For much of Amazon’s history, people thought of it as a retailer.
December 1, 2021 12:45 PM Subscribe
Amazon’s Toll Road A new report from the Institute for Local Self-Reliance (ILSR) a nonprofit organization and advocacy group with a focus on sustainable community development.
TLDR: Chart of Revenue from Seller fees over time, Chart of Amazon's cut of Seller Revenue over time (currently 34%).
TLDR: Chart of Revenue from Seller fees over time, Chart of Amazon's cut of Seller Revenue over time (currently 34%).
I haven't sold on Amazon since the seller fees were around the 19% mark mentioned in the report, fees which were high even then. From what I remember, the worst part was the fixed shipping rates. After the high fees, any remaining money you make could be nearly wiped out depending on how heavy your sold item is (and/or whether or not it could be sent via, for example, Media Mail).
There were also new rules put in place restricting what occasional/small-time sellers like myself could or couldn't sell. Allegedly, this was for quality control reasons, though given the current state of Amazon, I'm not sure how much good policies like this have done. At any rate, selling on Amazon is not worth the trouble anymore, and I feel for the people whose livelihoods depend on it. A 34% cut is atrocious.
posted by May Kasahara at 1:12 PM on December 1, 2021
There were also new rules put in place restricting what occasional/small-time sellers like myself could or couldn't sell. Allegedly, this was for quality control reasons, though given the current state of Amazon, I'm not sure how much good policies like this have done. At any rate, selling on Amazon is not worth the trouble anymore, and I feel for the people whose livelihoods depend on it. A 34% cut is atrocious.
posted by May Kasahara at 1:12 PM on December 1, 2021
The concept of the free market doesn't mean much when one company owns the market.
posted by nushustu at 1:37 PM on December 1, 2021 [1 favorite]
posted by nushustu at 1:37 PM on December 1, 2021 [1 favorite]
It’s almost as if from the get-go the sole purpose for Amazon’s existence was to exploit the labor of others to enrich an extremely small number of people.
posted by armoir from antproof case at 1:44 PM on December 1, 2021 [11 favorites]
posted by armoir from antproof case at 1:44 PM on December 1, 2021 [11 favorites]
Amazon is the second most trusted brand in the US (at least according to one survey) and only the US Military has a more favorable rating (according to a different survey (although the other orgs in that list are... odd)) which is just to say that focusing on giving customers what they want (the cheapest goods, delivered tomorrow) at the expense of those selling the goods, has made them the most successful company ever.
(Obligatory New Yorker cartoon)
posted by gwint at 1:44 PM on December 1, 2021 [2 favorites]
(Obligatory New Yorker cartoon)
posted by gwint at 1:44 PM on December 1, 2021 [2 favorites]
Okay I've read the article now and it doesn't even go into one of the other problems with trying to buying anything authentic off of Amazon (to my current understanding): you can do all the diligence you like, but because Amazon commingles inventory from the different sellers for what it thinks are the same items, you can still end up buying a counterfeit that came in from a third party seller even if you are buying it from the right seller.
posted by foxfirefey at 2:34 PM on December 1, 2021 [6 favorites]
posted by foxfirefey at 2:34 PM on December 1, 2021 [6 favorites]
... focusing on giving customers what they want (the cheapest goods, delivered tomorrow) at the expense of those selling the goods, has made them the most successful company ever.
True - but that contradicts the punchline of the cartoon ("we created a lot of value for shareholders.") At least in the short-term, the value from Amazon's direct retail business goes primarily to consumers, not shareholders.
Moving stuff can scale a bit, but the huge profits are from moving bits, not boxes. That's why they have huge profits from AWS, advertising, and third-party sales (which is a form of advertising).
posted by Mr.Know-it-some at 2:40 PM on December 1, 2021
True - but that contradicts the punchline of the cartoon ("we created a lot of value for shareholders.") At least in the short-term, the value from Amazon's direct retail business goes primarily to consumers, not shareholders.
Moving stuff can scale a bit, but the huge profits are from moving bits, not boxes. That's why they have huge profits from AWS, advertising, and third-party sales (which is a form of advertising).
posted by Mr.Know-it-some at 2:40 PM on December 1, 2021
...you can still end up buying a counterfeit that came in from a third party seller even if you are buying it from the right seller.
I don't buy from Amazon for a number of reasons (and it's not really that hard!), but fear of counterfeits is definitely one of them. They didn't include me in that trusted brand survey.
posted by maggiemaggie at 3:36 PM on December 1, 2021 [3 favorites]
I don't buy from Amazon for a number of reasons (and it's not really that hard!), but fear of counterfeits is definitely one of them. They didn't include me in that trusted brand survey.
posted by maggiemaggie at 3:36 PM on December 1, 2021 [3 favorites]
Moving stuff can scale a bit, but the huge profits are from moving bits, not boxes
It would be an interesting exercise to image Bezos starting a cloud services company in 1994 instead of an online bookstore, but in this timeline they are inextricably linked, and have resulted in 200,000% of value for shareholders.
posted by gwint at 3:43 PM on December 1, 2021 [1 favorite]
It would be an interesting exercise to image Bezos starting a cloud services company in 1994 instead of an online bookstore, but in this timeline they are inextricably linked, and have resulted in 200,000% of value for shareholders.
posted by gwint at 3:43 PM on December 1, 2021 [1 favorite]
I don’t think the "counterfeits" on Amazon are actually counterfeits.
Instead, they are deliberately inferior products authorized by the owners of trademarks which have a lower manufacturing cost than the original 'good' products because those trademark owners cannot make a profit selling through Amazon without drastically lowering the manufacturing costs.
In some cases you can get the original quality by going through a seller other than Amazon, but in many cases the seller just caves and drops the quality of the product from all sources.
And Amazon Prime's free delivery makes this an insoluble problem for both the manufacturer and Amazon itself, because for low volume orders of relatively inexpensive items, the actual cost of delivery is such a high percentage of the price that neither Amazon nor the manufacturer can make a profit from the higher quality product.
posted by jamjam at 4:12 PM on December 1, 2021 [1 favorite]
Instead, they are deliberately inferior products authorized by the owners of trademarks which have a lower manufacturing cost than the original 'good' products because those trademark owners cannot make a profit selling through Amazon without drastically lowering the manufacturing costs.
In some cases you can get the original quality by going through a seller other than Amazon, but in many cases the seller just caves and drops the quality of the product from all sources.
And Amazon Prime's free delivery makes this an insoluble problem for both the manufacturer and Amazon itself, because for low volume orders of relatively inexpensive items, the actual cost of delivery is such a high percentage of the price that neither Amazon nor the manufacturer can make a profit from the higher quality product.
posted by jamjam at 4:12 PM on December 1, 2021 [1 favorite]
I've definitely noticed a shift in myself over the past 3-4 years or so: where once I would have felt confident (if not ethically comfortable) buying almost anything on Amazon, today I'll only consider buying things where it really doesn't matter if they're counterfeits or not, or if they're low-quality.* Meanwhile some other stores I once trusted for important things (Newegg comes to mind) have also been turning themselves into third-party marketplaces, where I have no idea what the quality control is, whether they do Amazon-style merged listings where you don't know if the reviews and descriptions actually apply to the seller you're buying from, etc. It's bad enough wading through a sea of reviews and trying to figure out which ones are real; I'd like to at least be able to trust the quality control of the store I'm buying from.
I wonder how sustainable this system is going to be for Amazon and others.
* I feel like this is legitimately becoming a public health issue, considering how many supplements, topical treatments, cosmetics, and, most urgently, masks Amazon sells.
posted by trig at 4:14 PM on December 1, 2021 [13 favorites]
I wonder how sustainable this system is going to be for Amazon and others.
* I feel like this is legitimately becoming a public health issue, considering how many supplements, topical treatments, cosmetics, and, most urgently, masks Amazon sells.
posted by trig at 4:14 PM on December 1, 2021 [13 favorites]
Birkenstock is one brand who have very publicly pulled their products from Amazon over counterfeiting concerns. This includes all authorised resellers. This means that all of the Birkenstock listings still showing on Amazon are either unauthorised grey imports or counterfeit. Running Fakespot over the listings shows many of the reviews are also not genuine.
posted by Lanark at 4:50 PM on December 1, 2021 [6 favorites]
posted by Lanark at 4:50 PM on December 1, 2021 [6 favorites]
i guess my question is... what are we comparing amazon to in this context? thousands of individual online small businesses selling via, what, etsy? what's the realistic alternative? wouldnt any marketplace have this sort of leverage over participating sellers?
posted by wibari at 9:40 PM on December 1, 2021
posted by wibari at 9:40 PM on December 1, 2021
what's the realistic alternative?
Shopify have an annual revenue of $2.9 billion compared to Amazons $386 billion (2020 figures).
Shopify have 1.7 million merchants compared to Amazons approx 2 million.
A big part of the difference in those figures is the much lower fees charged by Shopify, their merchants are selling ~ $120 billion of goods each year
An obvious next step for Shopify would be to build a search engine/marketplace combining all those stores, competing directly with Amazon - heres an article explaining why they are not going to do that.
posted by Lanark at 1:55 AM on December 2, 2021 [6 favorites]
Shopify have an annual revenue of $2.9 billion compared to Amazons $386 billion (2020 figures).
Shopify have 1.7 million merchants compared to Amazons approx 2 million.
A big part of the difference in those figures is the much lower fees charged by Shopify, their merchants are selling ~ $120 billion of goods each year
An obvious next step for Shopify would be to build a search engine/marketplace combining all those stores, competing directly with Amazon - heres an article explaining why they are not going to do that.
posted by Lanark at 1:55 AM on December 2, 2021 [6 favorites]
I dunno, folks. I buy almost everything online, and a good share of that goes to Amazon. For years (decades?) now. I can't once think of a product that I ever suspected of being counterfeit. I've seen many copy items for sale. Including Bikenstock copies. Counterfeits? Extremely hard to say. Or definitively prove one way or another. To me, it almost always sounds like bullshitty news for the Amazon hate mill. I've seen this angle of attack many times over the decades. It's especially easy to do when conflating couterfeits with copies with greymarket goods.
I just can't really pile on too much on the Amazon hate wagon. I'm just not seeing the drastic damage others seemingly so want to see.
posted by 2N2222 at 5:00 AM on December 2, 2021 [1 favorite]
I just can't really pile on too much on the Amazon hate wagon. I'm just not seeing the drastic damage others seemingly so want to see.
posted by 2N2222 at 5:00 AM on December 2, 2021 [1 favorite]
I have personally bought a few things that were products I'd been buying for years and this time were different, while the ones I bought from physical stores were the same as they'd always been (and have continued being the same to this day). I've also bought some things (mostly electronics from major brands) that died abnormally early. Were any of these counterfeits, or just duds, or items from bad lots that shouldn't have been sold, or victims of bad quality control or storage or ...? I don't know. But it's happened enough times that I've grown wary. It also doesn't help that so many products have reviews, often with pictures, of how what the reviewer received wasn't genuine (which actually did happen to me once with a "genuine" laptop battery, although that's the kind of product where it's almost to be expected). The thing is that with these reviews, you usually have no idea which seller the reviewer bought from, or which seller's stock you'll be receiving (or, I guess, if those negative reviews are also astroturfing). Why deal with this nonsense if I don't have to? For the things I buy, I can generally find them for a good price from reputable stores that sell their own stock, and at this point I get suspicious of things that are priced much lower on Amazon.
Counterfeit masks on Amazon are apparently a very real problem, not something "the media" is making up.
For me personally, buying from Amazon has become a gamble, and shopping there a defensive process of wading through incredible amounts of dreck. It didn't use to feel that way.
posted by trig at 6:00 AM on December 2, 2021 [1 favorite]
Counterfeit masks on Amazon are apparently a very real problem, not something "the media" is making up.
For me personally, buying from Amazon has become a gamble, and shopping there a defensive process of wading through incredible amounts of dreck. It didn't use to feel that way.
posted by trig at 6:00 AM on December 2, 2021 [1 favorite]
I was in the market for a new landline phone (ask your parents) last year and looked on Amazon. The cheapest items looked very unreliable, so I sorted from most expensive down, and it was bizarre. £6,000 phones, from different sellers, but all with info copy of "Among the high-quality brackets, the overall structure is stable, the hardness is strong, it is not easy to break, and the handle is smoother." No reviews, little extra info, no Q&A - nothing to indicate anyone had ever bought one. I assume its some sort of money laundering or similar, but whatever it is Amazon is letting it sit there.
posted by YoungStencil at 9:39 AM on December 2, 2021 [2 favorites]
posted by YoungStencil at 9:39 AM on December 2, 2021 [2 favorites]
Lanark: "An obvious next step for Shopify would be to build a search engine/marketplace combining all those stores, competing directly with Amazon - heres an article explaining why they are not going to do that."
That article is really interesting, thanks for that. There's always this pendulum between centralizing/decentralizing that happens in tech, and agree with Shopify that decentralized is the smarter long-term play. Amazon has been great, but they are starting to creak under their own weight.
2N2222: "To me, it almost always sounds like bullshitty news for the Amazon hate mill. I've seen this angle of attack many times over the decades. It's especially easy to do when conflating couterfeits with copies with greymarket goods."
In my experience, it doesn't really matter much to me whether something is a "counterfeit" or a "copy". The main problem is that I can't distinguish between a legitimate seller that stands behind their product and a fly-by-night scammer. I'm mainly talking low-end goods here. All of the reviews are 4 stars, because there are a ton of 5-star reviews and then a bunch of 1-star reviews saying "This is a piece of junk, don't waste your time". I don't know if the 5-star reviews are fake, or if the 1-star reviews literally got a different product. And do I want to take the gamble that I'll get one of the good ones?
I've had a few of these bad experiences; a kid's lantern that I really liked, and when it got broken and I re-ordered the same thing and the new one barely functioned. Same thing with an external phone battery, the first one was great, the 2nd one failed after a month, and the 3rd one is now failing after 2 moths. Did I just get unlucky with a bad batch? Did I get a different knock-off product the second time? Does it matter? Do I want to keep shopping in a marketplace where it's a gamble over whether I get what I purchased? The sunk-cost of "free" shipping is starting to feel less compelling for me. For the time being they've still got me hooked, but barely.
posted by team lowkey at 11:07 AM on December 2, 2021 [2 favorites]
That article is really interesting, thanks for that. There's always this pendulum between centralizing/decentralizing that happens in tech, and agree with Shopify that decentralized is the smarter long-term play. Amazon has been great, but they are starting to creak under their own weight.
2N2222: "To me, it almost always sounds like bullshitty news for the Amazon hate mill. I've seen this angle of attack many times over the decades. It's especially easy to do when conflating couterfeits with copies with greymarket goods."
In my experience, it doesn't really matter much to me whether something is a "counterfeit" or a "copy". The main problem is that I can't distinguish between a legitimate seller that stands behind their product and a fly-by-night scammer. I'm mainly talking low-end goods here. All of the reviews are 4 stars, because there are a ton of 5-star reviews and then a bunch of 1-star reviews saying "This is a piece of junk, don't waste your time". I don't know if the 5-star reviews are fake, or if the 1-star reviews literally got a different product. And do I want to take the gamble that I'll get one of the good ones?
I've had a few of these bad experiences; a kid's lantern that I really liked, and when it got broken and I re-ordered the same thing and the new one barely functioned. Same thing with an external phone battery, the first one was great, the 2nd one failed after a month, and the 3rd one is now failing after 2 moths. Did I just get unlucky with a bad batch? Did I get a different knock-off product the second time? Does it matter? Do I want to keep shopping in a marketplace where it's a gamble over whether I get what I purchased? The sunk-cost of "free" shipping is starting to feel less compelling for me. For the time being they've still got me hooked, but barely.
posted by team lowkey at 11:07 AM on December 2, 2021 [2 favorites]
I forgot to mention one crucial aspect of Amazon which forces manufacturers to 'counterfeit' their own products in order to be able to make a profit selling through Amazon.
Amazon forbids sellers from offering their products online anywhere else for lower prices than on Amazon.
posted by jamjam at 12:33 PM on December 2, 2021 [1 favorite]
Amazon forbids sellers from offering their products online anywhere else for lower prices than on Amazon.
posted by jamjam at 12:33 PM on December 2, 2021 [1 favorite]
Amazon forbids sellers from offering their products online anywhere else for lower prices than on Amazon.
From these articles, it sounds like this is no longer true, but Amazon has policies that have a similar effect in many cases.
You're No Longer Required to Sell Products for Less on Amazon. The Problem? If You Don't, You've Got Another Penalty Coming (2019)
Amazon push for lower prices could be bad for shoppers everywhere: " the retail behemoth has been pressuring some of its top sellers to drop prices to ensure shoppers cannot find a lower price anywhere else ... Amazon has been telling some of the largest third-party sellers on its Marketplace platform they can’t list new products until they match prices offered by Amazon’s retail competitors."
posted by Mr.Know-it-some at 12:44 PM on December 2, 2021 [1 favorite]
From these articles, it sounds like this is no longer true, but Amazon has policies that have a similar effect in many cases.
You're No Longer Required to Sell Products for Less on Amazon. The Problem? If You Don't, You've Got Another Penalty Coming (2019)
Amazon push for lower prices could be bad for shoppers everywhere: " the retail behemoth has been pressuring some of its top sellers to drop prices to ensure shoppers cannot find a lower price anywhere else ... Amazon has been telling some of the largest third-party sellers on its Marketplace platform they can’t list new products until they match prices offered by Amazon’s retail competitors."
posted by Mr.Know-it-some at 12:44 PM on December 2, 2021 [1 favorite]
Used to be that for me, personally, Amazon's competition was local retail and other online providers, with the ethical considerations being a convenience tax over spending $15 in gas driving to various retail options.
However, for the past couple years their competition has been AliExpress, with higher local retail prices taking on the role of a convenience tax. If I can't find it locally and I can wait a month, I can save like 90% at AliExpress. Amazon is pretty much my last choice anymore, and it's not even really due to Bezos aversion.
Part of it is due to me being in the market for items that AliExpress sells, but the way that plays out in the Amazon world is that a bunch of sellers are reselling the same AliExpress items on Amazon that I'm looking for, they're just 5-10x the price there. In many cases the shipping times mirror the delays in shipping from China (I think there is one boat per month? It's always one month for shipping to the US on Ali).
they can’t list new products until they match prices offered by Amazon’s retail competitors."
Restraint of trade? Ha ha, no: it's "fuck you, that's why."
posted by rhizome at 12:49 PM on December 2, 2021
However, for the past couple years their competition has been AliExpress, with higher local retail prices taking on the role of a convenience tax. If I can't find it locally and I can wait a month, I can save like 90% at AliExpress. Amazon is pretty much my last choice anymore, and it's not even really due to Bezos aversion.
Part of it is due to me being in the market for items that AliExpress sells, but the way that plays out in the Amazon world is that a bunch of sellers are reselling the same AliExpress items on Amazon that I'm looking for, they're just 5-10x the price there. In many cases the shipping times mirror the delays in shipping from China (I think there is one boat per month? It's always one month for shipping to the US on Ali).
they can’t list new products until they match prices offered by Amazon’s retail competitors."
Restraint of trade? Ha ha, no: it's "fuck you, that's why."
posted by rhizome at 12:49 PM on December 2, 2021
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