[binarysolo]

Amazon 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).

[gwd]

> 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).

Stockholm syndrome at its finest -- reinterpreting "punishing a seller if an item is cheaper anywhere else on the internet, even a site they don't directly control" as "pro-consumer".

If Amazon really were a search engine for their own products, they should just give an accurate answer for their own site. If they really wanted to be pro-consumer, they'd say "Available cheaper here: ..."

ETA: Showing competitor's prices could still be a strategic win for Amazon. It conditions users to always first check Amazon; and most of the time if it's cheaper, the ease of one-click ordering and/or batching deliveries should make it worth ordering from Amazon even if it's a few dollars cheaper elsewhere.

[ChoGGi]

> If they really wanted to be pro-consumer, they'd say "Available cheaper here: ..."

Which company does that?

[libertine]

The elephant in the room is that Amazon keeps increasing their fees.

So if someone needs to adjust the price to accommodate Amazon fees, on Amazon, they're penalized.

Not to mention increasing ad costs, which at this point is another fee.

It's not for the benefit of the consumer, it's for the benefit of Amazon: Amazon wants people to buy on Amazon at the lowest cost for the consumer and at the highest margin for Amazon - they won't sacrifice their fees.

[RankingMember]

Hell, even something as simple as their sorting/filtering is so broken/clunky as to be anti-consumer. Try sorting lowest-to-highest and seeing how hard it is to actually understand the final price of everything that pops up (amidst all the sponsored trash).

[pnt12]

This reads like propaganda. Amazon has no business de-listing products because of their price elsewhere.

If it wanted to be pro-consumer, I don't know, it could warn the consumer the price is lower somewhere else, and point them there, like a good search engine of products! Sounds ridiculous? Yeah, because those claims are a bit ridiculous too.

[JKCalhoun]

"…[Amazon] could warn the consumer the price is lower somewhere else, and point them there…"

That would be a miracle.

(On 34th Street.)

[terminalshort]

Rules around pricing like that are standard retail practice since well before the internet even existed.

[cebert]

I don’t like it, but it is Amazon’s web property and they can do whatever they want. They could put up political banners on the top of their website, but I wouldn’t recommend it with how divided the country is.

[mitthrowaway2]

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.

[binarysolo]

So consider the alternative (because this happened to us): 5-6 years back, one of our brand stores sold a thing (https://www.amazon.com/dp/B08DKG3NX7) that created an entire niche of products, and 6 months after our success, a buncha clones came out of the woodwork.

On Amazon, they created listings that imitated our copy and images. On AliExpress/Taobao/etc., they ripped off our images and pretended to be us. Deciding which product/listing is the original product is super nontrivial especially when there's international trademarking and IP law (or lack thereof) involved.

[rjh29]

Agreed. The only explanation is that people don't want to use aliexpress so it's not counted as a direct competitor. If you're prepared to wait even a week, you can get less than 1/3 the price and this has been true for over a decade!

[flanked-evergl]

This is just not true. Sure if you want trash you can get it on Aliexpress and Amazon, but lots of good quality stuff is not available on Aliexpress at all.

Even some Chinese manufacturers have a broader range on Amazon than Aliexpress.

[noncoml]

> can also be found on AliExpress for a third of the price, both of them sold by FWHZHW

Am I a conspiracy theorist to believe that Amazon is behind Trump’s decision to end the de minimis?

[NavinF]

AliExpress obviously isn't comparable and the price is irrelevant when it takes 2-3 weeks vs same-day/1day

[wolpoli]

> 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.

[Paracompact]

Indeed, I don't know in what world you would call that pro-consumer behavior. In fact I thought I recall Amazon already got sued for this kind of agreement in their contracts, but maybe it's now merely a non-contractual agreement for doing business with Amazon?

https://www.ftc.gov/news-events/news/press-releases/2023/09/...

> Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.

[acrump]

> 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 a funny idea of pro-consumer, as we all know that the result of this is increased prices.

The seller can not afford to reduce the Amazon price to match other channels and still pay Amazon's margin, or afford to have the product hidden and lose the channel - and so is forced to increase the price elsewhere.

The net result is prices increase across the board, and Amazon gets to tell customers they are getting the 'lowest price', but they did it by increasing the price across the whole market.

This is pro-Amazon both in terms of margin and market share. In many ways, it is also pro-competitor/seller/distributor/agency... but it is very much anti-consumer.

And, as I hope we will soon see proven, illegal.

[fhennig]

Like other commentators I'd argue that the intentions don't matter much, the outcome does.

"The purpose of a system is what it does" (https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...)

[ralfd]

https://www.astralcodexten.com/p/come-on-obviously-the-purpo...

[oblio]

Brilliant. Like how Google websites constantly deprioritized Firefox (and promoted Chrome) and slowly killed it.

[mihaaly]

"Designing a system to incentivize sellers to have their lowest prices on Amazon..." so that vendors like the above person getting "the systemic effect that in order for the sellers to get their *sweet purchase orders from Amazon, they now need to raise prices elsewhere" IS intentional!

'Designing a sytem' to 'raise prices elsewhere'!

Probably the person's intent was to protect Amazon, but in my eye this is just providing a very strong real evidence against them now.

[Retric]

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.

[ChoGGi]

One might say Amazon is a dire strait for hopeful authors?

[nielsbot]

> this is meant to be pro-consumer

it's pro-Amazon and anti-competition, surely. (Amazon doesn't care about consumers except as profit sources)

> The sellers don't HAVE to sell to Amazon, but then they'd miss out on giant POs from Amazon at good terms.

So they have to sell to Amazon?

> I'm not sure if calling it a "widespread scheme to inflate prices" is the fairest thing.

It's fair if it's true, effectively or otherwise.

[ToValueFunfetti]

The word 'scheme' means that it isn't true if it's only true effectively. If you concede that Amazon didn't deliberately work towards this outcome, you concede that it's unfair to call it a scheme.

[philipwhiuk]

> 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).

Calling this pro-consumer is insane.

[Guvante]

That isn't lowering prices at all, it is raising prices.

[dataflow]

> 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.

[binarysolo]

That is probably part of the court case: does Amazon.com searches favor VC purchasing in any way, shape, or form. This would require disclosure of their algorithm weights and what not, which they would then need to redact so people can't reverse engineer their algos to SEO Amazon's search.

My understanding is they got caught with this in the mid 2010s and as a result had to come very clean on some of this inter-departmental stuff. Most people who've worked at/with Amazon know its fief-like bureaucracy and clean delineation of business units (as both a strength and a weakness), so I'd be curious if there was more to it.

Then the other question would be: if you run a system that has certain emergent behaviors coming from it, without direct collusion -- how much would you be on the hook for various things that do end up happening? It makes sense that Amazon search wants lowest prices on Amazon, and it makes sense that Amazon VC wants margin, so when the two effects result in price inflation is that Amazon's problem.

IANAL

[MrDarcy]

I re-read your post three times and cannot see how your first hand account of this practice does not square perfectly and ring true with the assertion Amazon has put in place a “widespread scheme to inflate prices.”

Edit: including how they protect their margin!

[NewJazz]

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.

[binarysolo]

"Aligned interest"

[behringer]

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.

[ipaddr]

Why wouldn't you reuse Amazon packaging when sending an item on ebay?

[pavel_lishin]

It sure sounds like Amazon is fucking you as both a buyer, and a seller - and yet, your comment comes off as very defensive of Amazon, as if they're a blameless party with no agency here, subject wholly to the whims of some invisible hand that they themselves have built and are operating.

[mihaaly]

| Designing a system to incentivize sellers to have their lowest prices on Amazon...

Is not what you conlude, not at all, and is contradicting yourself just two lines up:

| they now need to raise prices elsewhere

Bingo! The claim exactly! And you really say, that this is not a widespread, also as you described intentionally designed systematic effort to infalte prices?! Come on!! : /

[hypercube33]

The thing I noticed and is not talked about is used books on Amazon. There was a golden time when they were effectively a buck each due to companies processing so many systematically and now you can't find a used book there that isn't a few dollars off new at best.

Does anyone know what happened here?

[terminalshort]

The market realized that a used book in good condition is practically the same as a new one. The rest is just supply / demand.

[rationalist]

I buy my used (and sometimes new) books off of eBay.

eBay is a better bookstore than Amazon now.

[yndoendo]

I will never financially support Amazon ever in my life time. Any product or service that is exclusive to Amazon is not worth it.

I have stopped going to movies that are made and published by MGM. I have no intent to watch thew new James Bond movies.

[Nekorosu]

How did you manage to turn "increase their lowest price to appear on Amazon" into "incentivise sellers to have their lowest prices on Amazon"?

[akst]

> 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).

It’s not pro-consumer, take two seconds to consider second order effects here. If a producer can sell for lower elsewhere they can’t compete on price with Amazon unless they want to lose amazon sales.

[dingaling]

> 1. Think of Amazon as a search engine for products.

That's difficult to do when their search is so atrociously bad. It ignores keywords and places matches well down the page, if it displays them at all.

Plus the classic 'choose a department to enable sorting' prompt. 30 years and their programmers can't work out how to order items from different 'departments'. Why should a customer have to know about their internal taxonomy?

It's probably better to think of Amazon as a product promotion engine. What the customer thinks they want is less important than what Amazon wants to sell.

[themafia]

> 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.

[ahofmann]

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.

[anonnon]

> Amazon wants its site to be the lowest-price destination for products

Have you not used target.com or walmart.com recently?

[motbus3]

What you mean it is not fair? Imagine you are huge company that will not fail, you can enter any market, dump the prices, gather market share, make that the main stream of revenue, and suddenly you can click to kill someone whole business. This is a vendor lock-in based on a dumping model.

On the other hand, don't tell that prices are not personalised anywhere. 4 is destroying the economy with gray area tactics Anyone working there should be ashamed of being part of that

[novia]

> Think of Amazon as a search engine for products

Hahahahaha you lost me

[IronyMan100]

So If Amazon wante to be the lowest price Destination, but Takes fees for Listings, FBA etc, then the product price needs to include that fees. That will make the product more expensive and since amazon wanted to be the cheapest Destination, the price does need to gonup everywhere? It's maybe the Fairest Thing, but is it good for the Overall Economy?