How Amazon Wins: By Steamrolling Rivals and Partners (wsj.com) 71
The Wall Street Journal: To keep customers happy, which Mr. Bezos has long said is Amazon's fixation and growth strategy, executives behind the scenes have methodically waged targeted campaigns against rivals and partners alike -- an approach that has changed little through the years, from diapers to footwear. No competitor is too small to draw Amazon's sights. It cloned a line of camera tripods that a small outside company sold on Amazon's site, hurting the vendor's sales so badly it is now a fraction of its original size, the little firm's owner said. Amazon said it didn't violate the company's intellectual-property rights. When Amazon decided to compete with furniture retailer Wayfair, Mr. Bezos's deputies created what they called the Wayfair Parity Team, which studied how Wayfair procured, sold and delivered bulky furniture, eventually replicating a majority of its offerings, said people who worked on the team. Amazon and Wayfair declined to comment on the matter.
Amazon set its sights on Allbirds, the maker of popular shoes using natural and recycled materials, and last year launched a shoe called Galen that looks nearly identical to Allbirds' bestseller -- without the environmentally friendly materials and selling for less than half the price. "You can't help but look at a trillion-dollar company putting their muscle and their pockets and their machinations of their algorithms and reviewers and private-label machine all behind something that you've put your career against," said Allbirds Co-CEO Joey Zwillinger. "You have this giant machine creating all these headwinds for us." This year, Amazon has zeroed in on Shopify, a fast-growing Canadian company that helps small merchants create online shops. Amazon has established a secret team, "Project Santos," to replicate parts of Shopify's business model, said people familiar with the project. Amazon executives often initiated efforts like these on their own, though in some cases examined by The Wall Street Journal, Mr. Bezos himself was involved, according to former Amazon executives and internal emails.
From its start as an online bookstore 26 years ago, Amazon has expanded into an online retailer with a presence in nearly every major category. It is also the leading provider of cloud-computing services, a gadget maker, a major entertainment player and a rival to United Parcel Service and FedEx. Mr. Bezos is the world's richest man, with a net worth Forbes estimates at $187 billion. He still exhorts employees to consider Amazon a startup. "It is always day one," he likes to say. Day two is "stasis, followed by irrelevance, followed by excruciating, painful decline, followed by death." Mr. Bezos originally considered calling his company Relentless, and www.relentless.com still redirects to Amazon's site.
Amazon set its sights on Allbirds, the maker of popular shoes using natural and recycled materials, and last year launched a shoe called Galen that looks nearly identical to Allbirds' bestseller -- without the environmentally friendly materials and selling for less than half the price. "You can't help but look at a trillion-dollar company putting their muscle and their pockets and their machinations of their algorithms and reviewers and private-label machine all behind something that you've put your career against," said Allbirds Co-CEO Joey Zwillinger. "You have this giant machine creating all these headwinds for us." This year, Amazon has zeroed in on Shopify, a fast-growing Canadian company that helps small merchants create online shops. Amazon has established a secret team, "Project Santos," to replicate parts of Shopify's business model, said people familiar with the project. Amazon executives often initiated efforts like these on their own, though in some cases examined by The Wall Street Journal, Mr. Bezos himself was involved, according to former Amazon executives and internal emails.
From its start as an online bookstore 26 years ago, Amazon has expanded into an online retailer with a presence in nearly every major category. It is also the leading provider of cloud-computing services, a gadget maker, a major entertainment player and a rival to United Parcel Service and FedEx. Mr. Bezos is the world's richest man, with a net worth Forbes estimates at $187 billion. He still exhorts employees to consider Amazon a startup. "It is always day one," he likes to say. Day two is "stasis, followed by irrelevance, followed by excruciating, painful decline, followed by death." Mr. Bezos originally considered calling his company Relentless, and www.relentless.com still redirects to Amazon's site.
Amazon, the textbook definition of anticompetition (Score:3)
See subject
Re:Amazon, the textbook definition of anticompetit (Score:4, Insightful)
When you win over customers by dumping stolen/counterfeit property, it's a textbook example of fraud, which is fairly anti-competitive in my book
Re: (Score:2)
When you win over customers by dumping stolen/counterfeit property ...
That is not an accurate description of the activity described in TFA.
None of the products mentioned in TFA were stolen. None were counterfeit.
Re: (Score:2)
Amazon engages in fraud with their cheap imitations, I'm still calling them counterfeiters for it, like people who pass off badly made counterfeit bills..
And fuck them too, for not putting a couple hundred billion into the anti-covid effort. A multi-trillion dollar company squeezing every penny they can out of it.
Re:Amazon, the textbook definition of anticompetit (Score:5, Insightful)
"When you win over customers by offering better products, prices, and service, that is a textbook example of competition, not anti-competition."
Exactly, every supermarket does it.
If a product gets good sales, the supermarket puts a similar own-brand product with a lower price on the top shelf while you have to kneel down for the original.
They have done it for 50 years at least.
Re: (Score:2)
I note that there is more than one supermarket. There is only one Amazon.
Re: Amazon, the textbook definition of anticompeti (Score:2)
Re: (Score:2)
Walmart's website is garbage comparitively -- they allow unregulated third parties to sell on their domain just like Sears.
Target at least just sells products they've vetted for sale in their retail marketplace.
Re: (Score:2)
It's only competition until someone wins. That's a problem with pure market forces: Once someone is on top, they can use the advantage given by their economy of scale, supplier contracts and brand recognition to beat down any potential competition.
Re: (Score:1)
So long as it remains easy to distinguish between Amazon's store-brand knockoffs and the item you were originally searching for, I don't see a problem. Let the buyer decide.
I would love to see Amazon move into the pharmacy business and use its market power to bust the pharma monopoly and the special-interest laws that hold it up, so it would become legal for Amazon to shop the world market for branded and generic compounds. Only Amazon can outbid the pharma lobbyists for the legislators needed to put this t
Re: (Score:2)
Amazon, like any other pharmacy, would still have to see FDA-approved compounds. The only law change needed would be being able to buy them on the global market, as countries do.
Re: (Score:3)
When you abuse your market position to undercut competitors and eventually drive them out of the market, that's anti-competition.
Let's be clear here: that is what Amazon are being accused of doing. Are they being "competitive"? In a myopic sense, certainly. Putting you in a fight with an 800lb gorilla could also be called a "competition", but it's one in which you have effectively a zero chance of winning. It'd be more accurate to call it a "slaughter".
What Amazon are doing is not only unfair, it's against
virtuous cycle. Amazon is monposony not monopoly (Score:5, Interesting)
The origin stories of amazon often features the famous napkin sketch of the virtuous cycle Bezos sketched. I basically says that the more diverse the offerings the more traffic and that attracts more vendors. and that makes it an attractive place for consumers to shop.
And he's completely right about that. There's almost always some vendor on the site matching the low price you find off the site, so why bother looking elsewhere when you can see the whole range of pricing available in the market on one site?
Well the answer is that historically places with the lowest prices also tend to have the worst customer service.
Amazon's real innovation here was to remove that. Amazon has consistently excellent customer service. it's so good that I won't buy anything off amazon if it's not atleast 10% or $10 cheaper. Otherwise the hassle of dealing with an unsatisfactory product is not worth my time. The time it takes to resolve any bad transation is one 5 minute chat. No waiting on hold. no run-around. time saved.
And that leads to me buying from amazon.
But this virtuous cycle is also very very close to the definition of the crime anti trust laws deal with. And that is using dominance in one market to leverage dominance in another. It's why GM can't insist you buy only GM tires and use GM gasoline in GM cars. Amazon started with books and has sequentially eaten new markets. The "virtuous cycle" is the very nature of anti trust.
But they are managing this in a very consumer freindly way. GM requiring GM gas or you violate your warrantee is consumer coercion. Monopoly behaviour. Amazon is killing it with ruthless logistic efficienty for fast deliver, uniform expectations, low prices and a satisfaction assurance.
One has to wonder then are we all just waiting for this Milo Minderbinder like outfit where we all benefit is going to turn evil when the last competitor dies? Or will this great service continue?
that is should we snuff this in principle since all monopolies are ultimately bad?
Moreover you can't define them as a monopoly in the usual sense. The usual sense it to define a careful and narrow market sector and then look at their dominance. Cars. gasoline. But when there are alternatives then it gets vague. Is the apple app store a monopoly. Only if you define the market as apple phone owners. But if you define it as phone owners then no. And if you define it as computer programs then no. There's no defintion of a narrow market when it comes to amazon except one perhaps and that's as simply a storefront.
Amazon thus is more of a monopsony than a monopoly. They impose their draconian policies not on the buyers but on their vendors because the vendors don't have other good options.
Re:virtuous cycle. Amazon is monposony not monopol (Score:4, Informative)
Well the answer is that historically places with the lowest prices also tend to have the worst customer service. Amazon's real innovation here was to remove that.
That was true for many years, but that great customer service has deteriorated tremendously. It now also seems to only apply to Prime purchases. For everything else, it's "anything goes". This has two explanations:
1) It's an Amazon plan to eliminate 3rd party sellers, by giving non-Prime purchases the stink of fear.
2) Amazon's customer service is circling the drain.
Either one seems likely.
Re: (Score:2)
1) It's an Amazon plan to eliminate 3rd party sellers, by giving non-Prime purchases the stink of fear.
Which is again the Monopsony effect.
Re: (Score:3)
It's why GM can't insist you buy only GM tires and use GM gasoline in GM cars.
Why isn't this applied vis-à-vis Apple's walled aerden, console licensing, etc.
Why shouldn't GM be able to say, "If you don't like it, Ford's that-a-away..."? The situations aren't that different.
Re: (Score:2)
Extrapolating from your hypothetical to Amazon, which company is "Ford"?
Re: virtuous cycle. Amazon is monposony not monopo (Score:2)
Re: (Score:2)
That was my first thought as well.
Re: (Score:2)
Moreover you can't define them as a monopoly in the usual sense.
Correct. The closes that Amazon is coming to be (not yet, but approaching fast) is a utility - one that ought to be owned by the government as a non-profit.
Amazon is becoming not a market participant, but the marketplace. And that ought to be a public place, regulated to the benefit of all.
In theory. Unfortunately, in reality, all governments in the history of mankind have been corrupt and our current governments are incompetent on top because they're run by people who couldn't make a real career in a real
Re: (Score:2)
Re: (Score:3)
Well that is what people were complained about Walmart was doing similar stuff a long time ago.
This is a problem when you are a store that is really big and popular, where you decide to sell your own brand of products.
Your competitors need to play by your rules, as you are their biggest partner. But they are also your competitor so you do all you can do to dominate them.
The problem isn't that it is anti-competitive, they are still selling other guys stuff, at the price they are willing to offer. But it is
Ruthless (Score:5, Insightful)
So, whatcha gonna do about it?
Re: (Score:3, Insightful)
Their business plan is to squeeze everybody else out of business.
That is the plan of most businesses. Amazon is just more successful at it.
Re: (Score:2)
Root for WalMart. com as the "little guy"?
Move to North Korea where they don't have to worry about this stuff?
It's not obvious what to do. A breakup along geographical lines doesn't make any sense, so I guess we'd be looking at a breakup among functional lines, essentially requiring each unit of amazon to also sell their services to outside companies on equal terms with other units of Amazon.
Re:Ruthless (Score:5, Insightful)
It's not obvious what to do. A breakup along geographical lines doesn't make any sense, so I guess we'd be looking at a breakup among functional lines, essentially requiring each unit of amazon to also sell their services to outside companies on equal terms with other units of Amazon.
Spinning off AWS seems like a logical start.
Re: (Score:3)
Spinning off AWS seems like a logical start.
How will that make Amazon less of a monopoly in retail?
Re:Ruthless (Score:5, Informative)
Re: (Score:2)
start my own online retailer that's bigger and badder than Amazon?
With Blackjack! And Hookers!
A little more seriously, if it bothers you this much, don't buy from Amazon. I managed to get all but one of my Christmas gifts from places other than Amazon, so it certainly can be done.
Antitrust is coming for Amazon (Score:5, Insightful)
At this point, a breakup of Amazon seems like a great idea. Split them into a logistics operation that handles the warehouses and last mile delivery and sells that handling service to anybody at an equitable price. Split AWS off into its own company. Amazon Prime gets split into it's Netflix competitor and a logistics membership. Amazon Basics and all the other self-dealing Amazon does on its marketplace gets its own company, without access to the data from the marketplace. That leaves the marketplace itself, which should have capped listing fees or accept liability for the products, but no more fat rake with no guarantees.
Re:Antitrust is coming for Amazon (Score:5, Interesting)
Careful with those lines. Modern tripartite corporate structures transfer wealth to the tippy top by using a segmented approach. One company holds all the IP and reaps maximum profits without any obligations. Another company is responsible for owning capital equipment and real estate. Then, you franchise out the actual manufacturing to licensee companies, who are responsible for the lion's share of the costs, including employee benefits.
This article has a great explanation and supplies data:
https://americanaffairsjournal... [americanaf...ournal.org]
Re: (Score:2)
Then they put the tippy-top company that holds all the profits in Luxembourg. That's what Amazon does.
Taxes are for the little people.
This article seems slanted. (Score:2, Interesting)
Re: (Score:2)
But creating products similar to existing ones and selling them for less is not, generally speaking, anti-competitive. Nor is it illegal.
Doubly so when the tripod was probably just a rebadged product built by a manufacturer in China in the first place.
I mean, I can't be certain, because the article is hard-paywalled, and I'm not about to pay for a WSJ subscription just to satisfy my curiosity (particularly when the full article probably doesn't contain the answer to the question, either), but I wouldn't be surprised if this were a situation where Amazon just started rebadging the exact same product and undercutting their price.
What makes it
Re: (Score:2)
You left out goose their search results so the amazon product showed up first.
Re: (Score:2)
Yeah. I also left out "analyze the number of search queries for specific terms and the number of purchases for specific products, and use that to determine both demand and unmet demand far better than any individual seller could".
Re: (Score:2)
Using your knowledge of sales trends from your dominant online sales platform to know what t o clone might be considered anti-competitive, esp. if said sales platform hides your competition compared to your product.
Store brands (Score:3)
Ban store brands? Is that the solution? Seems the only viable thing. Also a terrible path.
Re:Store brands (Score:4, Insightful)
No need. Just break up Amazon into three companies: Web Services, Online retail, and product manufacturing.
Re: (Score:2)
Just break up Amazon into three companies: Web Services, Online retail, and product manufacturing.
The products are already made by contract manufacturers, not by Amazon.
Splitting AWS from the retail side would do nothing to reduce Amazon's dominance of retail.
Sears CEOs ... (Score:5, Insightful)
Re:Sears CEOs ... (Score:5, Interesting)
They had Sears Catalog before there was Amazon
Sears shut down its mail-order operation in 1993.
Amazon was founded in 1994.
If you angry (Score:5, Interesting)
about wage depression, it's companies like this that are taking money from the bottom straight to the top. We should do something about that, but we live those companies too much.
I stopped using Amazon, I can wait and they are overpriced. Amazon basics is crap
Amazon will fall (Score:1)
At some point, achieving "parity" with competitors will not be enough. "Not Amazon" will be a quality of its own. People learn slowly, but if you make enough enemies, you will go down.
Re: (Score:2)
Yes, that's what they used to say about made in Japan, made in Taiwan, made in Korea, and (even today) made in China.
There used to be a time when something that was made in Taiwan or Japan was considered terrible quality .. yet people bought those brands and eventually they improved in quality. Did anyone buy a Toyota in the 1960s unless they wanted to be the neighborhood clown? Made in China for example, everyone knows/thinks it's terrible quality .. yet the government has to do massive intervention to blo
Re: (Score:2)
Amazon is not beating the competition by being better or cheaper. It's being anticompetitive.
The antidote is small business and buy local (Score:2, Interesting)
Support local businesses wherever possible. Buy local. Big companies like Amazon are the antithesis of free market, they crush and destroy competition. It is very unhealthy because this large amalgamation of wealth allows them to buy political influence and power. Its a monster. Small business is the heart and soul of a community. Many big corporations support huge socialism and massive government as a strategy to stave off critics, big corporations and big government have a power sharing agreement. MegaCor
Re: (Score:3, Insightful)
The only socialism in this country is megacorporate welfare. Too Big To Fail? Well, I guess the lowly taxpayer will subsidize you, as well as pay for your products!
We have corporate welfare in this country. All those bitching about socialism ought to start with tearing down welfare for the richest 0.01%.
Re:The antidote is small business and buy local (Score:5, Insightful)
I'm tired of transferring my income from a small business to Amazon and other huge corporations via subsidies paid for with my tax dollars.
Every time those congressfuckers vote a new subsidy for some ultra wealthy magnate, guess whose pocket it comes out of?
MINE, YOU MOTHERFUCKERS.
TL;DR: Stop robbing the poor to pay the rich.
Re: (Score:2)
TL;DR: Stop robbing the poor to pay the rich.
short answer: Why? It's been working great for thousands of years.
Re: (Score:3)
Sure, but most people don't see it that way - they just see a low price when combined with free shipping.
All too often, you'll find a product on another online retailer that is slightly cheaper, but when you add on shipping, it isn't.
Customers have also got used to the excellent delivery that Amazon offers - in most countries where it operates.
It is exactly the same thing as happened with Supermarkets being more competitive than independent food retailers - when money is tight, people will shop where it is
Re: (Score:2)
Just an aside, not a counter to your point (which I wholeheartedly agree with) at all:
Maplins killed themselves off in corporate suicide, not as a result of Amazon.
Amazon hurt them sure, but Maplins died from financial missmanagement, corporate shenanigans and deliberate financial sabotage on the corporate side, and from abandoning any effort to sell actual usable electronics in favour of being a "blinky light & gimmick device" shop, selling the same crap as found in poundland at much higher prices. Wha
Re: (Score:2)
Thinking about this, I concur.
Just considering my own use of this store way back in the mid noughties, it was an absolute last resort visit and purchase.
Going to buy a hard drive? You would have at most, 3 to choose from, each about 30% more expensive than online.
Motherboards? Maybe 4 or 5, again, more expensive.
And yeah, they did sell a ton of garbage, they got fixated on the "DJ thing", selling cheap shitty gear at high prices.
"Hi, I'm looking for a .022uf Sprague Orange Drop capacitor - have any in stock
Re: (Score:2)
three cheers for efficiency! (Score:4, Funny)
once again, capitalism has achieved its utopian dream: happy customers and wealthy shareholders. is it now time to sabotage amazon's achievement? of course not! amazon has freed us all from the trouble of selling things to people. now we are all free to do something else!
if you don't know how to do anything but sell things to people and can't manage to beat amazon then you can just learn a new trade like programming for amazon or putting things in boxes for amazon or lugging boxes for amazon. that's freedom!
Re:three cheers for efficiency! (Score:4, Insightful)
I personally like the fact that Amazon automates jobs.
But you are wrong about people getting a new job. Sure, few individuals will do that, but not the big mass. Reason is math. E.g. imagine that robots do everything but youtube videos. So everyone becomes a youtuber. That means that everyone has huge competition and that always means that most will fail.
Next, think it this way. You are the customer. What are you willing to buy?
Food? Already mostly automated, not enough jobs.
Clothing? No room for new employees and automation will hit it hard also.
Entertainment? Games, movies, series, books, comics, full of competition already.
And so on.
You should see that no matter what you try to sell, you will either lose or cause someone else to lose. And best way to beat others is by automating human work, which creates even more unemployed people.
Re: (Score:2)
once again, capitalism has achieved its utopian dream: happy customers and wealthy shareholders. is it now time to sabotage amazon's achievement? of course not! amazon has freed us all from the trouble of selling things to people. now we are all free to do something else!
if you don't know how to do anything but sell things to people and can't manage to beat amazon then you can just...
Actually agreed with you up to this point. There's of course a difference between the ideal and the real, but theoretically Amazon has done a good thing and it should free up people to improve a different aspect of the economy/society. It's unfortunate our government doesn't facilitate this better. Bezos' massive wealth is a monument to this failure.
The WSJ? (Score:1)
Amazon is now in the lead because the previous evil empire, Walmart was not able to continue to innovate on customer care and logistics. Amazon is already showing signs of age, valuing advertising over sales, and another firm could leverage that into a competitive advantage. Amazon is also creating a brick and mortar type infrastructure, warehouses and delivery, tha
Re: (Score:3)
The WSJ sold their soul to Trump about the time of the last tax giveaway. The SWJ loved that, even parroted the trope that it would pay for itself.
Lesson learned (Score:2)
Whenever you walk into a library or any book store and want to mock the book nerds, remember how they can turn from a little bookworm into a Bezosaurs and squash you all!
What will we do when Amazon takes 90% (Score:3)
of the market ... when there is little real competition as the others have gone bust, when there is little choice except what Amazon offers ? Some will not notice or care. Others will wonder where their jobs went. Some will wish that they had supported other retailers while they had the change.
The problem: no one-click payment system (Score:3)
Re: (Score:2)
Yes that.
Certainty with shipping times. A lot of companies can’t tell you if it’s in stock and if it is they take 3 days to ship it. All a consumer wants to know is when it will be in their hands. Amazon does this well.
Amazon... and China... and tariffs (Score:1)
When China sells something for half of what it used to cost, because they're good at mass producing it, we buy, we pay, and we're happy to save 50%.
When trump raises tariffs and we pay more for goods... everyone says how bad it is that now we have to pay more for the same good that was half price last week. Agreed
But for some reason Amazon doing the same thing and not being subject to tariffs is bad? Why should we be upset at a retailer providing a competitive product at a competitive price?
If we believe
American Exceptionalism (Score:3)
This was called 'Enterprise agreement' in the 1980s and Microsoft and friends used it to learn why competing corporations had a strategic advantage. The competing, usually foreign, corporation (eg. Symbian Ltd) thought they were getting taught to create a better product. But the 'better' knowledge flowed one way only.
Anti-Trust ? (Score:2)
Ex-Amazon PM told me it's laziness (Score:3)
An ex-Amazon employee who now works for Google told me that every year the Product Managers have to come up with ideas for new products or product lines. The trick he said was that those PM's just look through all the sales data at what is doing well and take the best selling items or services. It's done on the retail side and on the AWS side.
There's plenty of evidence that this approach is approved of or endorsed by management though. In the retail world, home brands usually don't try to piss off the national brand or "genuine article" because those sellers pay for shelf space, placements and ads, but it seems like with Amazon they don't care and are just happy to wipe them out and take it all. After all, who gets on the front page of Amazon so much? Amazon shit. If Amazon could sell you an Amazon version of every top selling item or service, they would. The only down side is that they are killing off the companies that actually come up with new ideas. If your skill is just ripping off innovators, then you'd think you'd kill off the innovation. Unfortunately, as Amazon is the 500lb gorilla, there are plenty of suckers who want to sell through them.
Stopped using Amazon cause Prices went up (Score:2)
If they really want to keep their customers happy: (Score:1)
...then they should stop selling fakes, like those $10 "terabyte" SD cards. "Sold by ShenzhenDewNehLohMoh and fulfilled by Amazon" really means "Let's pretend we're a Buy-It-Now-only version of eBay".
I didn't get taken in by that particular scam, but I did once buy a piece of gear sold as new by Amazon (not a third party). It was packaged as new and worked fine (still does), but going through its setup sequence web pages revealed information about its first owner.