It is none of Amazons business what prices they put when they list their wares on other services, the only reason they care is that they want to crush the competition.
Dictating how retailers can interact with your competitors is anti-competitive. Dictating what prices they can offer when they put up listings is a part of that, it is anti-competitive.
It's exactly their business. Amazon is going to use the limited "shelf space" to promote and highlight those products which are most likely to sell (and to generate best margins). If a product is for sale for less elsewhere, it's less likely to do so, so why should Amazon waste the "shelf space"?
This is no different than what non-e-commerce stores (such as Walmart) have been doing for years.
Amazon doesn’t need to promote every single item they sell and it would be meaningless for them to do so. They have a long tail of items which rarely sell and only show up on very specific queries disproving any kind of limited shelf space argument.
As a simple practical manner a small manufacturer can more cheaply sell products at their factory than the overhead of selling through Amazon or anywhere else. You often see this where mid sized brewery offers beer kegs more cheaply on location.
Amazon’s policy simply increases prices without any benefit to consumers or the overall economy.
Overstock & Wayfair scan + compare identical & similar listings at Amazon and other sites, and will message sellers if their price is not the better price.
It's annoyingly a pretty standard practice. And they will see through the "different SKU" trick simply by comparing the product images.
I think that's a good solution in this case (ban it for everyone), but remember that there are different rules for companies who are found to have monopolies in a specific market. Something a monopolist does could be illegal while being completely legal for their competitors (who don't have a monopoly).
To be fair, every single wholesaler operates this way.
I have personalky spoken to wholesalers who sell widgets X (lighters etc) to retail stores.
If the retail stores undercut everyone else and drop the price below MSRP, they will exclude them in the future. There is centralized price control even though the retailers are free to do what they want.
That is done by auto dealers and anyone else who does MSRP. The difference is that they are still competing in that product category. Amazon on the other hand is a platform that stands BEHIND them. This leads to an emergent price cartel, just like in the propu lica piece on NYC real estate:
You can repeat that comment here as many times as you want but it will not make it a valid one. Amazon is practically a monopoly, and they have reached that position by often selling goods below COG prices, incurring losses but outliving the competition. Now without a competitive marketplace for quite a lot of stuff they can dictate the prices at a loss for everyone except them.
If somebody was to challenge them with lower prices they can just repeat the cycle. They simply do not have proper competition for a lot of stuff and they are abusing it.
Amazon isn't a monopoly by any definition. There are plenty of places to buy things. Repeating it over and over again won't change reality. Feel free to bookmark this and come back to it 10 years from now. Amazon won't be broken up, either.
Customers are so lazy they want the government do everything for them. If you don't like Amazon, close the tab and go to eBay.com or Walmart.com. It's very easy, and can be done in seconds. This isn't like telecom monopolies where you can't actually switch.
I will say that I used to buy stuff from AMZN all the time and now I hardly ever do.
For me the last straw was when Amazon Prime deliveries stopped arriving in two days despite being claimed to arrive in two. It made a difference because in two days it could be a hassle to drive to the store but in five days I can easily find the time.
Not long after that, Prime service became officially five days at my location while Amazon was shouting to the rooftops that other people were getting one day. Around this time it seemed every other retailer was trying to impress me with fulfillment and often shipping is free if you buy $200 of camera equipment or $80 worth of games, even when it isn't it isn't very expensive but it is always faster than AMZN, I even get Ebay packages from Japan faster than AMZN gets me packages from the next state.
There was also the rising problem that the quality of the listings was going down on AMZN; I'm not so concerned that the $24 product is crowding out the $17 product but rather that there are so many junk products that crowd out good products. On top of that there are many product listings that make no sense at all and it all adds up to a stressful process of sifting through a lot of junk and then not knowing if some absolute garbage is going to show up at my door.
So I went from buying something on AMZN probably several times a week to now less than once a month... I canceled my Prime subscription because I couldn't have any self respect if I was paying a subscription for something that was worse than average as opposed to better than average. And boy is it annoying to shop on AMZN now. The only thing you have to click more times than to cancel AMZN Prime is to order something from AMZN without signing up for a free trial of Prime.
For b2c monopolies matters, for b2b it is enough to be a dominant player to engage on a lot of harmful anti-competitive practices. This is a b2b situation that harms consumers, in that situation it doesn't matter that there are competitors, what matters is how much power Amazon has over vendors.
I disagree. Demanding the lowest price does not harm consumers. Overstock, Wayfair, Walmart and others do the same thing. The result is the lowest price for a given product on all sites. This is unquestionably good for consumers.
This is very short sighted. Lower prices inevitably come at a cost to quality. Normally this is corrected for in physical stores (you can see if something looks cheap), but it's not so easy with online shops. So yea, everything's cheap now because Amazon/Walmart/Temu and the like drove prices into the ground, but it's also all garbage. And the quality alternatives? Mostly gone because consumers flocked to cheap products.
> Most disagrees with you here, including those who makes the laws and the courts.
Downvotes don't mean anything. Most of the folks on here have no idea how e-commerce works. Amazon will win. It's simple to see - them losing would imply they are obligated to feature higher prices, which is clearly worse for customers and inherently at odds with what the FTC is supposedly trying to accomplish.
To be clear, you disagree because you fundamentally don't understand what's going on. I'll explain it to you.
A company makes a product - it costs $10 per unit to make. To list and sell with Amazon, they are charged $12 per unit. To make a profit the company adds and additional $1 per unit. They sell the product on Amazon for $23 per unit.
Online retailer Foo also has a store, and provide the same services that Amazon for their online shop at $5 per unit. The online retailer adds a profit of $2 per unit. Total price $17 per unit. Retailer Foo is more $ efficient for those services as a result customers price compare. Foo is rewarded for their effi with higher volume, manufacturer is rewarded with higher profit and consumer is rewarded with lower prices. Enforcing market competition led to all 3 parties involved being rewarded. Retailer Foo over time grows a larger customer base as people learn to price compare with them and forces Amazon to stop rent seeking.
But the above doesn't happen in the real world. Amazon enforces that the retailer lower their price on Amazon to $17, while still collecting $12 per unit. The company now can sell on foo, but only by selling on Amazon at a loss. They can't afford that amount of loss from Amazon and stay in business. So Amazon avoids competition. They can't pull their product from Amazon because not enough customers vist Foo retailer yet to make up the volume.
So in the end Foo retailer is more dollar efficient, but is prevented from growing and benefiting the marketplace. Amazon leverages its outside market size to avoid competition. Market participants preventing competition is against the benefits of capitalism and harms the consumer. So, it benefits the consumer to ensure Amazon has to actually compete with the more efficient competitor and stop rent selling behavior.
I do understand, but what you're describing is bad for Amazon's customers, as you note yourself.
Furthermore, again, no one is obligated to sell with Amazon. There are thousands, if not tens of thousands of sellers who do not sell their stuff on Amazon. It's not some requirement to do business in the 21st century.
In any case, we can come back to this case a year from now, and we can pretend to be shocked when nothing meaningful happens to Amazon.
I think you're looking at the short term and small scale instead of the long term and large / societal scale.
Yes I'm the short term Amazon's customers don't get the discount they could get om Foo retail. Bit then they become Foo retailer customers and they benefit. Too many things optimize for the small scale.
Similarly Amazon's upon losing customers to Foo retailer has to become more efficient overall (or reduce its rent seeking fee) to stop losing customers. So now all of Amazon's customers for that product benefit, even those that didn't move. And potentially even those customers for other Amazon products.
This is the purpose of capitalism - marker competition. Nobody wins with laisse-fair capitalism except rent seekers. Society benefits from market competition in capitalism and this is pushing for it.
You must be aware that producers can sell their own product and not be dependent on neither Amazon, nor any other middle man.
If I make light bulbs and sell them to customers through my own channels – exactly who is the rent seeker?
In my industry there are actors that are as dominant as Amazon are in retail, but there's also a huge part of the industry who just sell directly to the customer. It's your own choice. If you don't accept Amazon's terms, you don't have to do business with them. And vice versa.
That's a nasty way of arguing against his or her point. And "most" in this comment thread seem to have no idea of how sales and economics work. But go ahead, make a government Amazon like everybody is suggesting here. It's not like it's been done before? Government controlled production and distribution of goods, seems like a fresh new idea...
https://www.law.cornell.edu/wex/monopoly "For instance, the term monopoly may be referring to instances where: [...] There are many buyers or sellers, but one actor has enough market share to dictate prices (near monopolies)"
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I'm not replying to anything you might reply with because the rest of your comments in this thread have clearly been in bad faith. But this was one of the few smoking gun comments betraying either a biased position you hold or your lack of background on the topic, so it was easy enough to just post a link to an authoritative source + definition and just move on.
No, it's an extremely valid point. Government antitrust policy has been heavily shaped by Robert Bork's "The Antitrust Paradox" which proposes that antitrust law should only focus on consumer welfare rather than market structure or number of competitors.
It's not pro-consumer in any way. If the seller can profitably list it for a given price on a given platform, competition will almost certainly drive their price down to that level. The only time a policy like this becomes significant is if another platform, or the sellers own platform, can offer the product for cheaper than Amazon (eg. maybe they can ship straight from the factory), in which case this policy would force them to raise their prices, while simultaneously removing potential competitive pressure on Amazon.
Your assumption here is that they have to sell on Amazon to begin with, which they do not. There are plenty of products that you cannot buy on Amazon, so your entire post is ridiculous as it shows again, you don't need Amazon to succeed to begin with.
You are a seller. Amazon makes up 40% of your sales. You have your own first party website where you can profitably offer your product for 5% less and still make an additional 10% profit but it only makes up 5% of your sales currently.
What's your move in this position?
You can't just imagine all companies as perfect frictionless spherical interchangeable cows. In reality companies as large as Amazon can have significant market distorting effect, while much smaller companies might have to choose between their principles and going out of business.
What about taking out an ad to let people know where to buy your cheaper item? People didn't know walmart.com existed until a tv ad told them. Doesn't seem unreasonable to take some of the saving from not selling on Amazon and use it for services the platform was providing (discoverability).
You can lower the product for 5% on both your site and on Amazon. Since Amazon makes up the plurality of your sales you gain more sales both there and on your site. Everyone wins except for you, and such is the life of race-to-the-bottom e-commerce sales.
What I'm describing is already what happens, by the way. Look at Anker for an example.
Which is why your scenario here wont happen. Thanks for clarifying so well why your argument "there is no consumer harm" is bullshit, what you said here means you know that what Amazon does here increases prices.
The consumer is Amazon’s end customer, not the seller. Amazon sellers can and do take a loss to sell on Amazon, and ultimately the seller's fate is of no concern to Amazon. Again, they don't have to sell on Amazon to begin with. I buy plenty of bike parts, for example directly on their site and they're not even offered to Amazon to begin with.
How is Amazon forcing them to raise prices on other platforms pro consumer? The only one who benefits from this arrangement is Amazon, everyone else including the consumer just loses out.
Amazon is not forcing them to raise prices on other platforms? Amazon is telling their sellers that they must offer the best price on their platform. That does not necessarily mean they have to raise prices on other platforms.
> That does not necessarily mean they have to raise prices on other platforms.
It does, since losing sales on Amazon costs them more than raising the price on other platforms then that is what they will do, since companies are motivated by profit. Amazon knows this, that as a dominant market player if they add this rules the vendors will have to abide it since they will lose more from not using Amazon.
This is how anti-competitive practices works and why we have laws against them.
What you're saying doesn't make any sense. They could also just lower prices on other platforms - good for the customer. They can and should continue to lower prices, also good for the customer, until it is no longer profitable for them.
If they decide to raise prices, then that has more to do with the seller than Amazon.
If another ecommerce platform wants to compete on price to encourage customers to shop there, they cannot. Any discounts will only go to the seller's bottomline. How is that helping customers?
Clearly you are not a believer in free markets, because by the theory of free markets these prices would naturally arrive at the lowest possible price all on their own.
You are right that this policy is very simple, it's very clear both mathematically and logically. Companies cannot lower their prices lower than their costs. If costs are variable across platforms but prices are fixed to a single value than this will de-facto result in INCREASED prices. If this policy causes someone to leave a platform, that STILL doesn't result in prices any lower than they would absent the rule.
In fact, the sheer existence of the rule is a clear statement from Amazon that they believe they have significant and durable market pricing power, since if they didn't, this policy would clearly lead to sellers and buyers leaving their platform.
What you are advocating for here is the opposite of a free market. Two independent parties contracting with each other and agreeing to a most favored nation clause without government intervention is a free market: either party may choose to leave the relationship. The government stepping in restrict parties’ ability to contract as they see fit is a restraint on the market.
In a free market sellers will leave the Amazon ecosystem and move to a platform with less restrictive agreements, resulting in lower consumer prices (albeit with less availability). That’s exactly what GP is arguing. Obviously GP believes in a free market.
Amazon’s belief in their own market power is irrelevant.
Yes, because there are not literally thousands of e-commerce stores out there. Amazon is the only one. UPS, USPS and FedEx don't exist either. You must use Prime to transport your stuff.
Look, with this reasoning there is literally no world in which Amazon can be implicated for monopoly abuse of power. Apparently, having any other option (even if it is damaged by monopoly abuse) is good enough for you.
Clearly the FTC disagrees with your logic, and I'm glad they do. FedEx, UPS and USPS should be sued too if they did what Amazon is doing.
> It is none of Amazons business what prices they put when they list their wares on other services…
It is literally Amazon’s business to offer pricing at equal to or better than their competitors.
> …the only reason they care is that they want to crush the competition.
Every company wants to beat their competition, and many (most?) want to “crush” their competition. Don’t you think Target wants to crush Amazon? Don’t you think Google wants to crush Apple in smartphone sales? Don’t you think a local retailer would love to crush Amazon for products in their niche?
The only question here is whether Amazon is doing this in an abusive way and/or a way that negatively impacts consumers.
Dictating how retailers can interact with your competitors is anti-competitive. Dictating what prices they can offer when they put up listings is a part of that, it is anti-competitive.