Amazon Is Poised to Unleash a Purge of Small Wholesale Suppliers(bloomberg.com)
bloomberg.com
Amazon Is Poised to Unleash a Purge of Small Wholesale Suppliers
https://www.bloomberg.com/news/articles/2019-05-28/amazon-is-poised-to-unleash-long-feared-purge-of-small-suppliers
168 comments
Also of note is that this won't do anything to address the criticisms of rampant counterfeit and/or garbage quality products on the marketplace.
If anything it will only make it worse, as many of shrinking number of items sold by Amazon will now be tossed into the garbage pile along with everything else in the marketplace.
If anything it will only make it worse, as many of shrinking number of items sold by Amazon will now be tossed into the garbage pile along with everything else in the marketplace.
> Important to note that this "purge" is only for wholesale suppliers, not for marketplace sellers like the title implies.
Yes, but I avoid the marketplace sellers. I've been burned too often with those -- if I'm going to roll the dice on that sort of thing, I'm better off with eBay.
Yes, but I avoid the marketplace sellers. I've been burned too often with those -- if I'm going to roll the dice on that sort of thing, I'm better off with eBay.
What most people don't realize is that Amazon fees are 15% and most suppliers do FBA which tacks on a more expensive shipping charge than you would have otherwise with USPS.
eBay on the other hand charges 10% and sellers can ship items the cheapest way. Those same suppliers on Amazon list the their items on eBay for cheaper since they net the same after fees.
eBay on the other hand charges 10% and sellers can ship items the cheapest way. Those same suppliers on Amazon list the their items on eBay for cheaper since they net the same after fees.
> ...most suppliers do FBA which tacks on a more expensive shipping charge than you would have otherwise with USPS.
This is not universally true. As a seller on Amazon, using both FBA and seller-fulfillment, there is a lot of "it depends" in all of this.
Some items we can ship cheaper, especially to local zones. But as we're on one coast and we have a lot of customers on the other coast, FBA can be a real saver on the shipping charges.
Size and weight of the package affect the shipping charge, but on some products we sell, we find the fulfillment fees to sometimes get as low as less than 1/2 of what it would cost us to ship direct, even by the cheapest method we can use.
If you're looking at the fulfillment fees compared to what you get charged to ship a package, make sure you're also considering that Amazon helps distribute the products to regional fulfillment centers. It's Amazon's employees that pick and pack the orders. Amazon pays for the box it ships in. Amazon handles customer service and return processing, or reshipment if the item is damaged in transit, amongst other things.
Admittedly, this is not easy to consider all of the pros and cons, expenses and savings. FBA can also be a difficult beast to deal with when they don't check in your inventory, temporarily lose 300 units. Having to deal with Seller Support will cost you in terms of stress and its effects on your receding hairline, or your liver if you need to keep a bottle on your desk as you try to get problems resolved.
This is not universally true. As a seller on Amazon, using both FBA and seller-fulfillment, there is a lot of "it depends" in all of this.
Some items we can ship cheaper, especially to local zones. But as we're on one coast and we have a lot of customers on the other coast, FBA can be a real saver on the shipping charges.
Size and weight of the package affect the shipping charge, but on some products we sell, we find the fulfillment fees to sometimes get as low as less than 1/2 of what it would cost us to ship direct, even by the cheapest method we can use.
If you're looking at the fulfillment fees compared to what you get charged to ship a package, make sure you're also considering that Amazon helps distribute the products to regional fulfillment centers. It's Amazon's employees that pick and pack the orders. Amazon pays for the box it ships in. Amazon handles customer service and return processing, or reshipment if the item is damaged in transit, amongst other things.
Admittedly, this is not easy to consider all of the pros and cons, expenses and savings. FBA can also be a difficult beast to deal with when they don't check in your inventory, temporarily lose 300 units. Having to deal with Seller Support will cost you in terms of stress and its effects on your receding hairline, or your liver if you need to keep a bottle on your desk as you try to get problems resolved.
Using a few fee calculators & testing with a $100 item, it looks like they're comparable if the seller isn't using FBA. But, assuming FBA, then yes you spend a few dollars more than Ebay for the same item. However, selling via FBA can also give you a boost in sales with customers more inclined to buy when it will fit in their Prime subscription, and that increase in sales may outpace the increased cost.
Also, at least based on my own buying habits, (I know hardly representative) I'm much more likely to feel "safe" buying something on Amazon. But either way,to hit the most audience and maximize global profit, you can simply sell in both venues. Given some of the sales management tools that let sellers manage inventory & pricing across platforms, it doesn't have to dramatically increase the overhead of a sales & fulfillment operation.
As for switching from selling wholesale to Amazon to Marketplace, it may actually result in a net increase in profits because it is probably likely that selling retail via FBA will get more money in the sellers' pockets than the wholesale cost.
It really would be nice if Amazon gave sellers more certainty in this process though. It sounds like details & timing have yet to be fully nailed down, and it's the type of change that a business should be given something like 6 months of advance notice.
Also, at least based on my own buying habits, (I know hardly representative) I'm much more likely to feel "safe" buying something on Amazon. But either way,to hit the most audience and maximize global profit, you can simply sell in both venues. Given some of the sales management tools that let sellers manage inventory & pricing across platforms, it doesn't have to dramatically increase the overhead of a sales & fulfillment operation.
As for switching from selling wholesale to Amazon to Marketplace, it may actually result in a net increase in profits because it is probably likely that selling retail via FBA will get more money in the sellers' pockets than the wholesale cost.
It really would be nice if Amazon gave sellers more certainty in this process though. It sounds like details & timing have yet to be fully nailed down, and it's the type of change that a business should be given something like 6 months of advance notice.
> However, selling via FBA can also give you a boost in sales with customers more inclined to buy when it will fit in their Prime subscription, and that increase in sales may outpace the increased cost.
FBA is not a prerequisite for Prime eligibility. We sell on Amazon via Seller-Fulfilled Prime. They have pretty strict time tables for fulfillment to maintain eligibility, and you have to print your shipment labels through Seller Central, though you can link your own UPS account so not to pay extra fees.
FBA is not a prerequisite for Prime eligibility. We sell on Amazon via Seller-Fulfilled Prime. They have pretty strict time tables for fulfillment to maintain eligibility, and you have to print your shipment labels through Seller Central, though you can link your own UPS account so not to pay extra fees.
Sure, provided you already have your own fulfillment operation set up for other sales channels that's an excellent way to get the best of both worlds.
FBA is cheaper than USPS is almost all cases. Once you throw in the fact that FBA fees included pick and pack which you'd otherwise have to pay for yourself, it's quite rare to find items more cost effective to ship directly than to use FBA. Primarily it's either very small items that can be shipped with flats, or very large items where dimensional weight comes into play.
This is a good point, but Amazon tacks on even more fees if you want to fulfill those orders outside of Amazon. We used to sell small electronics on Amazon and other channels which used to cost $2.60 to ship USPS.
We signed up for FBA and they charged $5.95 to fulfill each order. Even if picking and packing costs $1-$2, you still make more profit shipping it yourself. We used to have 3 workers fulfill 150 orders a day from our warehouse which equals $0.80 to "pick and pack" and can be sent to any channel.
We signed up for FBA and they charged $5.95 to fulfill each order. Even if picking and packing costs $1-$2, you still make more profit shipping it yourself. We used to have 3 workers fulfill 150 orders a day from our warehouse which equals $0.80 to "pick and pack" and can be sent to any channel.
Yes, MCF is not competitive with other 3pls or in-house. It's a convenience charge.
I find a lot of things these days are actually slightly more expensive on eBay. I also see a lot of duplicate listings by the same (or apparently the same) seller with wildly varying prices. I still buy stuff on eBay once in a while, but it's not the place to go anymore for the best deal. And after you're accustomed to 1-2 day shipping from Amazon, waiting a couple weeks for an eBay shipment is a non-starter.
> And after you're accustomed to 1-2 day shipping from Amazon
That's Amazon Prime. Non-prime purchases are, in my experience, deliberately delayed. I'm two days from their New Jersey warehouse, and my last three purchases were all delivered in 7 business days or longer. All items were fulfilled by Amazon.
> waiting a couple weeks for an eBay shipment
As a former seller on ebay (20-30 items a month), getting things out on time is a priority for lots of people. Especially sellers shipping a lot of packages. Namely, because you want those good ratings from customers. Get a bunch of neutral/bad reviews because of shipping, and your sales will plummet.
That's Amazon Prime. Non-prime purchases are, in my experience, deliberately delayed. I'm two days from their New Jersey warehouse, and my last three purchases were all delivered in 7 business days or longer. All items were fulfilled by Amazon.
> waiting a couple weeks for an eBay shipment
As a former seller on ebay (20-30 items a month), getting things out on time is a priority for lots of people. Especially sellers shipping a lot of packages. Namely, because you want those good ratings from customers. Get a bunch of neutral/bad reviews because of shipping, and your sales will plummet.
I think what you are finding are eBay sellers dropshipping the items from Amazon directly. So those items will be more expensive since the sellers have to make up the 10% eBay fee. I'm talking about the Amazon sellers that use something like Channel Advisor and are listing the same products on eBay for less. But finding those sellers takes effort in some cases.
That may be exactly what happens on the back end. I only see it from a consumer point of view. I can't reliably best Amazon prices by going to eBay, I have to go somewhere like Walmart.
> I can't reliably best Amazon prices by going to eBay, I have to go somewhere like Walmart.
reply
A lot of eBay sellers actually source from Walmart. I have. I works pretty great... sometimes. Just gotta be quick about getting their clearance items or pricing mistakes.
A lot of eBay sellers actually source from Walmart. I have. I works pretty great... sometimes. Just gotta be quick about getting their clearance items or pricing mistakes.
I'm not particularly price-sensitive (that is, I'm not going to spend any time or energy finding the lowest possible price for something -- I'll just go with the first reasonable price I see). You may differ on this, and that's totally fair.
However, this:
> And after you're accustomed to 1-2 day shipping from Amazon, waiting a couple weeks for an eBay shipment is a non-starter.
Ignores the fact that (at least for the stuff I buy), you can usually get 2 day shipping from eBay sellers. The only time I have to wait more than a few days when ordering on eBay is if what I'm buying is rare enough that I have to buy from an out-of-country supplier -- and those things are rarely or never found on Amazon anyway.
However, this:
> And after you're accustomed to 1-2 day shipping from Amazon, waiting a couple weeks for an eBay shipment is a non-starter.
Ignores the fact that (at least for the stuff I buy), you can usually get 2 day shipping from eBay sellers. The only time I have to wait more than a few days when ordering on eBay is if what I'm buying is rare enough that I have to buy from an out-of-country supplier -- and those things are rarely or never found on Amazon anyway.
I'm definitely biased more in favor of convenience and shipping speed. But to take a recent example, I just bought something last week on eBay, and regular shipping was free, or I could upgrade to USPS Priority Mail for $9.99. For a $32 boxed set of DVDs, this triggers my rip-off sensor, even if it's not enough to really matter. And it wouldn't be two-day shipping, just priority mail. Good but not the same.
I like eBay well enough and I have my quibbles with Amazon (especially the marketplace) but they definitely have the one-click-and-you-have-it-tomorrow game nailed.
I like eBay well enough and I have my quibbles with Amazon (especially the marketplace) but they definitely have the one-click-and-you-have-it-tomorrow game nailed.
USPS has increased its shipping prices quite a bit in the last several years, enough that I can (unfortunately) easily see it costing $9.99 or even more to send a box set of DVDs. Try checking the USPS shipping calculator, you might be surprised at the results.
You're generally right but DVDs (and books and CDs) can go media mail and that's very cheap. Like $3 for 3 pounds.
I was selling off some old PC Magazines and Bytes from when I was a teenager and was surprised that magazines aren't supposed to be shipped via media mail since they've got advertisements in them.
I was selling off some old PC Magazines and Bytes from when I was a teenager and was surprised that magazines aren't supposed to be shipped via media mail since they've got advertisements in them.
> USPS Priority Mail for $9.99
Priority Mail != Media Mail
Priority Mail != Media Mail
> they definitely have the one-click-and-you-have-it-tomorrow game nailed.
There's no question about that.
But personally, this isn't a big deal for me. That's one of the reasons that I've really taken to "Amazon Day" for shipping -- I rarely need something the next day, and am entirely happy to wait up to a week for my Amazon order in exchange for only having one shipment per week.
My cutoff for "too long" tends to be a week or two, depending.
There's no question about that.
But personally, this isn't a big deal for me. That's one of the reasons that I've really taken to "Amazon Day" for shipping -- I rarely need something the next day, and am entirely happy to wait up to a week for my Amazon order in exchange for only having one shipment per week.
My cutoff for "too long" tends to be a week or two, depending.
Are you considering the PayPal fees you pay for payment processing when you sell on eBay? That's on top of the approximately 10% that eBay charges. eBay also charges listing fees and final value fees. I haven't done a deep dive on my own selling data to come up with an accurate comparision, but I think they're comparable.
> and most suppliers do FBA which tacks on a more expensive shipping charge than you would have otherwise with USPS.
That assumes equivalent costs in other parts of your operation. But with FBA, isn't Amazon doing your stock-keeping for you? You can avoid paying for warehouse space if Amazon is your warehouse.
That assumes equivalent costs in other parts of your operation. But with FBA, isn't Amazon doing your stock-keeping for you? You can avoid paying for warehouse space if Amazon is your warehouse.
Amazon does make you pay to use the warehouse space. If your inventory is not selling, they start charging you for housing the inventory. Their ideal scenario is to force sellers to send inventory that matches sales so warehousing is optimized.
I thought we paid for warehousing regardless. Though I think there are situations where if your selling inventory is turning over quickly, they may waive warehousing fees. The incentive is definitely there to manage inventory at optimal levels.
If your inventory sits too long in their warehouse, the fees go from "regular" storage fees to "long-term" storage fees. Those fees are much higher, which incentivizes the seller to put the stuff on sale to blow it out of their warehouses, or you can have the inventory sent back to you.
Also, fees vary by category and season. Around the holidays, you'll see them making a push to increase long-term storage fees to make way for the stuff that will actually sell, and on categories which are hot for the holidays, you might see them providing incentives with lower storage fees.
I'm not the primary person that deals with Amazon FBA, but he sits next to me. Don't take what I'm saying as the gospel, but this is based on somewhat second hand experiencing and reading some of the emails that come through. My partner pays more attention to those details.
If your inventory sits too long in their warehouse, the fees go from "regular" storage fees to "long-term" storage fees. Those fees are much higher, which incentivizes the seller to put the stuff on sale to blow it out of their warehouses, or you can have the inventory sent back to you.
Also, fees vary by category and season. Around the holidays, you'll see them making a push to increase long-term storage fees to make way for the stuff that will actually sell, and on categories which are hot for the holidays, you might see them providing incentives with lower storage fees.
I'm not the primary person that deals with Amazon FBA, but he sits next to me. Don't take what I'm saying as the gospel, but this is based on somewhat second hand experiencing and reading some of the emails that come through. My partner pays more attention to those details.
Yes I was talking about the long term storage fees which they used to charge if inventory was rolled over after 30 days. The items we used to sell needed to be purchased in high quantities to get a decent price so we would ship items to FBA on a monthly basis trying to estimate demand. Eventually, Amazon itself started selling the same item and it just wasn't worth it especially with higher fees for FBA.
I wish Amazon would let me set a flag to only return results for things sold by Amazon themselves.
Well, then you'd miss out on a lot of great products from third-party sellers, and with this latest push that is the subject of this article, you'd see less and less showing up.
...and you can do this after you do a search and see results and get to where you have additional filtering options. I'm guilty of using "Show only Prime offers" or whatever that one is called. After becoming a seller that does FBA and seller-fulfilled, I use that filter less. There are great small businesses that still ship very fast, and at competitive prices and since I'm one now, I feel their pain and want to support them too. I can also be patient on a lot of my shipments and don't require 2-day shipping.
...and you can do this after you do a search and see results and get to where you have additional filtering options. I'm guilty of using "Show only Prime offers" or whatever that one is called. After becoming a seller that does FBA and seller-fulfilled, I use that filter less. There are great small businesses that still ship very fast, and at competitive prices and since I'm one now, I feel their pain and want to support them too. I can also be patient on a lot of my shipments and don't require 2-day shipping.
> There are great small businesses that still ship very fast, and at competitive prices and since I'm one now
The problem is that there are also a lot of scumbags doing the same thing, and it's impossible to tell the great small businesses from the scammers. I've been burned by that a few times, and it's why I don't buy anything from Amazon unless Amazon is fulfilling the order (where I have at least some recourse).
If I'm buying directly from small sellers, I'm either using their website directly or I'm doing it on eBay.
The problem is that there are also a lot of scumbags doing the same thing, and it's impossible to tell the great small businesses from the scammers. I've been burned by that a few times, and it's why I don't buy anything from Amazon unless Amazon is fulfilling the order (where I have at least some recourse).
If I'm buying directly from small sellers, I'm either using their website directly or I'm doing it on eBay.
100% that. The only way to filter on the seller is to dig to the deepest category level, which is not ideal.
How do you avoid them?
I've always found this extension pretty useful against 'cookie-walls': https://github.com/Cookie-AutoDelete/Cookie-AutoDelete. Also, general cookie hygiene.
> To bypass the pay/nag wall
Why Outline over the Internet Archive [1]? The Archive is a non-profit with a decent privacy policy and identifiable leadership. Outline is an anonymous entity of unknown organisation with unknown motives.
[1] https://archive.org
Why Outline over the Internet Archive [1]? The Archive is a non-profit with a decent privacy policy and identifiable leadership. Outline is an anonymous entity of unknown organisation with unknown motives.
[1] https://archive.org
On August 4, 2014, Topolsky (co-founder and editor-in-chief of The Verge) stepped down from The Verge and Vox Media to join Bloomberg "as the editor of a series of new online ventures it is introducing as part of a revamped journalism strategy". He left Bloomberg in July 2015 after clashes with Michael Bloomberg over the direction of its digital media strategy and started the digital news company The Outline.
https://en.wikipedia.org/wiki/Joshua_Topolsky
https://en.wikipedia.org/wiki/Joshua_Topolsky
Thank you for the link. From the Wikipedia article on Outline:
“In March 27, 2019, it was announced that Bryan Goldberg and his company Bustle Digital Media had bought The Outline” [1].
So a VC-backed site got acquired by a publisher whose customers are advertisers. Meanwhile, Bloomberg’s “nag wall” is neutered with incognito mode. Outline remains, to me, to be a terrible trade-off.
[1] https://www.vox.com/2019/3/27/18284591/bustle-outline-bryan-...
“In March 27, 2019, it was announced that Bryan Goldberg and his company Bustle Digital Media had bought The Outline” [1].
So a VC-backed site got acquired by a publisher whose customers are advertisers. Meanwhile, Bloomberg’s “nag wall” is neutered with incognito mode. Outline remains, to me, to be a terrible trade-off.
[1] https://www.vox.com/2019/3/27/18284591/bustle-outline-bryan-...
Why use Internet Archive bandwidth when an alternative is there?
> Why use Internet Archive bandwidth when an alternative is there?
Outline looks sketchy. Its privacy policy allows for disclosure to analytics companies "or when Outline believes in good faith that disclosure is reasonably necessary to protect the property or rights of Outline, third parties or the public at large" [1]. (TL; DR Whenever, too whomever.) It explicitly considers business transfers, implying for-profit motives.
We don't know where it's incorporated. We don't know what kind of entity it is, nor to whom its beholden. We don't even know who is in charge nor how they're incentivized.
The Archives is run by honest people. If you don't like using their resources without compensation, donate to them. (Or, better yet, pay for the journalism you value.)
Outline is a lousy attempt at infringement for unknown gain by unknown people, a passable MITM.
[1] https://www.outline.com/privacy.html
Outline looks sketchy. Its privacy policy allows for disclosure to analytics companies "or when Outline believes in good faith that disclosure is reasonably necessary to protect the property or rights of Outline, third parties or the public at large" [1]. (TL; DR Whenever, too whomever.) It explicitly considers business transfers, implying for-profit motives.
We don't know where it's incorporated. We don't know what kind of entity it is, nor to whom its beholden. We don't even know who is in charge nor how they're incentivized.
The Archives is run by honest people. If you don't like using their resources without compensation, donate to them. (Or, better yet, pay for the journalism you value.)
Outline is a lousy attempt at infringement for unknown gain by unknown people, a passable MITM.
[1] https://www.outline.com/privacy.html
Just clear your cache and cookies.
>they have to compete with everyone else on actually selling and shipping their products direct to consumers
Incorrect, that would entail shutting down FBA which they aren't doing.
Incorrect, that would entail shutting down FBA which they aren't doing.
Amazon is basically only going to purchase products for resale from large suppliers, and will shove the rest into the normal marketplace operations where they have to compete with everyone else on actually selling and shipping their products direct to consumers.
"Your margins are our opportunity." -- Jeff Bezos.
"Your margins are our opportunity." -- Jeff Bezos.
No one ever talks about eBay anymore....but when are we going to collectively realize that they are the best of the "big tech" companies?
They've stayed remarkable true to their mission, haven't entered politics (ironic given previous CEO), and continued to offer a good service.
Since the commingling of inventory is now so prevalent at Amazon, I find myself using eBay more and more.
They've stayed remarkable true to their mission, haven't entered politics (ironic given previous CEO), and continued to offer a good service.
Since the commingling of inventory is now so prevalent at Amazon, I find myself using eBay more and more.
The best big tech company?
Maybe presently people have no major beefs with the organization.
But there have been more than enough negative actions by this company in the past including:
Suing craigslist (and losing) for breach of fiduciary duty because it wouldn't exploit its users enough. This was knowing that the shares were acquired in conflict with the ownership and mission of craigslist.
eBay tried to get inside information from Craigslist while it was secretly preparing release of Kijiji.[1]
eBay has been facilitating the sale of counterfeit items long before Amazon. Many sellers were upset by the requirement to use PayPal anded even acted to ban use of competing services.
So while the heat may be on Amazon, I would hold off on elevating eBay to some superior ethical position.
[1] https://www.wsj.com/articles/SB120959923436057759
Maybe presently people have no major beefs with the organization.
But there have been more than enough negative actions by this company in the past including:
Suing craigslist (and losing) for breach of fiduciary duty because it wouldn't exploit its users enough. This was knowing that the shares were acquired in conflict with the ownership and mission of craigslist.
eBay tried to get inside information from Craigslist while it was secretly preparing release of Kijiji.[1]
eBay has been facilitating the sale of counterfeit items long before Amazon. Many sellers were upset by the requirement to use PayPal anded even acted to ban use of competing services.
So while the heat may be on Amazon, I would hold off on elevating eBay to some superior ethical position.
[1] https://www.wsj.com/articles/SB120959923436057759
> Suing craigslist (and losing) for breach of fiduciary duty because it wouldn't exploit its users enough.
The lawsuit had nothing to do with "exploiting users". It was about Newmark and Buckmaster's attempt to dilute eBay's shares. A lawsuit eBay won.
The lawsuit had nothing to do with "exploiting users". It was about Newmark and Buckmaster's attempt to dilute eBay's shares. A lawsuit eBay won.
The fiduciary duty was to eBay. Which means eBay wanted craigslist to make more money, either through ads, data sales or both. Craigslist is so comparably benevolent, any additional revenue would have exploited its users.
The lawsuit also involved reversing the staggered board elections craigslist put in place specifically to prevent eBay from gaining access to confidential material.
Both the share dilution and board procedural change were done in response to ebay’s surprise launch of an attempted direct competitor to craigslist.
Both sides claimed victory, and eBay did not end up influencing Craigslist in any way. So it is hard to paint it as much of a victory. [1]
And whatever you think of craigslists slow, stodgy UX and feature set, it is hard to imagine if eBay had gained control having some positive impact on the site’s destiny apart from some comparably exploitive direction.
Ebay wanted first to make money off craigslist, and failing that to get info that would allow their competing biz to do so.
[1] https://blog.sfgate.com/techchron/2010/09/10/did-ebay-really...
The lawsuit also involved reversing the staggered board elections craigslist put in place specifically to prevent eBay from gaining access to confidential material.
Both the share dilution and board procedural change were done in response to ebay’s surprise launch of an attempted direct competitor to craigslist.
Both sides claimed victory, and eBay did not end up influencing Craigslist in any way. So it is hard to paint it as much of a victory. [1]
And whatever you think of craigslists slow, stodgy UX and feature set, it is hard to imagine if eBay had gained control having some positive impact on the site’s destiny apart from some comparably exploitive direction.
Ebay wanted first to make money off craigslist, and failing that to get info that would allow their competing biz to do so.
[1] https://blog.sfgate.com/techchron/2010/09/10/did-ebay-really...
Also, they own Paypal which itself has tons of issues (it had them before the purchase and apparently those issues continue as regular HN posts show).
>they own Paypal
They spun Paypal off into an independent company in 2015.
They spun Paypal off into an independent company in 2015.
Yes, technically the are separate. But given how tightly the systems remain integrated, it appears that was just for show.
>given how tightly the systems remain integrated
Ebay is moving away from its tight integration with Paypal and has a deal with a new payment processor (Adyen) after it's current paypal deal ends in 2020. Between that and the fact that they're two public companies with separate freely traded ownership, it's hard for me to buy the argument that the spin off was "just for show".
https://www.ebayinc.com/stories/news/ebay-to-intermediate-pa...
Ebay is moving away from its tight integration with Paypal and has a deal with a new payment processor (Adyen) after it's current paypal deal ends in 2020. Between that and the fact that they're two public companies with separate freely traded ownership, it's hard for me to buy the argument that the spin off was "just for show".
https://www.ebayinc.com/stories/news/ebay-to-intermediate-pa...
Also (in Canada at least) they are using a service called "Shippo" for shipping labels, instead of PayPal's shipping label service
They *owned Paypal
Yes, this. I don't consider eBay to be a "good guy". But they do increasingly appear to be the best of a bad bunch.
Even NewEgg sells on eBay, and they have their own website!
There is something to be said for the stability of marketplace rules and ecosystem. No rules are perfect, but if the rules are stable, people eventually learn how to interpret signals and assess risk. If the rules are constantly changing, all that hard-earned customer knowledge is discarded at random intervals, because the platform vendor has silently forked/rebooted the economy into a parallel universe. Now you have sellers in the new universe and buyers in the old universe.
In a sane regulatory environment, platforms would be forced to put a version number on both the UX and ToS, so people would at least know the universe/rules have changed. As with other mandatory reporting, metrics on public notification would reduce "universe churn" and make it part of the marketing/competitive landscape.
There is something to be said for the stability of marketplace rules and ecosystem. No rules are perfect, but if the rules are stable, people eventually learn how to interpret signals and assess risk. If the rules are constantly changing, all that hard-earned customer knowledge is discarded at random intervals, because the platform vendor has silently forked/rebooted the economy into a parallel universe. Now you have sellers in the new universe and buyers in the old universe.
In a sane regulatory environment, platforms would be forced to put a version number on both the UX and ToS, so people would at least know the universe/rules have changed. As with other mandatory reporting, metrics on public notification would reduce "universe churn" and make it part of the marketing/competitive landscape.
Amazon is a sprawling complex of market stalls masquerading as a single Costco, while Ebay is a sprawling complex of market stalls that makes no pretensions of being something else.
Amazon is a decaying strip mall surrounded by market stalls. There is a big-box store in there somewhere, where the "Amazon Basics" products come from.
The Faux Cathedral and the Bazaar?
For those wondering where the quote comes from;
https://monoskop.org/images/e/e0/Raymond_Eric_S_The_Cathedra...
https://monoskop.org/images/e/e0/Raymond_Eric_S_The_Cathedra...
> I find myself using eBay more and more.
The irony is that what attracted me to Amazon in the first place was that they could mostly supply the things I used to go to eBay for, but did it better -- because Amazon held the inventory and handled returns.
If Amazon no longer does that for the things I buy, then there's no advantage to using them. It sounds like eBay will be getting more of my business back.
The irony is that what attracted me to Amazon in the first place was that they could mostly supply the things I used to go to eBay for, but did it better -- because Amazon held the inventory and handled returns.
If Amazon no longer does that for the things I buy, then there's no advantage to using them. It sounds like eBay will be getting more of my business back.
I've had nothing but good experiences with ebay over the past few years, and I'm a very heavy user (buying and selling). I've been a member since 2002, FWIW.
Me too.
eBay has consistently handled disputes quickly and without hassles. Amazon has never managed that, even when they're the ones fulfilling the order.
eBay has consistently handled disputes quickly and without hassles. Amazon has never managed that, even when they're the ones fulfilling the order.
agreed, since Amazon product quality has become more suspect, I've found myself going to eBay for lots of various types of goods. I'm usually more pleased with my eBay experience than my Amazon experience, though I do use Amazon more frequently.
Yeah, I've continued to use eBay to make some of the higher ticket purchases I used to make on Amazon. If you want to buy something quality used, it's hard to find an alternative, and frankly, buying something that's high quality and used is one of the best ways to make a purchase (IE instruments, clothing).
Ebay's been good to me for nigh on 20 years, and it's not because everything is perfect quality. It's rather that, unlike Amazon, they don't try to hide and commingle differing quality items. Counterfeiting is still a problem, but giving negative feedback is still possible and it seems still encouraged in cases where it's warranted, and that makes the marketplace dynamics actually even out at scale. This is in stark comparison to Amazon, and it makes me trust eBay aggregate feedback scores much more on the whole.
I'll use Amazon for low-risk purchases, but otherwise, I'll find another retailer these days. The risk of something going awry and receiving poor after purchase support is too high.
Ebay's been good to me for nigh on 20 years, and it's not because everything is perfect quality. It's rather that, unlike Amazon, they don't try to hide and commingle differing quality items. Counterfeiting is still a problem, but giving negative feedback is still possible and it seems still encouraged in cases where it's warranted, and that makes the marketplace dynamics actually even out at scale. This is in stark comparison to Amazon, and it makes me trust eBay aggregate feedback scores much more on the whole.
I'll use Amazon for low-risk purchases, but otherwise, I'll find another retailer these days. The risk of something going awry and receiving poor after purchase support is too high.
> [eBay] stayed remarkable true to their mission
Having used eBay since its early days, I stopped when they lost their focus on auctions and became just another platform. Now I have to bother with market research to set a fixed price - much more hassle than auctioning at zero Euros and letting the market find the optimum price (only works in liquid categories though). I understand that the mass market finds auctions bewildering and prefers fixed price... I'm still disappointed.
Having used eBay since its early days, I stopped when they lost their focus on auctions and became just another platform. Now I have to bother with market research to set a fixed price - much more hassle than auctioning at zero Euros and letting the market find the optimum price (only works in liquid categories though). I understand that the mass market finds auctions bewildering and prefers fixed price... I'm still disappointed.
Auctioning the way eBay originally did it is usually sensible where items are unique. Used/vintage stuff, one-offs and rarities, opportunist-oriented bundles...
Selling toilet paper, or USB cables with that sort of bidding model doesn't work. I mean, prices don't need to fixed either. A dynamic bidding system of some sort (eg AdWords auctions) is definitely an interesting idea. But, to be the place where you ship for regular stuff it needs to be lower overhead for the buyer.
That's nothing against eBay's original mission. They did do (not anymore? I haven't tried in years) that job pretty well. I suspect it's still an awesome place to buy a proverbial broken radio.
Selling toilet paper, or USB cables with that sort of bidding model doesn't work. I mean, prices don't need to fixed either. A dynamic bidding system of some sort (eg AdWords auctions) is definitely an interesting idea. But, to be the place where you ship for regular stuff it needs to be lower overhead for the buyer.
That's nothing against eBay's original mission. They did do (not anymore? I haven't tried in years) that job pretty well. I suspect it's still an awesome place to buy a proverbial broken radio.
Me, too.
Unsure if they are the best, but they have maintained their core business. Yes, they lost to amazon in the overall race, but the niche they have carved maintains itself well. I was growing concerned in the last few years they were racing to be amazon, but in the last year they have pulled back on it.
They need to update their app and website, but overall, I like their pro buyer stance on transactions. Incredibly, most of the time I am looking for something specific, ebay sellers have lower prices than amazon.
Unsure if they are the best, but they have maintained their core business. Yes, they lost to amazon in the overall race, but the niche they have carved maintains itself well. I was growing concerned in the last few years they were racing to be amazon, but in the last year they have pulled back on it.
They need to update their app and website, but overall, I like their pro buyer stance on transactions. Incredibly, most of the time I am looking for something specific, ebay sellers have lower prices than amazon.
Looks to me like they've donated quite a bit of money to conservative democrats and republicans so I wouldn't exactly say they haven't entered politics.
https://www.opensecrets.org/pacs/pacgot.php?cycle=2018&cmte=...
Their CEO also sent a somewhat political all office email after the last presidential election: https://www.vox.com/2016/11/9/13576446/ebay-ceo-memo-us-elec...
My point is just to say that "market liberalism" is a stance, not the absence of a stance.
https://www.opensecrets.org/pacs/pacgot.php?cycle=2018&cmte=...
Their CEO also sent a somewhat political all office email after the last presidential election: https://www.vox.com/2016/11/9/13576446/ebay-ceo-memo-us-elec...
My point is just to say that "market liberalism" is a stance, not the absence of a stance.
> They've stayed remarkable true to their mission, haven't entered politics (ironic given previous CEO), and continued to offer a good service.
Well, aside from forcing you to use paypal and go through their mediation process. I'll never spend a cent on ebay again, or sell there—credit cards are the only way to shield yourself from bad purchases (that and buying in person).
Well, aside from forcing you to use paypal and go through their mediation process. I'll never spend a cent on ebay again, or sell there—credit cards are the only way to shield yourself from bad purchases (that and buying in person).
I've been selling on eBay recently and it's been surprisingly easy. Not making a killing by any means since it's just a side hustle but that extra 5k in the last 90 days is pretty nice for very little work.
I think the only beef people have with eBay is how dumb their support people can be sometimes when you run into a problem.
I think the only beef people have with eBay is how dumb their support people can be sometimes when you run into a problem.
ebay is getting more attractive again. But probably the stupidest company in the tech field.
They had skype, a kind of social network. They could have been facebook.
They had paypal they could have been the major payment processor on phones (see WeChat)
A lot of missed opportunities.
They had skype, a kind of social network. They could have been facebook.
They had paypal they could have been the major payment processor on phones (see WeChat)
A lot of missed opportunities.
I still use eBay once in a while, but many times they're more expensive than Amazon and the shipping is much slower. I'm not totally sold.
If eBay started a prime-type program where I could pay one fee for "free" 2-day shipping all year long, I'd buy more items from there. Until they do, Amazon is just easier and more reliable and that's more important than price.
Peter Thiel was never CEO of eBay. He was CEO of PayPal until eBay pruchased it, at which point he left the company to found Clarium Capital and Palantir.
EDIT: While the above statement is correct, I'm an idiot and totally forgot that a former eBay CEO ran for governor of California and remains active in politics.
EDIT: While the above statement is correct, I'm an idiot and totally forgot that a former eBay CEO ran for governor of California and remains active in politics.
I thought that was either a reference to Meg Whitman, who has run for office, or Pierre Omidyar, who funded First Look Media, parent of The Intercept.
Oh, you're right. Facepalm moment for me, I definitely knew about Whitman and politics.
is ebay considered one of the "big tech" companies? maybe they were at one point, but their market cap is at least an order of magnitude smaller than any of the FAANG companies
I would like tractability to original manufacturer, as well as any claims for compliance with various safety and production quality standards. Pretty much supplier transparency.
Sounds like a great browser extension: identify, with a % of confidence, if the product is available from an Alibaba wholesaler.
So... blockchain for product quality? :-)
Yeah, I'd like to be able to be able to look into / find who's a member of the bazaar and just fencing products, versus who's selling their own items directly. For example - I wouldn't buy speakers from some random reseller. I'd buy 'em from the original manufacturer, or the handful of "known" resellers that we all know like the big box stores.
Yeah, I'd like to be able to be able to look into / find who's a member of the bazaar and just fencing products, versus who's selling their own items directly. For example - I wouldn't buy speakers from some random reseller. I'd buy 'em from the original manufacturer, or the handful of "known" resellers that we all know like the big box stores.
This was discussed in depth on HN a while back about why blockchain doesn't really work well for supply chain management: https://blog.smartdec.net/you-do-not-need-blockchain-eight-p...
[deleted]
https://trutags.com/
This can provide authenticity guarantees and act as the root of a blockchain for each item.
This is a big move, it transitions Amazon from a more traditional retailer, to something more akin to a dropshipper. I'm reminded of Wayfairs Castlegate business. The manufacturer now takes on the responsibility of forecasting, they assume the risk of holding inventory, but Amazon still controls the customer impact things like boxing and shipping.... and they get to do it at the manufacturers cost.
It's quite brilliant actually.
It's quite brilliant actually.
> Amazon’s aim is to cut costs and focus wholesale purchasing on major brands like Procter & Gamble, Sony and Lego, the people said. That will ensure the company has adequate supplies of must-have merchandise and help it compete with the likes of Walmart, Target and Best Buy.
That would cut out most of my purchases from Amazon. It makes no sense to buy stuff from Amazon that I can get from my local big-box retailer, after all.
That would cut out most of my purchases from Amazon. It makes no sense to buy stuff from Amazon that I can get from my local big-box retailer, after all.
I've already stopped using Amazon.
They are significantly more expensive than Walmart. Which is new, this was not true 4 years ago.
They don't have the selection of stores like digikey.
They lost their purpose completely. I only use Amazon for Email due to modern Email standards.
They are significantly more expensive than Walmart. Which is new, this was not true 4 years ago.
They don't have the selection of stores like digikey.
They lost their purpose completely. I only use Amazon for Email due to modern Email standards.
Anecdotal, but that is what my wife did last year. Walmart having the online order with local pickup serves us better and cheaper. It also removed the biggest Walmart barrier for us which is going physically into the store.
Same here. I think that people got used to using Amazon for everything (because of good pricing), and stopped shopping around as much. Their prices are basically suggested retail price at this point. Which, no one should ever pay.
Also they've switched to the absolute worst, bottom-of-the-barrel delivery companies in many places.
When Canada Post couldn't deliver my package I only had to walk 5 minutes to pick it up.
Whoever their new delivery partner is. I'd have to drive to the edge of the city to pick up my package.
When Canada Post couldn't deliver my package I only had to walk 5 minutes to pick it up.
Whoever their new delivery partner is. I'd have to drive to the edge of the city to pick up my package.
Did you read the full article? They aren't dropping other brands/sellers from the platform. They just aren't going to buying from them anymore. Currently, they buy from some high volume brands directly and then sell the products themselves. They are going to stop doing this with smaller brands, who will now need act as sellers on the platform.
Yes, I read and understood the full article. The thing is that I won't do business with Marketplace sellers -- that place is a snake pit full of badness.
I only buy items from Amazon that are fulfilled by Amazon. If Amazon isn't holding the inventory and fulfilling the order themselves, then I'm not interested. I'll be going to eBay instead.
I only buy items from Amazon that are fulfilled by Amazon. If Amazon isn't holding the inventory and fulfilling the order themselves, then I'm not interested. I'll be going to eBay instead.
Third-party sellers still generally ship their items to Amazon warehouses to be sold. Orders for these items are still "Fulfilled by Amazon". Nothing in this article changes that.
Well, then I don't understand what the article says at all. Can you summarize it for me? What is the change being discussed? What does it affect?
To explain my confusion, here's a quote from the article:
> Amazon secures inventory two ways. The company buys products directly from wholesale vendors, reselling them like a traditional retail store, and it lets independent merchants post their own products on the site in a marketplace model similar to EBay Inc. or a consignment shop. About half of the goods sold on Amazon come from independent merchants, and the change will push the marketplace share of revenue even higher.
To explain my confusion, here's a quote from the article:
> Amazon secures inventory two ways. The company buys products directly from wholesale vendors, reselling them like a traditional retail store, and it lets independent merchants post their own products on the site in a marketplace model similar to EBay Inc. or a consignment shop. About half of the goods sold on Amazon come from independent merchants, and the change will push the marketplace share of revenue even higher.
Basically this: Currently Amazon buys a ton of products wholesale from companies and sells them directly. As in Amazon is both the seller and the fulfillment.
What is happening: Amazon will only do that for the largest brands like Lego, P&G, etc. Smaller brands will still be fulfilled by amazon (products stored in amazon's warehouses) but the actual seller will be the product's brand. This makes that brand compete with other sellers selling their products instead of selling wholesale to Amazon and Amazon having to carry the stock.
What is happening: Amazon will only do that for the largest brands like Lego, P&G, etc. Smaller brands will still be fulfilled by amazon (products stored in amazon's warehouses) but the actual seller will be the product's brand. This makes that brand compete with other sellers selling their products instead of selling wholesale to Amazon and Amazon having to carry the stock.
OK, I confess that I am a total idiot, but I don't understand what you're saying here at all. It also doesn't seem to be what the article is saying.
> Smaller brands will still be fulfilled by amazon (products stored in amazon's warehouses) but the actual seller will be the product's brand.
As opposed to whose brand? Isn't this how it's worked for years already?
> This makes that brand compete with other sellers selling their products instead of selling wholesale to Amazon and Amazon having to carry the stock.
But you just said that Amazon will still be carrying the stock.
I am so very confused here.
> Smaller brands will still be fulfilled by amazon (products stored in amazon's warehouses) but the actual seller will be the product's brand.
As opposed to whose brand? Isn't this how it's worked for years already?
> This makes that brand compete with other sellers selling their products instead of selling wholesale to Amazon and Amazon having to carry the stock.
But you just said that Amazon will still be carrying the stock.
I am so very confused here.
It's about whose balance sheet the stock is on.
If Amazon buys an iPhone, and then lists it for sale on the Amazon store, that's Amazon's iPhone. If Amazon doesn't manage to sell it, Amazon has lost money. If Amazon does sell it, they capture the profit margin between the price they bought it at, and the price they sold it at. Apple, who sold Amazon the iPhone originally, has no further business relationship with the person that buys the phone from Amazon; after the initial sale, it became Amazon's phone to sell, and their customer relationship to have.
This is the traditional "retail" sales model. Amazon is only a retailer for a relatively few products—and now fewer.
For any other brand that shows up on Amazon, Amazon is acting as a Logistics-as-a-Service provider to that business. If you buy a Samsung TV on Amazon, then it's coming from an Amazon warehouse, but Amazon does not own that TV; Samsung (or someone else, maybe a retailer!) does. Samsung (or whoever) are effectively renting warehouse space from Amazon to hold their TVs for them, paying Amazon to deliver their products, etc. in the same way that a developer would pay Amazon to hold data in S3 and deliver messages over SNS. If Samsung wants that TV back, Amazon has to give it back. It's not Amazon's property. But nor did Amazon have to buy it. It's neither an asset nor a liability on their balance sheet. They possess it only in the sense that a self-storage business possesses the contents of a storage unit; or in the sense that FedEx possesses a parcel while delivering it.
This is the https://en.wikipedia.org/wiki/Consignment model of sales. The Amazon store is effectively a consignment store.
Well known examples of consignment:
• Commercial art galleries where the works are for sale. The gallery doesn't own the works; the artist is renting space to display and attempt-to-sell their work.
• Brick-and-mortar book stores. (New) book stores don't own their stock of books; the books' publishers do. The book-store-as-storefront has some limited power to declare sales, but mostly sales are "ordered" by the publisher. When a book store can't sell enough of a book, and have left-over stock that looks like it isn't going anywhere, they must nominally "return" the stock to the publisher by destroying it (i.e. by ripping off the covers, like this: https://www.reddit.com/r/whatisthisthing/comments/7mw74c/why...)
Amazon, as a consignment storefront, doesn't make money off the sale itself; nor can they set profit margins or declare sales. Instead, they make money by charging the supplier for their logistics services. In some consignment businesses, this is a simple flat pay-per-use fee; but for the Amazon store, this is taken as a cut "off the top" of the supplier's gross revenue from the products sold.
If Amazon buys an iPhone, and then lists it for sale on the Amazon store, that's Amazon's iPhone. If Amazon doesn't manage to sell it, Amazon has lost money. If Amazon does sell it, they capture the profit margin between the price they bought it at, and the price they sold it at. Apple, who sold Amazon the iPhone originally, has no further business relationship with the person that buys the phone from Amazon; after the initial sale, it became Amazon's phone to sell, and their customer relationship to have.
This is the traditional "retail" sales model. Amazon is only a retailer for a relatively few products—and now fewer.
For any other brand that shows up on Amazon, Amazon is acting as a Logistics-as-a-Service provider to that business. If you buy a Samsung TV on Amazon, then it's coming from an Amazon warehouse, but Amazon does not own that TV; Samsung (or someone else, maybe a retailer!) does. Samsung (or whoever) are effectively renting warehouse space from Amazon to hold their TVs for them, paying Amazon to deliver their products, etc. in the same way that a developer would pay Amazon to hold data in S3 and deliver messages over SNS. If Samsung wants that TV back, Amazon has to give it back. It's not Amazon's property. But nor did Amazon have to buy it. It's neither an asset nor a liability on their balance sheet. They possess it only in the sense that a self-storage business possesses the contents of a storage unit; or in the sense that FedEx possesses a parcel while delivering it.
This is the https://en.wikipedia.org/wiki/Consignment model of sales. The Amazon store is effectively a consignment store.
Well known examples of consignment:
• Commercial art galleries where the works are for sale. The gallery doesn't own the works; the artist is renting space to display and attempt-to-sell their work.
• Brick-and-mortar book stores. (New) book stores don't own their stock of books; the books' publishers do. The book-store-as-storefront has some limited power to declare sales, but mostly sales are "ordered" by the publisher. When a book store can't sell enough of a book, and have left-over stock that looks like it isn't going anywhere, they must nominally "return" the stock to the publisher by destroying it (i.e. by ripping off the covers, like this: https://www.reddit.com/r/whatisthisthing/comments/7mw74c/why...)
Amazon, as a consignment storefront, doesn't make money off the sale itself; nor can they set profit margins or declare sales. Instead, they make money by charging the supplier for their logistics services. In some consignment businesses, this is a simple flat pay-per-use fee; but for the Amazon store, this is taken as a cut "off the top" of the supplier's gross revenue from the products sold.
Thank you. I actually do understand how consignment works, but I truly appreciate your completeness and the time you put into explaining this to me.
I guess what gets me confused is two things -- first, I thought that the only things that Amazon didn't sell on a consignment basis were things that actually carried Amazon branding. Second, the article seems to imply something a bit different than what you're explaining here.
So, just to check my understanding, this move by Amazon won't really affect anything as far as I am concerned as a customer?
In other words, right now I avoid buying anything from Amazon that Amazon isn't fulfilling out of its warehouses because I've had truly terrible experiences with things that aren't. This change won't reduce the number of items available for purchase with that constraint?
I guess what gets me confused is two things -- first, I thought that the only things that Amazon didn't sell on a consignment basis were things that actually carried Amazon branding. Second, the article seems to imply something a bit different than what you're explaining here.
So, just to check my understanding, this move by Amazon won't really affect anything as far as I am concerned as a customer?
In other words, right now I avoid buying anything from Amazon that Amazon isn't fulfilling out of its warehouses because I've had truly terrible experiences with things that aren't. This change won't reduce the number of items available for purchase with that constraint?
Nobody has full described what's going on, so let me try. There are four categories of things sold on Amazon:
- A) Amazon house brands
- B) Amazon retail
- C) 3rd party seller, fulfilled by Amazon (FBA)
- D) 3rd party seller, fulfilled by Merchant (FBM)
Amazon house brands are the things like Amazon Basics, or a host of other brands that are owned by them even though they're not explicitly labeled as such. Retail is the traditional retail model described by last user, Amazon buys inventory from other companies and then handles sales & fulfillment. FBA is sort of the consignment model, where Amazon doesn't own the inventory but they handle fulfillment. FBM is basically the Ebay model - Amazon is just facilitating the marketplace, taking customer payment etc, but the merchant is responsible for shipping/logistics.
They're going to scale back the number of companies they buy from for retail (B), and those companies will have to use C or D or stop selling on Amazon altogether.
- A) Amazon house brands
- B) Amazon retail
- C) 3rd party seller, fulfilled by Amazon (FBA)
- D) 3rd party seller, fulfilled by Merchant (FBM)
Amazon house brands are the things like Amazon Basics, or a host of other brands that are owned by them even though they're not explicitly labeled as such. Retail is the traditional retail model described by last user, Amazon buys inventory from other companies and then handles sales & fulfillment. FBA is sort of the consignment model, where Amazon doesn't own the inventory but they handle fulfillment. FBM is basically the Ebay model - Amazon is just facilitating the marketplace, taking customer payment etc, but the merchant is responsible for shipping/logistics.
They're going to scale back the number of companies they buy from for retail (B), and those companies will have to use C or D or stop selling on Amazon altogether.
Interestingly, those companies could also switch to A: offer their services as a white-label manufacturer for Amazon to produce goods in that same vertical they were previously retailing in.
Amazon used to retail tons of products, for two reasons:
1. Comparative ROI of different business models at different scales. When you're smaller, there's more money in being the middleman (if you can source products more cheaply through negotiation or clever sourcing, you can capture a large profit margin); and there's less money in being a logistics provider (since, without a built-up brand in the space, you have to compete on price.) Now that Amazon is huge, the scales are flipped: being the middleman and sourcing products is now more of a burden than a profit source, while running a well-known and trusted logistics provider is now a huge profit center. But this wasn't always true.
2. Bootstrapping. Consignment is a partnership built on trust. Big manufacturers won't do it with small/unknown storefronts. A retail supply-chain relationship (where the goods are—from the manufacturer's perspective—a sale, as soon as the retailer takes possession of them) is safer and lower-commitment for both parties. It's like hiring someone as a contractor instead of as an employee. Amazon ca. 1994 needed goods in their storefront, and the only way to get those goods into their storefront as a relative unknown was by buying them at wholesale, like a regular retailer.
> So, just to check my understanding, this move by Amazon won't really affect anything as far as I am concerned as a customer?
Definitely; in the long term, nothing will change. But, in the very short term, you might see a blip.
If nobody other than Amazon was selling some product on the Amazon storefront, and the manufacturer is asleep on their feet, the product's listing might pop out of existence for a few days, before the manufacturer bothers to take possession of the listing. Every manufacturer that Amazon was retailing for inevitably will re-list the products themselves (as a consigner), because Amazon is now too large to ignore as a sales channel.
1. Comparative ROI of different business models at different scales. When you're smaller, there's more money in being the middleman (if you can source products more cheaply through negotiation or clever sourcing, you can capture a large profit margin); and there's less money in being a logistics provider (since, without a built-up brand in the space, you have to compete on price.) Now that Amazon is huge, the scales are flipped: being the middleman and sourcing products is now more of a burden than a profit source, while running a well-known and trusted logistics provider is now a huge profit center. But this wasn't always true.
2. Bootstrapping. Consignment is a partnership built on trust. Big manufacturers won't do it with small/unknown storefronts. A retail supply-chain relationship (where the goods are—from the manufacturer's perspective—a sale, as soon as the retailer takes possession of them) is safer and lower-commitment for both parties. It's like hiring someone as a contractor instead of as an employee. Amazon ca. 1994 needed goods in their storefront, and the only way to get those goods into their storefront as a relative unknown was by buying them at wholesale, like a regular retailer.
> So, just to check my understanding, this move by Amazon won't really affect anything as far as I am concerned as a customer?
Definitely; in the long term, nothing will change. But, in the very short term, you might see a blip.
If nobody other than Amazon was selling some product on the Amazon storefront, and the manufacturer is asleep on their feet, the product's listing might pop out of existence for a few days, before the manufacturer bothers to take possession of the listing. Every manufacturer that Amazon was retailing for inevitably will re-list the products themselves (as a consigner), because Amazon is now too large to ignore as a sales channel.
FBA is very very different from being sold by Amazon. Its a cancerous scheme that charges ridiculously high 15% fees for the privilege of being listed on Amazon.
It's cancerous, but in the same way that Apple/Google/Valve charging (even higher) margins to allow software on their storefront is cancerous. We should fix this problem universally.
Their definition of 'smaller' is <$10m sales/year, which is gigantic and basically excludes maybe 95% of the myriad products Amazon now sells.
If I'm not buying from Amazon I have no reason to shop there. Its just another marketplace and I like ebay a lot more for that.
If I'm not buying from Amazon I have no reason to shop there. Its just another marketplace and I like ebay a lot more for that.
I don't think you understood what the parent commenter's point. Nothing has been excluded. Those brands will just turn around and sell on Amazon themselves. All the same products will be available. The products will just now be listed as sold by by their manufacturer, and "Fulfilled By Amazon"; rather than being sold by Amazon.
It's the difference between a chain coffee shop in a bookstore being staffed by employees of the bookstore, or being staffed by corporate employees of the coffee-shop chain. Either way, you can go into the bookstore and get coffee. It's just a matter of who's getting the profit margin and dictating sales deals.
Also, most big-ticket name-brand items on Amazon are already sold by their manufacturer, because that's a better deal for the manufacturer. For example, iPhones on Amazon are sold by Apple, because not even Amazon has enough bargaining power to get wholesale prices from Apple. This has always been the case. It's only the medium-sized businesses, large enough to matter to Amazon's bottom line, but small enough for Amazon to bully, that Amazon was acting as a middle-man for. They're giving some of that up, because the profit margin they were capturing as a middle-man, which was previously enticing to them, is now too slim to matter to them.
It's the difference between a chain coffee shop in a bookstore being staffed by employees of the bookstore, or being staffed by corporate employees of the coffee-shop chain. Either way, you can go into the bookstore and get coffee. It's just a matter of who's getting the profit margin and dictating sales deals.
Also, most big-ticket name-brand items on Amazon are already sold by their manufacturer, because that's a better deal for the manufacturer. For example, iPhones on Amazon are sold by Apple, because not even Amazon has enough bargaining power to get wholesale prices from Apple. This has always been the case. It's only the medium-sized businesses, large enough to matter to Amazon's bottom line, but small enough for Amazon to bully, that Amazon was acting as a middle-man for. They're giving some of that up, because the profit margin they were capturing as a middle-man, which was previously enticing to them, is now too slim to matter to them.
They're dropping those brands into the midden heap that is the "marketplace" where you can't be sure of what you're getting. If Amazon was selling it directly, you had some confidence they were buying from that seller. No longer.
Amazon buys are now just as risky as Ebay ever was.
Amazon buys are now just as risky as Ebay ever was.
> That would cut out most of my purchases from Amazon. It makes no sense to buy stuff from Amazon that I can get from my local big-box retailer, after all.
I bet you $5 that:
1) their decision was not made in a vacuum with no information
And
2) you might not represent a significant portion of their customer base.
I bet you $5 that:
1) their decision was not made in a vacuum with no information
And
2) you might not represent a significant portion of their customer base.
I never claimed that I represented a significant portion of their customer base. I was merely stating that this is likely to seriously reduce my spending on Amazon.
Which is probably a good thing, really. Maybe I'll even be able to ditch my Prime membership!
Which is probably a good thing, really. Maybe I'll even be able to ditch my Prime membership!
IDK, sounds (mostly?) like a CYA move. That is, the Counterfeit Apocalypse was coming, but this helps them dodge that. I would think similar for all the bogus reviews and rating. I can hear it now, "Oh. Those? Those aren't __our__ products. We only list them."
I hate to sound like a cynic, but me thinks Amazon's legal team cooked this up, or at least had a heavy hand in it.
I hate to sound like a cynic, but me thinks Amazon's legal team cooked this up, or at least had a heavy hand in it.
I wonder if they'll give all these small sellers the co-mingle option. If they switch to a model where the original vendor pays the extra to not co-mingle, it might indeed address the counterfeit copy. (Buy at MSRP from the original vendor, and be assured that it's genuine, or buy a discount version from another vendor, and take what you get.)
Another ramification... many suppliers/vendors will now be "more directly" competing with their own customers within the amazon marketplace. Whereas before a vendor could sell a large quantity to Amazon and then smaller quantities (at higher prices) to middlemen and let the middleman fight it out, now they'll be a huge incentive to price in such a way that middlemen get cut out.
If this sounds good (hey, no middlemen, better for us) consider this typical situation (I know it well)... Retail company buys toys for sale in store, but uses marketplace for overstock, offsets, and to keep products on shelves fresh... Not a huge profit center, but an important part of "flow" - now the viability of that shrinks as suppliers squeeze prices upwards.
And the cycle continues... retailers have to raise prices to make up for what little "volume" sales they do... people stop shopping retail because it is "too expensive" and down go more independent stores.
If this sounds good (hey, no middlemen, better for us) consider this typical situation (I know it well)... Retail company buys toys for sale in store, but uses marketplace for overstock, offsets, and to keep products on shelves fresh... Not a huge profit center, but an important part of "flow" - now the viability of that shrinks as suppliers squeeze prices upwards.
And the cycle continues... retailers have to raise prices to make up for what little "volume" sales they do... people stop shopping retail because it is "too expensive" and down go more independent stores.
Alibaba tried the same thing. It did not go well
The result is well known. It quickly became apparent that very few people went online to buy "upscale brand stuff," and it overloaded their logistics big time
The result is well known. It quickly became apparent that very few people went online to buy "upscale brand stuff," and it overloaded their logistics big time
Amazon is no longer the lowest cost and highest quality store.
They have become just another store.
Moves like this show they are losing their benefits more and more
They have become just another store.
Moves like this show they are losing their benefits more and more
"just another store"
Hah. Their picking and shipping logistics are far and away superior to any other retailer. They offer free 1-day shipping to large swaths of the U.S. for Prime members.
Hah. Their picking and shipping logistics are far and away superior to any other retailer. They offer free 1-day shipping to large swaths of the U.S. for Prime members.
Have any more information on this? And do you think there is not more market elasticity in the US?
It also seems this only effects wholesalers, not the traditional resalers.
It also seems this only effects wholesalers, not the traditional resalers.
You know that Alibaba have T-mall?
It was their original take on "direct upscale retail brands" online mall.
They were a late comes after JD had some early success, and followed by countless clones.
T-mall was losing money big time, and none of bigger Taobao merchants wanted to move, moreover new Taobao brand stores were beginning to eat into T-mall.
So, at around 2016 Alibaba decided to "give them a nudge" with racking up their fees, putting arbitrary limits on their accounts, and blatant "first dose free" offers to switch to T-mall.
In the end, only few did, and one who did really did not manage to get full advantage of the platform.
Most "upscale" brand suppliers valued control given by having their Taobao store too much to switch to being banal wholesalers.
Lately, they reversed their stance on Taobao brand stores. But yeah, they definitely shot themselves in the foot with that move.
It was their original take on "direct upscale retail brands" online mall.
They were a late comes after JD had some early success, and followed by countless clones.
T-mall was losing money big time, and none of bigger Taobao merchants wanted to move, moreover new Taobao brand stores were beginning to eat into T-mall.
So, at around 2016 Alibaba decided to "give them a nudge" with racking up their fees, putting arbitrary limits on their accounts, and blatant "first dose free" offers to switch to T-mall.
In the end, only few did, and one who did really did not manage to get full advantage of the platform.
Most "upscale" brand suppliers valued control given by having their Taobao store too much to switch to being banal wholesalers.
Lately, they reversed their stance on Taobao brand stores. But yeah, they definitely shot themselves in the foot with that move.
Then what Amazon is doing here is reverse of what Alibaba/Tmall/Taobao tried. Amazon is pushing smaller brands(<$10M) from being a wholesaler to become a 3rd party seller. but Alibaba tried to push brands from being a 3p seller to a wholesaler. This may be because Taobao wasn't charging 3rd party sellers as much as Amazon, because Taobao was in direct competition with ebay. Also I guess Taobao doesn't have something similar to Fullfillment_by_Amazon, and it does direct shipment from seller to buyer.
This is a load of total bull, you sound like you never went into this industry and don't know how Alibaba makes money and how much.
Especially this line:
>T-mall was losing money big time
Especially this line:
>T-mall was losing money big time
Man, Alibaba was a company on my list of prospective employers for years, and I personally knew not so few people there. I certainly know what I talk.
For the first few years, T-mall was effectively running at near 0 profit, when they (unsuccessfully) tried to catch up with JD.
Please substantiate your commentary
Some more background: https://www.tlgcommerce.com.hk/blog/why-brands-are-leaving-t...
For the first few years, T-mall was effectively running at near 0 profit, when they (unsuccessfully) tried to catch up with JD.
Please substantiate your commentary
Some more background: https://www.tlgcommerce.com.hk/blog/why-brands-are-leaving-t...
This sounds bad, but is honestly anyone surprised?
Client/customer concentration is something that every business needs to be watching as a matter of critical importance.
The big boys will always play rough and negotiate things on their terms when they can get away with it - be it the Government, Apple, Walmart or Amazon.
I have sympathy for the companies that are about to be put under immense stress, but it should also be something that every business has already planned for.
Client/customer concentration is something that every business needs to be watching as a matter of critical importance.
The big boys will always play rough and negotiate things on their terms when they can get away with it - be it the Government, Apple, Walmart or Amazon.
I have sympathy for the companies that are about to be put under immense stress, but it should also be something that every business has already planned for.
No, it's not surprising. The lack of surprise that a company's greed is boundless shouldn't be the standard to which we hold them accountable for their behavior. It's kinda hard to see how Amazon won't eventually collide with antitrust forces at some point.
The rise of tech giants like Amazon has largely coincided with their development of entire markets that they control. There's so much money to be made establishing the market and taking small transaction fees as opposed to just bringing a product to an existing market.
Not only did Amazon make money by creating the go-to online marketplace, they captured tremendous amounts of data on what people were and weren't buying. This allowed them to spin off cheaper versions of competing products, undercutting the businesses that they were already making money from. They dominate the sales channels, and now they're going after the vendors directly, starting with the small, low-hanging fruit.
The rise of tech giants like Amazon has largely coincided with their development of entire markets that they control. There's so much money to be made establishing the market and taking small transaction fees as opposed to just bringing a product to an existing market.
Not only did Amazon make money by creating the go-to online marketplace, they captured tremendous amounts of data on what people were and weren't buying. This allowed them to spin off cheaper versions of competing products, undercutting the businesses that they were already making money from. They dominate the sales channels, and now they're going after the vendors directly, starting with the small, low-hanging fruit.
>It's kinda hard to see how Amazon won't eventually collide with antitrust forces at some point.
Where did you get this idea? I don't see how Amazon, or anyone else for that matter, could ever run afoul of "antitrust forces" in the US, because there's simply no such thing in America any more. America hasn't enforced antitrust law in ages.
They might have problems in other countries, but the US is by far their largest market, and they have absolutely nothing to worry about here.
Where did you get this idea? I don't see how Amazon, or anyone else for that matter, could ever run afoul of "antitrust forces" in the US, because there's simply no such thing in America any more. America hasn't enforced antitrust law in ages.
They might have problems in other countries, but the US is by far their largest market, and they have absolutely nothing to worry about here.
> America hasn't enforced antitrust law in ages
A lot of American antitrust enforcement is private. Witness, for instance, the recent Apple Inc. v. Pepper [1].
(We need more public enforcement. But claiming we have no antitrust enforcement is false.)
[1] https://www.scotusblog.com/case-files/cases/apple-v-pepper/
A lot of American antitrust enforcement is private. Witness, for instance, the recent Apple Inc. v. Pepper [1].
(We need more public enforcement. But claiming we have no antitrust enforcement is false.)
[1] https://www.scotusblog.com/case-files/cases/apple-v-pepper/
Right - this isn't new, basically everything you've said also applies to Walmart but twenty years ago.
I actually see those two as fairly different.
Walmart perfected large-scale logistics and built a network of one-stop-shops across America, taking out small mom-and-pop shops along the way.
Amazon set out to be the go-to online shopping platform largely by encouraging small mom-and-pop shops to sell through Amazon. Once the platform was big enough, it started making more sense for Amazon to cannibalize vendors instead of just continuing to let the market grow.
Sure, both companies are large behemoths that do their part to decimate local economies and avoid paying taxes, but their strategies were pretty different, IMO.
Walmart perfected large-scale logistics and built a network of one-stop-shops across America, taking out small mom-and-pop shops along the way.
Amazon set out to be the go-to online shopping platform largely by encouraging small mom-and-pop shops to sell through Amazon. Once the platform was big enough, it started making more sense for Amazon to cannibalize vendors instead of just continuing to let the market grow.
Sure, both companies are large behemoths that do their part to decimate local economies and avoid paying taxes, but their strategies were pretty different, IMO.
>is honestly anyone surprised?
I'm surprised. I thought that when the entire store was run by computers the marginal cost of adding another supplier would be zilch, and the long tail would prosper.
I'm surprised. I thought that when the entire store was run by computers the marginal cost of adding another supplier would be zilch, and the long tail would prosper.
The long tail DOES prosper. Nothing is stopping small vendors from selling their products on the Amazon marketplace. If true, it’s just suggesting that Amazon will no longer place purchase orders and hold inventory on its books.
Even with automation of on-boarding, scaling the selection still requires scaling inventory costs if it’s merchandised by Amazon itself.
Even with automation of on-boarding, scaling the selection still requires scaling inventory costs if it’s merchandised by Amazon itself.
So Amazon is going harder into the marketplace side of things, turning Amazon from an online retailer into another version of eBay? This doesn't sound like a positive move for me, but I guess that doesn't necessarily means its bad for Amazon's profitability if other people don't mind rolling the dice on random products by relatively unknown sellers and manufacturers.
Doesn't this article say the exact opposite of what you just said?
No. Amazon is pushing smaller sellers into their marketplace platform which is ride with counterfeits, thieves, and garbage products with fake reviews purchased on Facebook. My wife and I stopped going to Amazon because product quality started getting so bad. It's to the point that I trust Alibaba or eBay over Amazon, which is a shame. I suspect there's a lot of less vocal people in the same boat who've started exploring other merchants.
Yep, I have been alot of stuff from Aliexpress lately because you can find sellers that are quite reputable and actually support their shit somewhat. Amazon? You find people reselling shit from Alibaba and not caring a thing about it.
No? It says Amazon is cutting back on the "Sold by Amazon.com" items and pushing those items onto the marketplace, and only sticking to directly selling items from large manufacturers.
The article doesn't say that at all. It says that they are going to stop sourcing from small wholesalers and buy directly from consumer brands, essentially bypassing other parties and enabling a factory to shipping center channel. If anything is syaing the complete opposite of what you stated in your comment.
I really hope this triggers some long needed anti-trust action against amazon - controlling the market place and using that control to execute actions like this is exactly what those laws are there for, this is the first step in a consolidation to force suppliers into less profitable agreements and individual bargaining.
magduf(1)
I partly blame GS1 for not moving fast enough to create an open supply chain network (not just standards).
This is why I would never base my business on a marketplace like Amazon. You are always beholden to them and the reality is you aren't really independent.
From my reading, it's not removing them from the marketplace. Instead these are suppliers Amazon.com (not the market place) would buy in bulk directly from. They will now need to transition to the marketplace. There is a plus, which is they can probably ask a higher margin... but it also means they're now personally competing with anyone else who may have the same product, and now they're probably going to pay Amazon to warehouse their product.
Many small-time businesses are pretty much FBA only. That's why there's so many similar products with little more than branding differences: this is done in China and shipped to Amazon. There's probably not a small percentage of 4-hour-workweek types who are very unlikely to go from working from home to staffing a warehouse and performing fulfillment, running an e-commerce store and trying to figure out discoverability.
(though according to a sibling comment, that may not be what the article is talking about - unfortunately I'm paywalled out)
(though according to a sibling comment, that may not be what the article is talking about - unfortunately I'm paywalled out)
I come across these very often. I find these "businesses" to be adding very little value.
From a customer point of view, I have no issue shafting those 4-hour-workweek-types.
From a customer point of view, I have no issue shafting those 4-hour-workweek-types.
Many business don't have a choice. A lot of the time, the choice is "sell on Amazon" or "don't sell". That's what monopsony is, and it's why Amazon needs to be broken up.
This is completely true.
We used to do some development work for a client in florida. They sold all kinds of batteries on amazon. One day, a single dispute brought their whole business down. They had a whole warehouse of employees and they all got fucked because some temp employee somewhere in the world half-read a dispute while hungover from the night before and clicked a button.
No appeals, no recourse. Your entire company shut down just like that.
We used to do some development work for a client in florida. They sold all kinds of batteries on amazon. One day, a single dispute brought their whole business down. They had a whole warehouse of employees and they all got fucked because some temp employee somewhere in the world half-read a dispute while hungover from the night before and clicked a button.
No appeals, no recourse. Your entire company shut down just like that.
And that is exactly why they should have built their own shop and used it as their primary storefront. With services like Shopify or Squarespace it's not rocket science these days and you could still use Amazon, eBay or other marketplaces as additional sales channels. It's almost reckless and short-sighted not to maintain a truly owned store - don't put all your eggs in one basket.
These guys need to hire an Amazon reinstatement specialist - they're like $2k-10k a pop and basically help suspended guys get back to Amazon.
It's nontrivial to get the business back but the main barrier is playing Amazon's game, writing the doc exactly the way they want it, and being super vigilant once you're on probation.
It's nontrivial to get the business back but the main barrier is playing Amazon's game, writing the doc exactly the way they want it, and being super vigilant once you're on probation.
I just presume these guys have amazon employees on their own payroll. Like governement corruption, but libertarian where's there's even less recourse and no courts.
Curious - are you able to share more details?
That looks like a fault of this business though. They outsourced some critical element of their business.
Except that many of those businesses only exist because the reach and customer availability granted by Amazon.
It might be better if it is clear that they are not an open marketplace anymore, ever since amazon basics
would this just push the minor-large brands (aukey, anker, etc) into marketplace? Or are these minor-large brands already in the marketplace?
a quick spot check of a bunch of anker products shows they're already a marketplace seller
Do they at least enforce that Anker products actually came from Anker and not some scammer who's happy to burn my apartment down?
No. It should hopefully be well known by now that Amazon "commingles" all inventory of a given item. You can never be sure if you'll get a well-made counterfeit on the "marketplace". Even if you PICK WHICH SELLER you get whatever's in the bin that the overworked amazon warehouse sub-sub-sub-contracted employee quickly plucks.
is true for big ticket items like apple products and laptops
Sellers can choose to not co-mingle, but then they have to put a separate UPC code on the item.
Having done that, can they be sure that another seller won't try to horn in on the new UPC code?
for any anker product i can find on amazon, there is only one seller - ankerdirect - selling on FBA. it's difficult to commingle products when they're all coming from the same seller.
Important to note that this "purge" is only for wholesale suppliers, not for marketplace sellers like the title implies. Amazon is basically only going to purchase products for resale from large suppliers, and will shove the rest into the normal marketplace operations where they have to compete with everyone else on actually selling and shipping their products direct to consumers. Also of note is that this won't do anything to address the criticisms of rampant counterfeit and/or garbage quality products on the marketplace.