retail (online or brick and mortar). It's cut throat competition, razor thin margins, players coming and going.

[fallingknife]

It's a very strong argument to say that the practice currently being pursued by the FTC has been a long standing and generally accepted as legal practice in the retail industry. The fact that they are going after Amazon for this, but have not ever gone after anybody else who has been doing it for decades leads me to the conclusion that this is not about the actual trade practice it claims to be about, but rather a politically targeted attack on Amazon.

And the FTC is very much capable of running multiple enforcement actions at once. Why are there no such charges against other companies doing the same thing. They don't have to be one at a time.

[sli]

I checked, Amazon does indeed sell tiny violins. They are keychains that make sounds. Unless there's a claim here that the FTC is working directly for, say, Walmart, everyone else benefits from Amazon being brought down a handful of pegs.

Sorry if it makes things hard for some AWS customers, but eggs, baskets, etc.

[jancsika]

> Much of what Amazon does is what other retailers already do.

Walmart and Costco subsidize free shipping by raising prices on the third party businesses who sell through them?

Because that's what the article is about.

[thayne]

The mechanics might be different, but the "free shipping" is still subsidized by driving the price of the product itself up. Either way, all consumers pay a higher price, so that a subset of them don't have to pay for shipping.

[Guvante]

Historically you are careful with free shipping to ensure the loss is less than say a retail cut of the price.

That is why minimum orders were so popular, if it cost say $8 to ship something and a retail margin is 15% I can do the math on a break even point where it is a wash or better for the vendor.

[tick_tock_tick]

Yes

[smt88]

Costco doesn't do this because they aren't a marketplace. They only sell products in their own inventory. They aren't gouging small sellers.

[bonestamp2]

> The agreement often has a stipulation that the same product can never be cheaper elsewhere which is sometimes easy as WalMart gets specific SKUs

Yep, this is anti-consumer and anti-competitive -- it should be illegal. Here's where it gets interesting though...

In wal-mart's case they're trying to win on price competition alone. They're hoping with their volume, operations and efficiency, nobody else can sell with a lower margin. But Amazon is doing the opposite.

I looked into selling on Amazon recently and the fees were over 30%! Amazon requiring that sellers can't offer a lower price elsewhere drives the prices up on Amazon and off Amazon. Primarily, they're trying to prevent sellers from directing buyers to their own website where they can offer the product at a lower price because there are no 30%+ fees.

[ryukoposting]

To what extent do the randomly-named Chinese Amazon storefronts manage to circumvent Amazon's price-competition algo? If you make a storefront named qwduburtf on Amazon and a storefront named civendntip on eBay, I can't imagine Amazon would be able to match up your product listings between the two sites.

[Salgat]

Amazon's biggest advantage is that they can sell fakes and patent violating products to undercut other retailers.

[time0ut]

Don’t forget copyright violating products.

[jedberg]

> Costco makes the majority of its money from memberships

Not really. Their total profits last year were $2.8B and their membership income was $1.5B. It only represents the majority if you assume there is no cost to their membership income. But we know there is, because they have to have employees who do nothing but process memberships and they have to maintain all their membership benefits which also requires employees.

It's fair to say that about 1/2 of their income is from memberships though, which is still high.

[dragonwriter]

> Their total profits last year were $2.8B and their membership income was $1.5B.

According to their 2022 annual report, their membership revenue for their reporting year (the 52 week period ending August 28, 2022) was $4.2B, and their net income for the same period was $5.9B, so neither your numbers nor the relationship between them seems to be correct, unless Costco committed massive securities fraud.

https://investor.costco.com/financials/annual-reports-and-pr...

[recursive]

If those numbers are precisely accurate, it should be noted that Costco could be paying up to $100M to process memberships, and it would still literally actually be most of their profit. Also "about 1/2" and "most" are not mutually inclusive. In fact, I'd expect they mutually occur with some frequency.

[pharrington]

The assumption is that everything the business does has a cost.

[dmix]

> The agreement often has a stipulation that the same product can never be cheaper elsewhere which is sometimes easy as WalMart gets specific SKUs.

Are you sure this is done overtly by Walmart? As the article says Amazon had this policy but it was dropped because of EU and US gov pressure. I'd be surprised if Walmart got an exception.

Unless there's some distinction for retail stores not just online.

[darkarmani]

Isn't that totally different? I thought brick and mortar stores actually buy inventory (or commit to buy orders in this age of just-in-time) where Amazon is just the middleman connecting buyers and sellers and charging fees on both ends.

If Amazon wants to commit to certain sizes of orders, I'm sure the vendors will be happy with contractual price setting.

[viraptor]

Amazon warehouse inventory is held ahead of time. That's how the commitment to some stock levels works today.

[resoluteteeth]

> The agreement often has a stipulation that the same product can never be cheaper elsewhere which is sometimes easy as WalMart gets specific SKUs

Does the trick of creating different SKUs work for amazon though? If not, it seems like what they're doing might be worse. Since according to the article they're now enforcing the rule against having lower prices elsewhere through software, depending on how it's implemented it could end up having a much broader effect.

[Guvante]

Amazon Prime isn't the same as Costco Membership unless you ignore everything beyond "richer customers are willing to pay for it".

Costco makes its profit off its membership.

Amazon Prime offers a product at less than cost and then shifts that cost onto its manufacturers.

After all if I am paying Amazon for Prime shouldn't Amazon pay for the difference between more typical free shipping and two day shipping at minimum? Isn't that what the payment is for?

The reality is Amazon Prime is more akin to a loss leader and Amazon realized it could use its market position to avoid inflating it's price to reflect that loss by putting pressure on its partners.

Of course whether this is legal is an open question obviously but it certainly isn't the same as Costco using a membership as a profit source.

Walmart vs Amazon is more nuanced as the difference gets into market overlaps. Should Amazon be able to force you to use its fulfillment service to use its website (which is generally illegal for drop ship style setups like Amazon who doesn't take ownership).

So Amazon is certainly rubbing against a "you can't force bundling like that". The question is whether their "forcing" you in the way their website heavily focuses on Prime.