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Emails Detail Amazon's Plan To Crush a Startup Rival With Price Cuts (arstechnica.com) 88

An anonymous reader shares a report: Quidsi's (parent company of Diapers.com) founders didn't want to sell their company, but Amazon's diaper price war was starting to hurt Quidsi. Growth was slowing, and Quidsi was having trouble raising additional capital to continue expanding. On September 14, the founders of Quidsi flew to Seattle to meet with Amazon and discuss a possible acquisition. As Quidsi's founders were sitting in a meeting with Amazon brass, Amazon hit Quidsi in the gut. It announced a new program called "Amazon Mom" that offered free Prime service and an additional 30-percent discount on diapers if users signed up to get them through Amazon's monthly "subscribe and save" program. This was a larger discount than Amazon offered on most other Subscribe and Save items.

This put Quidsi in an untenable situation, as Stone writes: "That month, Diapers.com listed a case of Pampers at $45; Amazon priced it at $39, and Amazon Mom customers with Subscribe and Save could get a case for less than $30. At one point, Quidsi executives took what they knew about shipping rates, factored in Proctor and Gamble's wholesale prices, and calculated that Amazon was on track to lose $100 million over three months in the diapers category alone." Amazon's losses may have actually been even larger. During Wednesday's hearing, Scanlon said that internal documents obtained by the committee showed Amazon losing $200 million in a single month from diaper products."

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Emails Detail Amazon's Plan To Crush a Startup Rival With Price Cuts

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  • Ooops (Score:4, Interesting)

    by gnasher719 ( 869701 ) on Friday July 31, 2020 @01:09PM (#60352055)
    That's most definitely something that you don't want the public to know, and that you don't want the government to know.
    • Re:Ooops (Score:5, Informative)

      by jonsmirl ( 114798 ) on Friday July 31, 2020 @01:12PM (#60352071) Homepage

      This happened 11 years ago when Amazon was about 1/20th the size it is currently.

      • So basically it's taken more than a decade for the US Government to even start thinking about the potential issues with these online mega-corporations. And, even now, they've only gotten as far as calling in the company heads to testify.

        • Amazon wasn't a mega corporation 11 years ago. 11 years ago there was this company called Walmart that was about 40x bigger than Amazon was at the time. In 2009 Amazon and Quidsi were both minor players in the diaper market who decided to get into a price war with each other.

          Don't project today's Amazon back onto the state of the market 11 years ago. This is just click bait trying to trigger Amazon hatred.

          • Bullshit. It was obvious that Amazon could fall back on its resources and significantly outprice its competitor and operate at a net loss until the competitor folded. The key thing is that Amazon then raised prices on their diaper products and basically gouged their newly acquired diapers.com customers. It doesn't mean jack that those customers could go to a brick and mortar and pay the same gouging price or more.

      • This happened 11 years ago when Amazon was about 1/20th the size it is currently.

        Oh thank god. It was only a $100bn company back then. For a moment I was worried they were a big player.

  • by Ed Tice ( 3732157 ) on Friday July 31, 2020 @01:10PM (#60352059)
    There are laws against this but the conditions for prosecution are such that it rarely (if ever) occurs. And yet we still have calls for deregulation by the same people who pronounce that "personal responsibility" is the key to upward mobility. I guess for them upward mobility means going from making minimum wage in an Amazon warehouse and having no health insurance to making 10% above minimum wage and having crappy insurance?
  • by Cassini2 ( 956052 ) on Friday July 31, 2020 @01:20PM (#60352119)

    Looking at amazon.com, amazon.co.uk, and amazon.ca for international prices for Pampers Swaddlers Size 5 (US & Canada), and Pampers Pure Protection Size 5 (UK):

    U.S.A. $44.56 for 132 which is $0.3375 each.
    U.K. Euro $28.13 for 132 which is Euro $0.2131 each = US$0.2512.
    Canada CDN$29.82 for 120 which is CDN$0.2485 each = US$0.1830

    Something's up with the pricing.

    • They're about $0.35 at Walmart.com and $0.38 at Target.com so on that case Amazon is definitely the cheapest of big USA online retailers.

      The international pricing may be a lot more complicated than you might first assume. Other countries frequently have price controls. Additionally other countries may have a product with the same name but which is manufactured in their own nation, effectively licensing the American brand name, so they may be cheaper simply because they make them more cheaply. And while I

    • It’s like Americans love being abused.
      You have have some of the poorest metrics of western countries, for health, health care, minimum wage, holidays, sick pay, unfair dismissal, homicide, jailing, police misconduct, consumer rights. They even make you vote on Tuesday and measure in imperial!
      It’s like you are slaves to big business and have Stockholm’s syndrome!
      I feel sorry for you guys!

    • Pampers (P&G) and Huggies dominate the U.S. market [fool.com], with Pampers being #1

      The UK seems to have some strong competing brands [statista.com], so Pampers' share of the market is smaller. (BTW, the UK price is in GBP, not Euros, so is about $0.28 per diaper.)

      In Canada, Pampers is #3 at a paltry 8% [cadenshae.ca].

      So the different pricing would seem to be consistent with how popular Pampers is in the respective markets. When you're #1 (US), you can charge a premium. When you're big but have strong competitors (UK), you need to co
  • SHOCKED!

    Okay, not that shocked.

    Amazon is just as sleazy as Walmart, you just don't have to deal with the "People of Walmart" when shopping.
  • real American monopolies who are being evil: Google, Twitter, Amazon, etc.

    These should be split into multiple companies that exist on different continents. In addition, the anti dumping rules of old should be brought back. What Amazon and Google are doing is as criminal as Microsoft was. Also, it is time to prevent outside monopolies that dump, steal patented ideas, etc; IOW, since china will not break up their government owned monopolies no reign them in, it is time to block them from America, if not the west.
  • Those bean counters at amazon really know their shit.
  • Amazon's behavior is not illegal until someone establishes to a court's satisfaction that they're a monopoly. That requires defining the market that they are monopolizing. IIRC, the courts have to agree that the defined market is significant and generally require on the order of 70% market share to even consider the question of a monopoly. What's the market that Amazon holds on the order of a 70% share of? Retail? Diapers?

    Oldsters like me recall what a shock it was in the legal and policy worlds whe
    • "Predatory Pricing" isn't limited to monopolies. In fact it's designed to prevent the establishment of monopolies.

      https://www.investopedia.com/terms/p/predatory-pricing.asp [investopedia.com]

      the Court established that for prices to be predatory, they must be not simply aggressively low but actually below the seller's cost. That said, it is not a violation of the law if a business sets prices below its own costs for reasons other than having a specific strategy to eliminate competitors.

      If Amazon emails are dumb enough to say 'we can't let diapers.com survive' then they are at risk.

  • where they have an Unfair Sales Act. Other states may have similar laws. https://datcp.wi.gov/Pages/Pro... [wi.gov].
  • It's just bad if you're the loser.

  • The real WTF is disposable diapers. Soft cotton cloths for 6-9 months, wash them and/or compost them. Teach your kid to notify you before they can even walk. Humans develop slow compared to other animals, but not THAT slow, and our massive brains give us other advantages. Anyone who can't potty train by 9 months at the latest is a failure of a parent, or has a slower than average child.

    Hopefully I won't be modded down for this, because it's true.

  • Why would Amazon take a big loss on diapers? Just to put Quidsi out of business and then jack up the price of diapers later? Or something else?
  • This is the exact same as the Chinese (CCP) economic model. Sell at a loss until the rest go under.

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