alt Hacker NewsThe Amazon tax
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Imo it's all about all ads. And then it is about all middlemen.even real estate agents make ir more expensive for both - seller and buyer
An idea I've played around with in the past is to have some sort of law that limits how much revenue a company can make from ads. For example, a law that says "A company cannot make more than 10% of its gross revenue from ads or selling customer data".
This kind of law would wreak havoc for certain companies (and content creators). However, just like prediction markets, ads distort and ruin the very thing they are trying to optimize.
Sort by "Best Sellers" always on Amazon. "Featured" is driven by ads. Also? Firefox with Ublock Origin blocks ads (but it's an endless cat and mouse game).
I'm curious how similar/different this is to buying shelf space or aisle placement in physical stores.
In the product search results game, I imagine Google and Amazon will soon have competition from AI chatbots linking to product pages in response to user queries. Also, OpenAI is getting into ad business. Seems like that will add a different place where book publishers could run ads? They will also need to optimize their web pages to be useful to bots looking for information.
The real amazon tax is getting people to think shipping fees are part of the item, and causing one $5 cable+shipping to be $10. Three $5 cables and shipping is $30. tbh if amazon went up in smoke like wildberries I would not even flinch.
Closed amazon account when Bz decided to get into politics. I realize I can buy everything I need “in the real world” and thru manufacture websites directly. I do not miss it.
Some European countries, including UK, have enough of a strong network of local supermarkets and department stores that Amazon is simply not necessary. I have not used Amazon in the last five years. Most of my family and friends rarely use it either.
There is little reason to when you can walk into a supermarket or department store, often with three or five of them within 1000 feet, and buy what you need at the normal marked price. If you cannot go there yourself, most of them offer home delivery anyway. You also know who you are buying from, you do not have to worry about questionable third-party sellers, and if there is a problem you can telephone a human being or simply walk back into the shop. What is not to like?
But yeah, not every city or country is lucky enough to have such a strong retail network. Amazon makes sense in many parts of the world. But I also think its success in those places is a sad indicator of weak local infra and underinvestment in local retail.
The world would probably be an economically healthier place if every town and region could support a strong network of supermarkets, department stores, and indie shops. It keeps more money circulating locally, supports more local jobs and improves local economy instead of funnelling all the money through one gigantic company.
I think Ad's may be the best and most profitable part of Amazon.
https://s-1.vercel.app/posts/marketplaces-airbnb-future-foun...
This is so true!
I rarely order anything from Amazon these days, maybe once or twice a year. Everything feels like a rip-off or fake. I don't trust the search function at all. Nor do I trust the customer ratings. The only exception is if I buy from a brand I already know that has its own brand-shop, owned directly by the manufacturer.
> When there are plenty of ads, the maker of the best air fryer now has to bid on ads as well, if only to protect the sales they were entitled to in the first place. Businesses continue to buy the ads—not because they’re dumb, but because the system has created a situation with few options.
Sure, this is probably accurate in many situations.
> The highest-yielding ad my publisher has tested so far [for Seth Godin's new book, The Knot] is the search "Seth Godin The Knot".
But not that one. If you cut spending on that ad to zero, you would lose an immeasurably small number of sales. The ad is high yield because people who search for "Seth Godin The Knot" are already planning to buy Seth Godin's The Knot. Letting other people display ads on top of that search won't dissuade them.
The search ads ostensibly solve the cold start problem: If a seller introduces a new product, how is that to be ranked? Well, they can buy some ads, get some ratings, and boot up their sales & search ranking. Great.
It of course also creates essentially perfect competition. Amazon will even tell you the top selling products across categories, so that no seller can make excess profits for long - others will quickly jump into the fray to compete that away.
This is of course the market working as intended - the sellers compete away any and all surplus. Normally that would be a good thing for consumers! Unfortunately the search ad tax is very real, and siphons off a good chunk of the surplus as monopolist rent.
This is all structural. A marketplace like this is a natural monopoly with massive network effects. And the allure of the search ad is irresistible - they literally can't not do it, lest their shareholders rebel.
Google ads work exactly the same way.
As a seller your only options are to either have better conversion economics than the competition (so you can win the ads bidding war - guess why every successful site on the internet is gameified to all hell, and why the amazon listing titles & descriptions look like they do) or to not play.
If you can create a viral hit for a product you can probably eke out excess profits for a few months - people want precisely your branded product and not a cheap knockoff, at least for a while.
("Excess profits" = anything above what will literally make the marginal seller say "it's not worth it", which is a very low bar when competing with the entire world)
I don't understand the "theft" or "stealing" angle here, other than as a clumsy rhetorical device. I can see an "unfair" angle, and the behavior is definitely bad for customers, but it's not theft. Theft and stealing are when someone unlawfully[1] takes something that belongs to you. But here, it's never established that whatever was taken ever belonged to either the consumer or the maker in the first place.
[1] The author tries to escape this requirement by calling it "legal theft" but that's an oxymoron.
My current strategy is to skip ads and skip any name that is just a jumble of letters. But the garbage producers are getting so good with AI they can create entire websites with US addresses and pictures of buildings and employees and none of it is real.
One could argue that Google Ads are jacking up the prices of hotels.
To me, this is an equivalent of a platform fee. If you didn't have a search platform, you'd most likely go with the big players, overpay, have a bad experience & be worse off.
Would love a similar post breaking down the rightmove (UK equivalent of zillow) tax. Fortunately there is currently a court case against them that might help. I am also starting a #RightmoveHygiene campaign to encourage people to spend less time on there.
You have to pay me to engage with Amazon.
They have become so big that they harm the buying power of the consumer and the selling power of the producer.
I know this first hand. Company had to give away 1-2 million in free engineering labor for the opportunity to obtain their business.
Have not bought anything from them in over 10 years and never will again.
The only reason I have Prime these days is for the unlimited photo storage and then some extra storage for video. It’s hard to find a convenient and cost effective way to free my data.
I can recommend looking up Yanis Varoufakis and his Technofeudalism.
I would have thought the Amazon tax is “free shipping” that has altered the pricing of every item, and now B&M retail is picking up the same pricing despite a much lower shipping overhead
Ads too, I guess
Amazon has no mercy, so neither do I.
In my defense, they started it. (I had purchased a stainless steel muffler with a lifetime warranty off of Amazon Auto, the thing was counterfeit, completely rusted through in less than a year, and Amazon would not honor their written warranty and I didn't care to fight it legally...)
So the next time they dropped my package off in my lobby when I have specific instructions to bring it to my front door? I never got it.
And unfortunately for them... it keeps happening now?
Like every other package that gets delivered?!
(They always believe this, apparently... either that, or their agreement with their delivery insurance services must eat the cost).
I've more than gotten my muffler refunded now and they're none the wiser, so win win really!
> The ad system they built isn’t illegal, but it’s pretty clear who it’s for.
"If you're not the customer, you're the product".
Well, Amazon actually did it. They made us the customer _AND_ the product. Hooray.
Like LOTS of other people, I, of course, use Amazon. But, more and more often... if I can find a product somewhere else within, say, 5-6%... I'll buy it that someplace else. Especially if that someplace else is actually a building I can walk into and inspect the thing I'm buying before I pay for it.
Shopping on Amazon is getting worse every day. How can it be good for Amazon in the long run that every time I buy something from their site, I actually have to spend time convincing myself that I'm not getting a knock-off product?
In the modern world, every single time money leaves my bank account I feel like I'm potentially being scammed. I hate it.
Turns out we ended up with paid search, but paid for by who? :D
Seems bad.
Offtopic: Amazon has removed the option to not store your credit card details when checking out items. There used to be a checkbox that allowed you to choose not to save your credit card details for future purchases.
It's gone and confirmed and acknowledged by their support which made me take a screenshot of the popup where the card details are entered to confirm it. They in turned wanted to give me a 15€ gift card for the inconvenience and told them that I wasn't there asking for a gift card or discount and refused it.
So every single time you purchase with your credit card if you do not want your details to be saved, you have to MANUALLY go to your personal settings and remove the added card from your last purchase. Fucking amazing.
On top of that listings are overflowed with chinese brands and/or items that have no correlation to what I'm looking for.
Can someone suggest better alternatives here in Europe?
The solution could be common evolving public protocols to create large alternative non-profit marketplaces.
I'm sympathetic to the points he makes. But it's hard to take it seriously when he makes his money selling marketing and he's complaining about cpc advertising. It's like if a horse breeder were complaining about cars
Large enough companies always set up rent mechanisms.
> Amazon is stealing from the customers they said they were here to serve.
The stealing is, of course, much more fundamental than the search tax.
I am reminded of the saying by 19th-century French social thinker Proudhon, who said: "La propriete? C'est le vol!" ("Property? Why, that's theft!") - he was describing interactions which, at that time, it was conceivably possible to manage collectively for the public benefit - taken over by individuals, institutions and mechanisms economically benefits a small few to the detriment of the majority (farmers and laborers). The Amazon product search example is different, but then, also not so different. I mean, it's just search - and the blog post author knows it could just be implemented reasonably so that people who want to find his book find his book. Then suddenly, Amazon put a fence around that field and demands you pay a part of your annual yield for it to allow you to farm that field, and not drive you off by force. And that metaphor is probably quite clear to you even though there are no farmers, fields or fences in the blog post.
Amazon's not stealing that money from its stockholders, which is who
Google has entered the chat, and also eBay and every aggregator site on the web.
Don't hate the player, hate the game. This is no different than grocery stores selling shelf space. It is not at all like theft (morally wrong) or taxes (infamously inefficient). And if you don't do it, you go out of business since you aren't competitive with someone that does. It's sad that such obvious rage bait makes it to the top of hacker news.
At least they are labeled as “Sponsored”. There’s probably a browser extension to remove them.
Has anyone found a useable fake review detector since Fakespot and Review Meta went down?
Not using Amazon (in light of geopolitical events and quite frankly, just not liking the way they do business or Jeff Bezos (as he presents himself to the world)) has been a net positive.
There was a time it was good and convenient and the worst of what they are wasn't quite so obvious but that time has passed.
I think AWS still cares about customer trust, but Amazon retail abandoned that at least a decade ago. The ads are so high-margin compared to retail though (biggest profit center after AWS) that I don't expect them to change anything.
Insinuating that there is one "best product" that Amazon magically knows is the best is quite an assumption. The best product might be completely different for different people and different depending on the time for the same person. Plus there are always new products being introduced and products being discontinued. I think we are mis assuming ill intent a little. Second issue is the assumption that there is always a fixed pie of demand for a product, when a new great product comes out more people will purchase from a category, its never fixed completely. This sounds like cope for book sales being lower than expected if we are being honest.
I like the stock
I'm sorry, but how does a business writer lead an article with garbage like this:
Amazon makes nearly a billion dollars in profit from search ads. Every week. Each week, they sell merchants and publishers enough search-distorting ads to capture a billion dollars in revenue.
Is it revenue or profit? They are not the same thing.
I'm honestly at the stage where I'm finding the same product but cheaper in the local retailer. I don't mean a dollar here or there, I mean a full 30% cheaper. Particularly most things food related. I used to be putting in an order weekly, I now haven't in almost three months.
No wonder Amazon sued Perplexity to forbid agents on their site, agents could cut through the crap and find what users wanted instead of what Amazon peddles. They even won the suit.
I think our only hope against platform enshitification is using agents that optimize our interests not theirs. They don't deserve human eyes on those SERPs.
Grocery stores and department stores have played games with what items they stock and where they stock it (location on the shelf is hugely important in a grocery store) for decades, it's just better hidden than the 'sponsored' text next to Amazon paid ads. It's infinitely easier to make a product and get it available on Amazon.com than it ever was to get your product into a grocery store.
>They know the best-reviewed, least-returned, best-priced model. The only purpose of the ads is to get you to pick an air fryer that isn’t that one
As others have pointed out, without ads, even if you make the best air fryer on the planet tomorrow, good luck getting people to realize that.
The market will fix this right? RIGHT?
Maybe we need ad blockers for Amazon ads.
Last week I searched for a "Eufy S350" security camera on Amazon. Instead of search results, Alexa for Shopping took over the entire screen, proceeded to tell me that the Eufy S350 doesn't exist, and then recommended a Eufy vacuum cleaner.
This feels comical to me today, but I can imagine a near future where paid AI ads gaslit you into believing that the product you searched for is vastly inferior to the product AI "recommends".
Long time Amazon seller/brand here (and ex-academic/game theorist) -- it's a little more complicated if you think about the various parties' incentives, but yeah we have a half-assed market equilibrium that sucks for everyone.
Amazon as the marketplace facilitator has an interesting job to run:
1) It wants customers to get exactly what they want (as measured by the minimal amount of clicking/scrolling/time it takes for a customer to hit the landing page -> complete shopping). This is mostly customer-centric.
2) It wants to promote as much competition as it can between products and brands so that no seller dominates the market. This is... mildly customer-centric so big sellers can't rest on their laurels, and mostly self-serving (so no single seller/brand can gain enough power to threaten Amazon).
3) Amazon has to strike a balance of #1 and #2 so that there's some opportunity for new entrants to enter any product space. Back in the days they structured search so that some percentage of results would be new sellers and products, and new products would get some amount of sessions to prove they convert within a certain statistical distribution to land a certain rank (BSR). Note the rise of alphabet soup Amazon brands is partially because they allowed for disposable brands that could be black-hatted, and partially because for a few years these sellers were just generating tons of new brands to share new SKU real estate on search results (so when you searched for "small kitchen colander" or what not, you'd find the same product being sold by 10 sockpuppet sellers occupying 10 search spaces, taking result space away from the other sellers).
But what if they can get everyone to partially pay for #3? Enter ads, where basically new and old brands pay to play for eyeballs on Amazon.
So if you think about it, Amazon is a search problem where you wanna push results such that the expected value of the results pushed yield the highest expected value, something along the lines of: Expected Value (EV) of your product = [your sales price] x [your product's conversion rate in the past X days] x [some confidence level of said conversion rate] - [returns] + [whatever other Amz secret sauce] + [Amazon PPC]
Amazon can get people to pay for their eyeballs, swap some seller blackhat tactics for others, and more or less keep OK results. So that's Amazon's end.
As an established seller -- I know my product converts at X%, so as long as the math works out where I spend $Y/click, expect it to convert at X%, and my profit Z > Y * X it's what I do (and the tax I pay), and I move that up and down depending on my inventory situation. If possible, yes, I would pass some of that down to price raises as long as the market's willing to bear it, so I can make a minimum margin requirement off my Amazon channel (which is the lowest, compared to my D2C website or through offline B&M channels, but I do so because my biggest volume is on-Amazon).
As a customer... yeah the default search results are "good enough" for the 80-20 crowd; the convenience, ease-to-checkout, and 1-2 day shipping wins them over. As a "nerdy" customer who likes researching products to get the best one, I used to research via online reviews and reddit (most of which are gamified in their own ways)... but now I use AI (ChatGPT, *not* Amazon's Alexa Shopping because it's not great) and mostly call it a day.
Enshittification for everyone that comes into contact with a corporation run with only profit (and profit growth) in mind.
One would be tempted to think that doing things different and actually providing a good service for consumers, sellers, etc would be a multibillion dollar business, but somehow it seems like it isn't.
The amazon tax holds nothing to the credit card tax. Credit cards have been driving prices up for decades with their behind the scenes fees that are passed onto the customer. All for "convenience" of the right to buy something because now they have created a near mandatory purchasing system duopoly.
For a while Amazon was good at discovering new books to read. Nowadays my ad-blocker blocks everything except for the book I am directly navigating to from the page. No discovery of new books is happening for me there anymore.
Another place to discover new books was Goodreads. Bought and left to rot by Amazon.
I don't buy many books anymore.