[jasallen]

The difference is between retailer and marketplace. Both Amazon and Costco are retailers, and both could use that knowledge to decide what products to self-source for better retail margins. Either way, still a retailer, but maybe also a manufacturer / wholesaler.

But Amazon is also a marketplace. In that role it acts as a "rentable retail space". Using the data of the retailers in your marketplace to decide what to make/wholesale and then retail is another layer.

You could easily argue that it reduces to the same thing. But societally we've excepted that the retailer is a full layer in the system and gets full access to the data flowing through it. The marketplace itself is historically more of a fee-for-use type of thing, so its not an ingrained concept for us.

[dehrmann]

> But Amazon is also a marketplace

Meanwhile, https://news.ycombinator.com/item?id=24174276

"Amazon Liable for Defective Third-Party Products Rules CA Appellate Court"

It seems both regulators and Amazon want whether or not it's a marketplace to go both ways whenever it's convenient.

[cowpig]

In an ideal world regulators want to define Amazon as whatever best fits with the public's best interest (as opposed to what is convenient)

[IncRnd]

You're misreading the ruling. The ruling is for state law not federal and says the following, "The Appellate Court didn’t agree with Amazon’s stance. It noted that the product had been listed on Amazon, was stored in an Amazon warehouse, had payment facilitated by Amazon, and shipped it out in Amazon packaging, proving it to have a hand in getting it to Bolger and thus liable under California law." So, this stance will change depending on the product and what law is being alleged to have been broken.

[mdoms]

There's nothing definitional about "marketplace" that says you don't have to bear responsibility for what is bought and sold on your marketplace.

[legutierr]

This explanation makes the most sense to me, but there is something that you are leaving out. Not only is Amazon a marketplace, but it is THE marketplace. Amazon has an effective monopoly on small-seller logistics and marketplace services in the United States (and many other places), soup-to-nuts.

If you are anything other than a massive corporation, any manufacturer that chooses not to sell through Amazon and utilize all or most of its services (marketplace listing, payments, warehousing, delivery) will be at a massive cost disadvantage and will not be able to compete with other sellers that do choose to participate with Amazon.

And more significantly, perhaps, if you don't sell through Amazon's marketplace, you are often unable to compete with Amazon itself.

[awillen]

This just isn't really true. It depends on what type of product you're selling, but there are a huge number of independent ecommerce stores that do extremely well.

I sell dog treat mix (coopersdogtreats.com) - I do much better both in terms of margins and overall sales on my own website (with traffic coming primarily via paid FB ads) than on Amazon.

That's not even including other huge marketplaces like walmart.com, Chewy, Etsy, etc.

Amazon doesn't have a monopoly on small-seller logistics - I'm about to move all of my logistics over to a 3PL, and there are plenty that will cost-effectively work with startups (ShipBob, Shipmonk, etc. - just Google "ecommerce 3PL" and you'll see what I mean).

How much Amazon plays into your business obviously depends on the category, but the idea that it's impossible to compete in ecommerce unless you're on Amazon is an easily disproven myth.

[jtsiskin]

I think Shopify’s massive success means this likely isn’t this extreme

[Manuel_D]

I'm still not understanding the distinction here. Costco and Amazon both sell company-brand products, alongside non-company products. Costco and Amazon collect and analyze sales data from the sale of both company and non-company products.

[cgriswald]

You have the wrong mental model. Amazon isn’t Costco. Amazon is a shopping mall that has access to its tenants’ sales information and also owns an anchor store in the same mall.

Costco can determine that Best Brand shoes sell in its stores and decide to source shoes themselves and stop carrying Best Brand.

Amazon can determine that the Footlocker in their mall is making a killing selling Best Brand shoes and either sell Best Brand shoes in their anchor store or source their own shoes, all at a price that Footlocker can’t match. They can also advertise those shoes throughout their mall and change the layout so customers have to walk past their cheaper shoes to get to the Footlocker.

[Closi]

> Costco and Amazon collect and analyze sales data from the sale of both company and non-company products.

It's similar, although personally I think the relationship between the companies is meaningfully different:

Costco purchases product from manufacturers, and may choose to source product from other manufacturers (including under its own brand name). It uses it's own sales data to make this decision.

Amazon acts as a marketplace for other businesses to list and sell their own products. These businesses are online retailers which use the Amazon platform, and pay Amazon fees for this service. Amazon is then using other retailers sales data in order to inform it's own business.

The difference is with Costco it is their own sales data, while in Amazon it is the sales data of other retailers. It would be an issue if Walmart had access to Costco's sales data and not visa-versa (this would provide Walmart with an unfair competitive advantage). Similarly other smaller online retailers do not get access to Amazon's sales data, but Amazon get's access to the other retailers sales data who use their platform, and will then use this to compete with them.

[NegativeLatency]

When Costco sells a product they’ve already bought it (a retailer) on the other hand when Amazon sells something they’re just acting as a middle party for the item in most cases.

[FactolSarin]

All of Amazon's "we're not actually a monopoly" and "we're not responsible for defective products" arguments are based on this. They claim they are very much NOT a Costco or Walmart.

[elzbardico]

Costco buys the products it sells. Then it decides how and for how much they will be sold. Their product, paid for. That’s the difference

[eropple]

Amazon sells products and facilitates others' sales.

If Amazon carried the entirety of their inventory themselves like Costco or like Walmart used to be (before the expansion of their own online marketplace), it would be a distinctly different situation.

[LanceH]

Costco buys products and resells them. Costco's research numbers are paid for entirely by Costco.

Amazon rents space to merchants where those items are sold through the site for a fee. Amazon is never on the hook for a sale and is basically getting paid to do the market research to set up as a competitor.

Yes, Costco does do some referral sales but I can't think of anything which has gone on to be a Kirkland product.

[foerbert]

I think the difference they are getting at is something akin to this.

In one situation you run a stall and buy products from people to sell at that stall. At some point you use what you've learned doing this to sell your own product.

In the other, you don't buy anything from anybody. Instead, you rent out a stall for other people to sell things from. You then watch the stall and use that information to open your own stall.

The first case seems pretty normal to most people, I think. The person you were buying from originally doesn't inherently get some kind of assurance that you will always buy from them in the future. There's no difference to the seller if you buy from somebody else, don't sell any of that product, or make your own. We just don't expect that buying goods from somebody inherently adds any other kind of obligation. It's two equal parties making an exchange, and nothing more.

The second case, however, I think is not so clear cut. All of the sudden you have a lasting relationship between two unequal parties. These are the sorts of situations where you tend to find more implicit or inherent obligations on the participants. It's no longer the guy you sold that thing to not buying from you again, it's your landlord competing with you.

I'm not trying to pick a side here, so much as I am trying to explain why people might not see the two situations as identical. And of course there are plenty of real-world complications too.

[chaostheory]

> But Amazon is also a marketplace. In that role it acts as a "rentable retail space".

Most brick and mortar retailers also sell space to manufacturers. Product positioning in the store and even on the shelves isnt solely due to UX

[lsaferite]

So how do you factor in the recent ruling in California?

> An appeals court in California has ruled that Amazon can be held liable for products sold through its marketplace by a third-party seller

That seems to obviate the distinction of 'marketplace facilitator' vs. 'retailer' for them. That makes them much more like Costco with a special relationship with vendors to set up vendor-specific sections in their store.

Personally, I've always detested the 3rd-party market in Amazon and wouldn't mind seeing it go away.

[hirako2000]

Amazon doesn't see it that way, their optimised their business as an ad platform + logistic solution. Higher margins there than bothering acting as sellers with lower and not even guaranteed margins.

[hirako2000]

Amazon doesn't see it that way, their optimised their business as an ad platform + logistic solution. Higher margins there than bothering acting as sellers with risky margins.

[tlogan]

Majority of big retails also rent majority of their shelves to vendors. This is called consignment contract.

So no big difference...

[Nasrudith]

That sounds awfully like the Platform vs Publisher distinction "logic".