1) How is that different than a department store? If you go into housewares at Macy's you'll see their own branded stuff along with other brands. So at issue is not the practice itself, but rather that the digital marketplace makes it easier and more efficient.
2) The consumer (along with Amazon) is a beneficiary here. The losers are brands trying to sell commodity items at a markup. The play is not to undercut all the power strip sellers (to take an example) and once they are out of business, jack up the price. The play is to take the margin due to marketing and brand equity from the sellers and split it between the consumer and Jeff Bezos, so rather than being harmed, the consumer benefits from this.
I think it is different. When a department store buys a third-party product, it pays for it and the Store bears the risk of the item not selling. If Macy's decides to make their own brand, they did so by transferring risk from manufacturer to themselves in the beginning; if a product didn't sell enough, they had stake in it. There are some successes (store-brands) and some failures (brands they bought, never worked)
In the Amazon Basics case, AMZN doesn't own inventory for the product at all. All the risk is to be borne by the 3rd party manufacturer. When Amazon looks at its data and sees a product succeeding, it creates a Basics product with no risk - it knows this thing sells. There is no way Amazon can 'fail' per se.
This essentially is the difference. Any manufacturer is likely scared of success on the Amazon Marketplace. If too successful, it can be Amazon-Basic'ed.
> The consumer (along with Amazon) is a beneficiary here. The losers are brands trying to sell commodity items at a markup.
I think in the short-term for that product - yes, the consumer finds a cheaper product, but Amazon will always have an economies-of-scale advantage.
However, long-term, I think innovators will not know if making a highly successful product (which is always difficult to sell cheap because scale isn't achieved) is worth it.
I found this episode from Planet Money pretty informative: https://www.npr.org/sections/money/2019/02/22/697170790/anti...
If Macy's sells a third party product (say, a piece of cookware) and sees it doing well, then makes and sells a copy of it they don't seem to have taken more risk than Amazon.
It also feels pretty similar to what fashion designers have accused department stores of doing for decades: letting them take the risk, then "following fast" (or stealing designs, depending on your perspective) when something turns out to be popular.
It's 100% the exact same thing. Go to Walmart and see thousands of "Great Value" products and you'll get the exact same thing. Warren is off her rocker on this one. We have real tech monopolies in the Cable/ISP industry but we're talking about Amazon and Facebook.
If 90% of retail stores were Walmart because they owned a significant percentage of real-estate in key markets (thus, preventing other retailers from moving in), then their Great Value offerings would also be anti-competitive.
Amazon's behavior is a textbook anti-competition. They literally build copies of products offered by other merchants on their site, then rank them higher in search results, often times, driving the merchants out of business.
That's just incorrect. There's nothing wrong with controlling 100% of the market share, as long as you don't use your position to illegally prevent competition.
> Amazon's behavior is a textbook anti-competition.
That completely counters the point you just made. Amazon accounts for maybe 5% of retail sales, and Walmart is closer to 15%. Even in the eCommerce market their share is around 50%. Vastly lower than the 90% you threw out there.
> They literally build copies of products offered by other merchants on their site
Every retail company does this through suppliers. It's called "white label" and it's an industry standard. And Amazon does not build them, they license another companies product.
> then rank them higher in search results,
Citation needed.
> often times, driving the merchants out of business.
Again, citation needed. Particularly the "often times".
The difference would be Amazon's [alleged] monopoly power.
> 2) The consumer (along with Amazon) is a beneficiary here. The losers are brands trying to sell commodity items at a markup. The play is not to undercut all the power strip sellers (to take an example) and once they are out of business, jack up the price. The play is to take the margin due to marketing and brand equity from the sellers and split it between the consumer and Jeff Bezos, so rather than being harmed, the consumer benefits from this.
That seems like a very charitable way of describing the situation, and even if accurate may only remain true in the short term. Whether undercutting branded sellers is the goal or not, that's exactly what's happening--even as you charitably describe it. What happens ten years down the road when those brands are gone due to Amazon's allegedly benevolent undercutting?
I'm not sure about the ultimate merits here (in fact, I'm a bit skeptical of the claim that Amazon has all of the market power that some say it does). But I think you may be dismissing this all a bit too quickly.
I don't see Amazon as being particularly more of a monopoly than Walmart. If Amazon was a traditional brick and mortar business, would we even be having this conversation?
A big chain consumes the market and puts others our of businesses and it is just how things are. A new internet company goes from niche to cannot be ignored and it is scary change despite the impact being essentially the same.
Combine that with openly envious old media and their selective condemnation. I honestly suspect the real reason is that tech companies don't buy enough TV ads for their liking given the softball treatment of ones that do frequently like cable.
It doesn't matter. The power strips are still being manufactured at the same factory in China.
As I said before, I'm not convinced that all of these things will actually happen. But the answer can't be as simple as "who cares...Amazon is just cutting out the middle man."
Tesco infamously had 24 ways of extracting extra money from suppliers via back margin. The front margin is the traditional agreed buying price.
