alt Hacker NewsAmazon seller/distributor/agency here; I've been in the space for over a decade.
The title is a little clickbait-y. As far as I understand it:
1. Think of Amazon as a search engine for products. 2. Amazon wants its site to be the lowest-price destination for products. 3. If Amazon finds your product on another website for lower than its own website, it'll just hide your listing from the search -- this is meant to be pro-consumer (when you go to Amazon you'll get the lowest price).
This is where it gets a bit more complicated: 4. Amazon sells ~40% of its goods under its own purchasing arm, known to sellers as Vendor Central. (These are items shipped and sold by Amazon.com). This purchasing arm wants X% margins from *brands, based on whatever their internal targets. From what I've experienced personally -- their terms are generally better than their competitors (Walmart/Target/Costco/Sams), so it's generally a no-brainer to sell directly to them when I can instead of selling direct.
So when 4 has a conflict of interest with #1-3, you get the systemic effect that in order for the sellers to get their **sweet purchase orders from Amazon, they now need to raise prices elsewhere so the purchasing arm gets their cut. The sellers don't HAVE to sell to Amazon, but then they'd miss out on giant POs from Amazon at good terms.
Designing a system to incentivize sellers to have their lowest prices on Amazon... I'm not sure if calling it a "widespread scheme to inflate prices" is the fairest thing.
*edit: Historically, Amazon VC basically ran at near break-even under Jeff, "your margin is my opportunity" and all that. Since Andy took over there's been a reshuffling of chairs and the different business units have different margin requirements now.
**edit2: the price inflation mostly affects big brands that sell 8+ figs/yr on Amazon, because smaller sellers don't get POs from VC (too small to bother).
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> 3. If Amazon finds your product on another website for lower than its own website, it'll just hide your listing from the search -- this is meant to be pro-consumer (when you go to Amazon you'll get the lowest price).
Most favored nation clauses are often considered anti-competitive.
Here’s an example where Amazon strait up increases prices.
There’s a great deal of self published fiction posted online for free. Amazon is happy for people to sell bundle that into a book and sell that.
Kindle Unlimited specifically requires authors to remove earlier copies of their own works to become part of kindle unlimited. Thus increasing the minimum price for everyone above what it would otherwise be.
Some authors make the transition and win, but many destroy their audience and thus current and future revenue sources like donations and patron subscribers. It’s a tempting infusion of cash, but the long term consequences can be devastating making the whole thing really predatory.
That isn't lowering prices at all, it is raising prices.
> Think of Amazon is a search engine for products.
> [Amazon's] own purchasing arm
...so we can't think of Amazon as just "a search engine", right?
You might as well hand someone a toy and say "Think of this as a toy gun. But this is where it gets a bit more complicated: 40% of these have a trigger that shoots bullets." Whom are you kidding?
Clearly with the scheme you described, these are morally two separate entities colluding with each other to use each others' huge powers in the market to raise prices and pocket more profit for themselves.
Thank you for your insight and sharing of your perspective. This system leads to some interesting conclusions and observations. One is, that it explains why big brand products made a significant dive in quality. My decades old bose QC25 where of superb quality at 250 € while my somewhat new Bose quiet comfort ultras priced at 350 € are of comparatively very poor quality.
It also opens the market for cheap knockoffs. If some chi-fi headphones for 60 bucks are almost as good as the big brands and the big US brands are forced for high prices despite the bad build quality by Amazon, another big seller website should emerge. Oh wait, this already happened with AliExpress and temu.
If Amazon finds your product on another website for lower than its own website, it'll just hide your listing from the search -- this is meant to be pro-consumer (when you go to Amazon you'll get the lowest price)
Yeah, no, this is meant to be pro-Amazon, not pro-consumer.
I wish ebay would hide listings that are more expensive than amazon. It's extremely frustrating getting amazon packages from ebay purchases. I make sure to 1 star all of them.
> when you go to Amazon you'll get the lowest price
> there's been a reshuffling of chairs
Hmm.. I think those two things are in conflict.
> The title is a little clickbait-y.
The attourney general of California disagrees with you.
This doesn't make sense; these days it seems like the majority of products on Amazon can also be found on AliExpress for a third of the price, both of them sold by FWHZHW. From what you're saying, these things should disappear from Amazon's search listings, but in my experience they're the ones promoted straight to the top, and anything else gets buried under that mountain.