Almost every major grocery store and convenience store chain does this. These are the store’s generic brands, they are specifically designed to be copies of the name brand, and they are positioned more favorably on the shelves. (They often say “compare to [name brand]”.) In general, this is highly beneficial to competition and the consumer.

If you want to make an argument that Amazon’s high market share makes this strategy damaging when it would otherwise be good, then sure go ahead and do that. But the argument needs to be specific and quantitative.

Being too big and powerful. I want to say here that if there were as many Amazons as there are grocery stores, it wouldn't be bad at all. Instead, since Kroger is about to buy Albertson's and consolidation in retail and services continues, grocery store brands should have the same questions to answer as Amazon. Hypothetically, assuming we had governments that were concerned about these issues as anything other than an opening to solicit cash from lobbyists or something to be promised during a campaign.

This is actually a great example, but not the way you intended it.

Amazon isn't beating Walmart. They haven't even dented Walmart's revenue[1]. They're just killing everyone other than Walmart.

Walmart is now unbeatable because they're so big, they can demand wholesale prices that no one else can. If Walmart wants to buy 100M tomatoes from you, you'd sell them barely above cost because otherwise you're stuck with more tomatoes than you could ever sell.

To put it another way: you can't compete with these companies because they abuse their market power (either directly or through regulatory capture), not because they're actually that good at anything.

1. https://fourweekmba.com/amazon-vs-walmart/

Competitor on what vector? Speaking from a US-centric viewpoint here, but my thoughts;

* Distribution & Warehousing - Walmart & Costco

* Sales & Advertising - Google & Facebook

A few notable online storefronts that are independent and I use frequently are B&H Photovideo and Newegg. Realistically though the options I listed above are the only companies I see having the scale to compete with Amazon at anything, and even then they're an order of magnitude behind. Just my opinion, again very US-centric.

Correct. Exactly my point.

> That alone destroys the argument that retail is a single uniform market.

This is not my claim. My claim is that (at a bare minimum) the market Amazon competes in includes Walmart, target and other large retailers. The market is not “online retail.”

> Considering everything they bundle into Amazon Prime they are on serious thin ice.

No. Bundling is a totally separate antitrust issue. Also none of the items in the Prime bundle raise antitrust concerns.

If you want an example of a tech firm taking a serious antitrust risk with a bundled good, the best example right now is Microsoft teams.

No you don't have to imagine a world where every successful company has a competitor that is completely equal. That isn't how free markets work, that is how things work in theory but never in practice. There is always someone at the top.

> There might be an on-line retailer that was every bit as good as Amazon, but which exercised better oversight of their supply chain so that, say, ordering a name brand from them wasn't a total crap shoot in terms of whether you're getting the real thing or a counterfeit, or which carried items that you can't find on Amazon.

You love Amazon but you are shooting craps when you "use them all the time"? It seems you want it both ways and want to just imagine a world where Amazon has more competition because Jeff Bezos is the worlds wealthiest person.

I can imagine a world where there is a free market and the most successful become the most wealthy.

At the risk of being accused of whataboutism, _everyone_ does this.

The big-box stores go direct to China, often to the same factories that their intermediates were using. Walmart doubled-down on a direct-to-factory approach starting in 2010, moving from 20% to 80% direct with cost savings of 5-15%.

Your grocery store sells private-labelled goods. This market is expected to reach $220 billion by 2020.

The weakening of established brands has enabled large merchants to leverage sales data to drive product lines that provide good/better/best options to the consumer. The fact that Amazon started to sell their own products shouldn't have been a surprise to anyone in the industry. Ten years ago the complaint from brands was "big box stores are killing us", now it's "Amazon is killing us".

Pointing out that Bezos is the world's richest man and claiming he's exploiting people is a tired ad hominem attack.

Well for one it’s different in that store brands are often made by the same manufacturing/processing plant as the regular brand.

So not only is consent implicitly build in because the producer agreed to make the store brand variety, it’s another income stream.

And secondly the store brands typically go out of their way to differentiate themselves from the main brand to such a degree that if you hold the two boxes next to each other you wouldn’t mistake one for the other.

Thirdly they significantly undercut the other brands and sellers. They can do so because they don’t have to pay themselves a commission and all the other fees, which in turn forces the other brands and sellers to match or eek out a small price difference in which they’re cheaper in the hopes to get some sales, cutting into the already thin margins that are left after paying Amazon’s fees.

Amazon is also in a better position because of the vertical integration, they have a direct relationship with the manufacturer which cuts out the margins of the middle men (the sellers and distributors), regular sellers on Amazon have the distributor’s margins to deal with and then their own margins and as opposed to Amazon they can’t sell their items as a loss leader.

As for Walmart and similar retail, it’s a whole different situation. The manufacturer sets the price and within it, their margin. The retailer then purchases it at that price and tacks on their margin, but if it’s on the shelves then the manufacturer has been paid so there’s no risk for the manufacturer because the retailer carries the risk.

There are some nuances and exceptions, such as manufacturers sometimes being able to force a MSRP onto the retailer or a retailer being big enough to leverage a better price or a risk shifting agreement where the retailer doesn’t have to pay for delivery until the items are sold, nevertheless, in general the relationship is entirely different from the relationship Amazon has with its sellers.

And lastly, Walmart doesn’t hire people to walk beside you in the store to swiftly grab a Great Value variant and push it in your hand each time you so much as think of buying something.

The cereal factory that makes Kellogg’s cereal also making Great Value cereal is therefore not comparable to Amazon.

Amazon typically makes their Basics items look identical to the most popular brand and place it at the top of search results.

Now the original brand is forced to pay to get their item at the top of the list, and even then it’ll get second place, underneath the Amazon branded one (often barely above the fold).

Take this example of me searching for a padlock[0][1].

Not only is the Amazon branded lock identical to the one below it, it’s placed prominently at the top of the results in such a way that it’s the only product that can be seen in full.

The one immediately below it doesn’t get top spot despite being “sponsored” (i.e. paid to be prominently displayed) and if you look at the price they’re trying to be a little bit cheaper than Amazon in the hopes to generate sales but given how minor the price difference is with the Amazon branded lock, it comes across as a painful thing for them to do because it seems to me as a meaningless difference (but admittedly that’s me reading into things).

The issue is that when you’re the platform holder that sets the fees for sellers, controls what people see, have insider knowledge on sales and you use that to benefit your manufacturing and sales division, then you have too much control and are abusing your powers imho.

Brick and mortar retailers don’t have this much control over and information on their suppliers.

0: https://pasteboard.co/AZRfDpAtXw4f.jpg

1: https://pasteboard.co/VEFULgwx2IgB.png

but burying alternatives, they basically drive smaller product competitors away, reducing their sales and their ability to grow and innovate.

Amazon has been blatantly copying products that other brand sold, and made them cheaper. Great for consumers if the only thing you care about it price.

Because the game is getting rigged and Amazon products will always be more prominent, no-one can compete with Amazon on these products.

You end up with less competition and less choice. Amazon can just undercut you, push you down in their listings and get the lion's share of any product type they find lucrative.

Certainly not all that bad but where do you imagine this is going if no-one else is able to compete with Amazon?

Amazon is already king and has power of life and death on countless businesses that rely on it being an impartial party so they have a chance to sell their ware.

Potentially, but stop focusing on the act and focus on the result.

You brought up retailers and their shelf space. First no grocery store puts "Grocery Store O's" in a better placement than Cherrios...but fine lets assume they did. Does putting "Grocery Store O's" force Cherrios out of the market? No. However, seems to be no shortage of examples of a successful vendor on Amazon being forced out of the market altogether after Amazon copies their successful product.

In the US retail market? Walmart (2x the size of Amazon), eBay, Kroger, Home Depot, Lowes, HEB, Costco, Target, Walgreens, Staples, CVS, Publix, Albertsons, Aldi, Macy's, Best Buy, OfficeMax, Nordstrom, Kohl's... I can continue if you want. Those are just off the top of my head.

>Show me the alternative to YouTube.

Netflix, cable, Hulu, Amazon, HBO, Disney, Sling, there's a few more. It's a very competitive market and it's why YouTube hardly makes any money, if they actually make any at all.

I think you are making the common error of conflating "big company" with "monopoly". Amazon doesn't control supply in a market like say the USPS with first class mail or your utility with electrical supply.

I think it is different. When a department store buys a third-party product, it pays for it and the Store bears the risk of the item not selling. If Macy's decides to make their own brand, they did so by transferring risk from manufacturer to themselves in the beginning; if a product didn't sell enough, they had stake in it. There are some successes (store-brands) and some failures (brands they bought, never worked)

In the Amazon Basics case, AMZN doesn't own inventory for the product at all. All the risk is to be borne by the 3rd party manufacturer. When Amazon looks at its data and sees a product succeeding, it creates a Basics product with no risk - it knows this thing sells. There is no way Amazon can 'fail' per se.

This essentially is the difference. Any manufacturer is likely scared of success on the Amazon Marketplace. If too successful, it can be Amazon-Basic'ed.

> The consumer (along with Amazon) is a beneficiary here. The losers are brands trying to sell commodity items at a markup.

I think in the short-term for that product - yes, the consumer finds a cheaper product, but Amazon will always have an economies-of-scale advantage.

However, long-term, I think innovators will not know if making a highly successful product (which is always difficult to sell cheap because scale isn't achieved) is worth it.

I found this episode from Planet Money pretty informative: https://www.npr.org/sections/money/2019/02/22/697170790/anti...

I don't see Amazon as being particularly more of a monopoly than Walmart. If Amazon was a traditional brick and mortar business, would we even be having this conversation?

I completely agree that such a strategy throws away much of the value of the Whole Foods brand.

It doesn't surprise me that Amazon is taking it in this direction though. What Amazon is best at is ruthless price differentiation and/or logistics. They don't do price discrimination in their cash cow businesses as far as I know: online retail, streaming (comes packaged with prime for "free), aws, kindle, etc. Their brand is providing the best value and convenience for purchasing commodity retail items. Even their branded items compete on price.

It's interesting that Whole Foods already started down the path towards competing on price before Amazon swooped in.

If Amazon can actually compete with you in a given product niche, then you're not bringing any value to the table (since they own the customer relationship, the fulfillment, the logistics, etc.), so why do you deserve to make money? There are a gazillion product categories on Amazon. There's no way they can bring products to market in all of them. They focus their attention on markets where brand differentiation isn't very important. Usually those markets are that way because what consumers care about is price, convenience, and surpassing some minimum level of quality. Those are the spaces where Amazon puts forward their own product. And if your livelihood is tied to being a relatively generic brand in a product category where consumers really only care about convenience and price, then you need to find a different way to make it in the world.

It's similar, although personally I think the relationship between the companies is meaningfully different:

Costco purchases product from manufacturers, and may choose to source product from other manufacturers (including under its own brand name). It uses it's own sales data to make this decision.

Amazon acts as a marketplace for other businesses to list and sell their own products. These businesses are online retailers which use the Amazon platform, and pay Amazon fees for this service. Amazon is then using other retailers sales data in order to inform it's own business.

The difference is with Costco it is their own sales data, while in Amazon it is the sales data of other retailers. It would be an issue if Walmart had access to Costco's sales data and not visa-versa (this would provide Walmart with an unfair competitive advantage). Similarly other smaller online retailers do not get access to Amazon's sales data, but Amazon get's access to the other retailers sales data who use their platform, and will then use this to compete with them.

I don't think that is true for all competitors, but it definitely is for many competitors. It's a good point if they are using that power, which I think they are, especially in particular industries. Same applies to Facebook, Apple, and many other companies as well.

>2. They purport to operate a neutral marketplace where they aren't responsible for the end product while also controlling what products you see and what company you will buy from and choose the ones that give them the best margin. The huge problem of counterfeit and faulty products on Amazon directly harms the consumer and because of (1) there isn't a general market remedy.

That's two different things, isn't it? Counterfeit products are a problem and a non-neutral market is a different problem. I think the non-neutral market bit is already covered by existing regulations, isn't it? Shouldn't we simply apply the rules we have?

>3. They leverage their position as market maker to figure out what products to manufacture and undercut innovative companies with their massive scale. In the short term this is a net benefit to consumers who get a cheaper product but it creates a mess of bad incentives down the line.

This one I've seen before but not as an argument to break them up - it's an interesting argument to me because I think a lot of companies engage in these practices. Grocery stores classically would release basic cheerios for example and undercut the price of the brand

I don't believe this to be the case. How is Amazon a monopoly, given the large number of online retailers that continue to be successful?

The garden department at your local department (Wal-Mart does this. So do most home repair places) store is operated by another company. So too is the salty snack aisle, soft drink aisle and many other departments where an outside vendor is basically renting shelf space, and paying the rent in margin at the register. In all of these cases, the store also has a house brand that is in the same aisle, competing with the big brands. So, what Amazon is doing is really the same, but in an ecommerce format. BTW, department and grocery stores were running their own logistics company long before Amazon even existed.