Can confirm. Amazon's warehouses have been absolutely packed lately, sellers have have been complaining about inbound shipping limits for most of Q4. This is despite Amazon growing warehouse capacity by a huge amount in 2021 and having plenty of excess capacity earlier in 2022. Also, the lead times at our factories in Asia are the shortest that they've been since the pandemic began.
We were deciding on a business name at the time, so we didn’t already own the trademark. Based on other similar names that we were considering, voltive.com should probably have been under $10k, but the seller absolutely refused to budge (why not, carrying cost is only $12/year after all).
But getting a decent name is hard. We wanted something that was two syllables, not trademarked (trademarks are important when selling on Amazon, as we do), easy to spell if you hear it said, had a toll free phone number available (we have 888-VOLTIVE). That narrows things considerably.
Here’s another perspective. We own voltive.com. It cost us $28k. “Us” is me and my partner, small business owners with families and bills, working to build something of value in the world. We bought the domain from someone who had never used it for anything. Is it just that some guy fleeced us for $28k by squatting on that domain for 20 years at $12/year when we were actually trying to do something productive with the name? I certainly don’t think so.
For our purposes (and most businesses), those are marginal improvements. And there's absolutely no way the very significant risks involved with handling cryptocurrency are worth it to us.
I agree, seems to me like a lot of their popularity was tied to pandemic lockdowns coupled with people's balance sheets going up because of stock, real estate, etc. Basically, a microcosm of the huge increase in home improvement and durable goods spending in the last 2 years.
Our products are popular with the vanlife crowd. We’ve sold to dozens of conversion companies at this point (we sell wire that can be used to hook up all the low voltage devices that get installed in them). So I’ve tried to figure out who is buying these, since as many people have noted, they’re so danged expensive. The best I’ve come up with is: people enjoy recreation. Some people like to go to the lake and might buy themselves a $100k boat. Other people like camping and might buy themselves a $100k van conversion. As for why a van vs an RV, I think there are arguments about size and maneuverability, but really I think it’s just that the Mercedes vans are cool, RVs are not, and people with disposable income like cool things more than uncool things.
Flexport is a freight forwarder. You tell them where you want your international shipment to go and they make all the arrangements with the various intermediaries to get it from origin to destination and through customs. I’ve worked with a bunch of freight forwarders and Flexport’s software is far and away the best that I’ve encountered. Most freight forwarders operate on email and Google Sheets. You constantly have to call and prod them to get updates on your shipment. With Flexport everything is in their app and they have good behind the scenes systems for keeping shipment info up to date. It’s kinda hard to explain how much better of an experience they provide to someone who’s never had to deal with freight forwarders.
By your theory, any business with suppliers or retail customers is one hire away from extinction. But we don’t actually see all that much of this kind of competition out in the real world. There is a reason that firms specialize: the size and organization of a firm is tied pretty tightly to the kinds of activities that pay the bills and manufacturing is very different from sales and marketing is very different from running an online retail marketplace.
How would another marketplace lowering their referral fee cause sellers to raise their prices? They can either keep the extra margin at the marketplace with the lower fees, or they can reduce their prices at Amazon.
Counterfactual is a good term for the scenario you described since it is counter to the actual facts in this situation, which are that Amazon's referral fees are in line with all the other marketplaces and it's the 3rd party sellers who are setting prices, not Amazon.
Shopify is not a meaningful comparison, since it is not a marketplace. They don't bring customers to you. They're essentially a hosting and payments provider. You have to get traffic yourself.
> yet they engage in this anti-competitive and consumer damaging behavior of requiring sellers to sell products at low or below cost
Is your position that they are increasing the prices consumer pay or that they're decreasing them?
This is nuts. Amazon is simply choosing not to show the product. It's the seller who decides what to do about that. They can raise the price at the other retailer or they can lower the price at Amazon. Fees are similar across all of the marketplaces, so it's not like sellers make lower margins on Amazon.
Yup. Amazon provides an extremely valuable service to us: they provide a stream of customers who are at the end of the sales funnel and ready to convert because they trust Amazon's platform.
> What happens when Amazon starts private labeling the same things you sell? Or your supplier starts selling on Amazon and undercutting you?
This is going to blow your mind, but we compete against both Amazon Basics and our factory.
We compete with Amazon Basics by selling a differentiated product. Amazon will never be able to compete in every product niche and at every level of quality/differentiation. It's actually not possible for the same reason that a centrally planned economy breaks down above a certain level of complexity: there are simply too many different niches that need to be addressed and the profit motive is the only system we've discovered which ensures that they get addressed.
And we compete with our supplier by understanding the market better. They're good at manufacturing, but they don't really understand the end user. The type of personality that is good at operating a factory tends not to be the type of personality that is good at marketing. HN doesn't really like to hear this, but sales and marketing are actually an important part of running a business, especially one that sells to consumers.
They (as in, Amazon) are not setting prices. The 3rd party sellers decide what the prices are: they can either lower the price on Amazon or raise the price at the other retailer. Amazon doesn't really care; they just want to sell stuff and take their cut. And ensure that customers don't develop a habit of price shopping everything after they do all their research on Amazon.
> Selling on Amazon takes a 18-33% markup on the price of the product. Amazon forces this margin consumers by requiring sellers to not sell cheaper elsewhere
Amazon charges a referral fee on all 3rd party transactions. It varies by category, but is typically 8-15%. All retailers take similar margins. For instance, the largest retailer in the US is Walmart. Here is a list of their 3rd party referral fees: https://marketplace.walmart.com/referral-fees/.
Given that the retailers all take similar margins, I think it's crazy to somehow paint this as Amazon forcing a markup on customers. All Amazon is doing is refusing to show products if the price on Amazon is higher than at a competitor. It's the seller who chooses what to do about that. They can either raise the price at the competitor, or they can lower the price on Amazon.
Again, the retailer's margins are similar, so it shouldn't matter.
But Amazon isn't doing this so that they can make the other retailer's customers pay more. They're doing it to make sure their own customers pay the lowest price that prevails in the marketplace. It's just that this is the only mechanism they have for accomplishing that. Amazon can't control what a seller does elsewhere, but if a product is on sale elsewhere, they can basically tell the seller that they refuse to list it on Amazon unless the seller reduces the price to match the other retailer.
So far most of the discussion is about pricing on Amazon vs. other retailers, but Amazon also does this between sellers of the same product on Amazon. If there are multiple sellers of the same product, Amazon will funnel their customers to the seller offer with the lowest price. The jargon term for this is "getting the buy box".
We sell on Amazon. The fees are not insane. It varies by category, but typically they range from 10-15%. Amazon brings tons of value to the relationship, so we're happy to pay that fee.
Agree with your larger point, but prices actually were flat or slightly down in July vs June, which is deflation (they were up year over year, but that’s due to inflation in preceding months).