Got a Hot Seller on Amazon? Prepare for Amazon to Make One Too

http://www.bloomberg.com/news/articles/2016-04-20/got-a-hot-seller-on-amazon-prepare-for-e-tailer-to-make-one-too

by petethomas • 10 years ago

290 226 10 years ago

bitL7• 10 years ago

Yes, it happens all the time on Amazon. Not only Amazon itself, but also other companies observing hot sellers (there is an API for that), then "cloning" the item and ordering manufacturing in Shenzhen. If you complain to Amazon, your selling privileges might be removed... Amazon desperately needs a competitor.

eganist2• 10 years ago

Yup, and they've (as far as I've heard -- could be wrong) threatened to blacklist sellers who move to upstarts like Jet or even if they sell more prominently on eBay.

Perhaps I don't know the definition of anticompetitive, but I feel like this fits the bill.

ikeboy5• 10 years ago

I haven't heard that. They have a rule that you can't sell items elsewhere for less than you're selling them on Amazon for, but otherwise there's no restrictions.

jhall14684• 10 years ago

If you complain to Amazon

About what, exactly? Amazon isn't in the business of deciding trademark/copyright/patent disputes. If a clone of a product is violating IP, then you need to handle it legally. If there is no IP to protect, then you made a mistake.

bitL7• 10 years ago

Sure, but we all know costs of a litigation which most sellers on Amazon can't afford - Amazon takes most of the profit, 15% default fees leave very little to normal sellers, usually under 5% as the (re-)pricing competition is now algorithmic, resembling HFT. Then if you want to have your product featured on Amazon (meaning your offer will be the default one even if it is more expensive than somebody else's), you need to contact the category manager and it's up to their discretion to decide (which reeks of a high potential of corruption/profit sharing etc). On one hand it's pretty cool you can automate price responses and very beneficial to the customer, on the other the game has an increasing risk of being rigged.

vtlynch2• 10 years ago

No. If Amazon is willfully allowing clones that violate IP or other rights, then it is 100% in their interest to take action on that.

forgetsusername2• 10 years ago

Generally, people want to abolish IP and copyright (or any law, for that matter) except when it's in their own interest. Human nature.

Not much talk of the fact that I, as a consumer, can now get an identical product for cheaper. Not identical? Then what is the concern?

knowaveragejoe• 10 years ago

In theory though, if Amazon is making a superior product that's cheaper, isn't that what competition is supposed to achieve? I've bought a few AmazonBasics(cables, mostly) and have been pleased with the quality, but it could be radically different with other products.

Bjorkbat• 10 years ago

But that's the thing, it's a little bit questionable for Amazon to be a competitor. They started out as a partner that offered a retail platform for Rain Design, only to turn around and come up with a cheaper product. Even though it's perfectly legal, there's still an expectation of trust, which they've violated.

Would you sell products on a platform knowing that if you were too successful the people operating the platform would turn around and come out with a cheaper product? I wouldn't.

bitL7• 10 years ago

That's one possible benefit. But try to compete with Amazon on price directly; many (now former) sellers reported having their accounts under review shortly after (often leading to permanent selling rights removal - there's always some odd item that you might have in your huge catalog, even if you never sold one, that might be interpreted as not allowed on Amazon) and nowadays many small operations just try to avoid competing on items Amazon sells itself because of fear of getting kicked out. That's not beneficial to customers at all. So basically Amazon might be heading to be in this mode:

- allow 3rd party sellers/manufacturers to sell items - once items are hot and are easily clonable, start manufacturing them - let original manufacturers bleed or kick them out if they compete on price with you - wait for another batch of sellers to identify next hot item - repeat

vtlynch2• 10 years ago

Ah yes, the dream of the free market. Create a product that is successful, only to be driven out of business by a monstrously large corporate entity that can take advantage of economies of scale better than you can. Ignore the fact that the majority of companies cant actually compete with that behavior.

JohnBooty• 10 years ago

    > In theory though, if Amazon is making a superior 
    > product that's cheaper, isn't that what competition 
    > is supposed to achieve?

Yes and no. It's the age-old question, right?

If it's too easy to rip off somebody else's idea, you stifle innovation.

But if you go too far in the other direction, innovation gets stifled that way as well.

mooreds6• 10 years ago

How is this different than the private labels of major grocery stores?

tamana2• 10 years ago

Private label products are generally made by the same manufacturer as premium label.

6stringmerc4• 10 years ago

Yikes. Makes me wonder what kind of recourse could be possible. Often I see a lot of "death to IP protections!" chants around here, which makes this situation all the more interesting. In my view this is a pretty clear 'derivative' infringment, and if there's enough of them, could there be a class-action approach to signing up those who can make the connection? "Ripping-shit-off" isn't a very pleasant business model in my opinion.

jhall14684• 10 years ago

In my view this is a pretty clear 'derivative' infringment

That's copyright law. This is a patented product. As long as your product doesn't infringe on the patent, it's not an infringement.

6stringmerc4• 10 years ago

I get that distinction, and wonder why the patent isn't solid enough to pursue action against what looks like a direct imitation. If a copy can get so close but still avoid 'infringement' then the patent isn't doing its function properly. Strange.

brianwawok6• 10 years ago

Except in many cases there was no rip off involved.

Very common example: Someone sees something on alibaba that looks cool. Say an apple peeler for $.50. So they buy 10k of them, slap on a label that says BlahBlah Inc, and sell on Amazon for $10. Maybe they give away 500 of them on review sites to build up some reviews for the brand BlahBlah Inc apple peelers.

Other people buy the same thing from alibaba, slap a different label on, sell for $8.

If Amazon goes straight to the manufacturer and asks for it in a different color to sell for $5 under the "Amazon Basics" label.. who really got ripped off? The invention was already there. The wholesaler was already there. It is just shifting around who gets what piece of the profit pie.

Can see 100s of these kind of sellers on /r/FulfillmentByAmazon

6stringmerc4• 10 years ago

Okay, a first-to-market scenario like you describe doesn't fit with the 'rip off' mentality, and I get that. It's simply herding toward a new market by way of being the first to get traction. Sure, if Amazon Basics sells a 'household paper shredder' it's not like the concept was lifted whole cloth, and the manufacturing diversity is already inherent. That's fine, I see that.

But, that's not at all what I'm describing though, and which is far more destructive: if an actual, innovative product gets copied. If such cases are rare with Amazon as the copying entity, it still matters from a recourse standpoint. So, in a different example, if a company creates an innovative paper cutter, unlike any other on the market, patents it, makes it, and it sells well, this is the scenario: if 15 months later Amazon Basics has a design and functioning clone at a price that undercuts the original, then that should be a case to hash out in court and if violating trade / patent protections, slapped with punitive fines.

rhino369• 10 years ago

One recourse is seeking a general exclusion order at the ITC if you have patents. You don't get money but you can get customs to prevent importation.

If you don't have parents then they aren't ripping off your IP.

EdHominem5• 10 years ago

I'm not sure that making a stand for something deserves protection.

If so, does the protection go to the first device, or the best in six months? The one blessed by the manufacturer?

What's being ripped off here? Instead this sounds like "underserved market getting noticed - more consumer choice coming."

cylinder2• 10 years ago

E-Tailer was an odd word choice in the headline. I read a few paragraphs in still trying to learn more about the company "E-Tailer."

vnchr• 10 years ago

Agreed. Seems like they were dancing around naming Amazon in the title.

tantalor• 10 years ago

Huh? "Amazon" is the 6th word of the title.

mooreds6• 10 years ago

Maybe they didn't want the word Amazon in the title twice? Was weird. Who uses the term e-tailer anymore anyway? Seems like a blast of fresh air from 1999.

themodelplumber• 10 years ago

This was an oddly-worded comment. I read two sentences and still didn't understand anything about the referenced "E-Tailer" corporation.

Is this what upvotes have come to?

dang• 10 years ago

Sounds like we need some title redundancy in the title.

jamescun• 10 years ago

I feel for Rain Design (I love my mStand); however is this any different to your average supermarket offering lower priced own-brand competitors to their other stock?

goldbrick• 10 years ago

To me, the mStand was going a more premium market segment, you know, the "stand Apple forgot to make" kind of thing. The Amazon knockoff looks like shit.

takno• 10 years ago

Agreed. I'm not really seeing that much similarity in the products at all.

DanielBMarkham• 10 years ago

I think the mixed incentives problem is becoming more and more glaring with each passing day.

Want to write an app that people use on their phone? Awesome. Become an Apple Dev or a Droid Dev. It's the lottery: the providers love you playing, but only about 1-in-100 make it, and "making it" is not about quality. The garden is too big to be manually cultivated, so the winners are the ones that can play the algorithm.

Have a site online you'd like people to visit? If you're advertising it, you're going through Google or Facebook. Just be sure you don't accidentally flip any yellow flags with them. If you do, they can yank your advertising and you're talking to a robot trying to get it back. Unless you're big, of course. Or you can play the algorithm.

How about if you sell a physical product? What if you've been selling it for years? Well, you gotta go to Amazon. They own internet product sales. But guess what? If you switch to a provider, you don't have an email list, you don't have a unique internet address, you don't provide a unique experience, and whatever you do has just become a commodity. And we're back to the algorithm thing again, because if you can source, package, and sell it on Amazon? Somebody else can too. Probably cheaper. Maybe it has high quality parts. Maybe not. There's far too many products for Amazon to manually curate, so you're back to worshiping the algorithm. The algorithm provides traffic, it provides recommendations, it provides an indication of quality text content -- it provides sales.

Make a mistake in the old brick and mortar days? Go change your sign. Deal with complaints through the BBB.

Make a mistake now? Sure, there's recourse. Sometimes. It's all about the algorithm. And we can't tell you what's in the algorithm, because if we did? Everybody would be gaming it. Like they are now.

The algorithm rules all.

Cross it and die.

mooreds6• 10 years ago

The algorithm rules all.
Cross it and die.

Or, differentiate, use these awesome platforms as a traffic source or branding help, focus on direct to the consumer sales and loyalty, and/or build a better product and keep doing so.

Middle men have been around for millennia, these new ones are just that much more efficient. But small fry have more resources now too.

brianwawok6• 10 years ago

So what was this like 30 years ago? No algo with no internet. You make a business, you try to sell it around your town. If you do really awesome you can get 75% of X business in your town. If you do really really really awesome maybe you can franchise it across the country. But most people topped out at ruling a town.

Now we are competing on a world market. Gains are much bigger, but everyone has 500 competitors. You tend to get nothing or $billions.

Good for the consumer I think, as they can get the best version of X. Not so good for the 499 other businesses that close.

pbhjpbhj2• 10 years ago

Good for the consumer I think, as they can get the best version of X. //

I look around and I don't see consumers getting the best version of things I see consumers getting what they're told they should want whilst seemingly ignoring major improvements.

Engineered obsolescence seems like a major thing, how does it benefit consumers (except the rich ones who're probably involved in profiting from it themselves - even then they get the downsides of environmental damage and wastage of resources, eventually).

I want a kettle that has the lid catches made in a resilient and repairable way - instead all the kettles I can find (up to about £80) have plastic that is seemingly designed to perish in a year or two at most. My first washing machine lasted about 15 years; now washing machine repair people are telling me that a machine 3 years old is past it and should be replaced. Progress?

Wealthy companies can see off poor companies and bury better designs. Consumers don't tend to look beyond the end of their wallet, or can't afford to.

We're not working together to create better products we're fighting each other to get consumers money.

golergka• 10 years ago

It all seems pretty bleak, until you think about customer perspective.

soared• 10 years ago

I completely disagree on most of these points.

1. Apps - Yes sandboxed and owned by apple or google.

2. Online site - No, not at all. There are a million other platforms for paid traffic. There is literally billions of places to get referral traffic, millions of which are social. Organic relies on Google, but they are much much better than any reasonable alternative. Following their rules is incredibly simple - don't cheat and produce good content. Horror stories exist but they are tiny tiny minorities.

3. Physical Product - No, you don't have to go to amazon at all. Why would you even think that? Make an ecommerce store just like millions of other brands and millions of individuals.

4. Make a mistake back then - Change your sign. Now just buy a new domain. What about the internet prevents you from changing branding? Yeah you need to rebuild your organic, but thats the penalty for being a shit brand.

Algorithm only rules what you let it, and in some cases (organic) its the best thing you could hope for (if your brand is quality).

Everybody games the algorithm, but if you cross it you die? ...okay.

personlurking2• 10 years ago

Also relevant from 2 months ago:

"Company Makes $70M Selling Random Stuff on Amazon" https://news.ycombinator.com/item?id=11186289

I also remember another somewhat 'recent' article about a secretive company doing what AmazonBasics is doing now but I can't locate it.

ikeboy5• 10 years ago

https://www.fastcompany.com/3021229/chaim-pikarski-the-amazo...?

personlurking2• 10 years ago

that's the one!

danvoell• 10 years ago

Not sure why this leaves such a bad taste in my mouth. Obviously, a lot of major retailers already do this. It just seems like Amazon can do this at a much bigger scale and/or at the same scale as Walmart and end up putting a lot of people out of business.

themartorana• 10 years ago

Because Amazon claims to be your partner in business when they're really using you until they have no more need for you.

Other major retailers may compete with each other with similar items, but they're not partners, they're competitors.

chrisgd3• 10 years ago

Is there anything different with Costco offering a Kirkland Signature anything after they see that product flying off the shelves? Kirkland signature olive oil, balsamic vinegar, coffee, shirts, shoes, peanut butter. Even newer products like air popped quinoa chips or coconut water. If you see something new in everyone's cart one day, two months later there is a kirkland signature brand.

aroch• 10 years ago

I think one way it is, at least a little, different is Costco is frequently purchasing those products from the original vendor in bulk and handling the packaging / distribution themselves. As a result, $NameBrand is making money on both the branded and generic versions of ProductX.

EdHominem5• 10 years ago

One $NameBrand is, the rest are not. So for all companies except that chosen one, this is the same; brand-name products being undercut by (someone else's) no-name.

imaginenore• 10 years ago

Good. Competition is what keeps the quality high and prices low.

aetherson• 10 years ago

Yeah, seriously: "Oh my god, a laptop stand is now being produced at half the price of the previous one! The sky is falling!"

thesmileyone2• 10 years ago

No, because when the competition goes bankrupt, they put their prices up and quality no longer matters.

And thus, evil corporation monopolys form.

dubcanada2• 10 years ago

This isn't exactly news... This has been happening since we began selling stuff.

You know how to combat that, keep the price the same, and make a name for yourself as the best laptop stand around.

People still buy all kinds of US made products even though there are China made versions for 50-70% off.

tamana2• 10 years ago

This isn't really a Made In US vs China thing. Almost nothing sold in US is made in US.

dubcanada2• 10 years ago

Yes it is, this is the exact same thing.

There are shop out there that sell knock off purses and watches (exactly the same as on Amazon) yet people still go to Louis Vuitton and buy their purses.

It's a free market, people are welcome to remake a product with a slight change and sell it.

forgetsusername2• 10 years ago

Almost nothing sold in US is made in US.

Almost nothing, huh?

http://www.marketwatch.com/story/us-manufacturing-dead-outpu...

vblord• 10 years ago

Unfortunately this type of behavior is not uncommon with Amazon's business practices. The book "The Everything Store" by Brad Stone was a very good book. But it also shows how Amazon deploys these types of business practices. With the huge market share Amazon has, it has crushed many smaller business just by selling cheaper products. For example, it took a huge loss on selling Diapers just to destroy a competitor. Because it has so many resources, it can do these types of things.

mooreds6• 10 years ago

Rain Design’s Tai has resigned himself to the competitive threat from Amazon and says he can withstand it if he’s able to foster customer loyalty.

And how do you best do that?

Build your own channel and don't depend on Amazon.

cylinder2• 10 years ago

But everyone is looking on Amazon first. I know I would. Most have Prime and want to use it above anything else.

Prime isn't sustainable on its own. Amazon can make the loss and still convince investors to stick around. Mom and Pop can't ship you something via airplane for free AND cut price by half.

willholloway• 10 years ago

What's needed is a competitor to Prime thats federated.

I would love a one click payment processor that had my cc and shipping info that was low fee, and available on independent web sites.

The small amount of friction of putting in shipping address/cc makes me look to Amazon first.

incongruity• 10 years ago

The other big draw to Amazon, for me, is the reviews. I know it's not perfect, but by and large, items with 4 or 5 star reviews tend to be good. Going outside Amazon leaves me without that, most of the time. Add that to your federated system and I'm sold.

mooreds6• 10 years ago

I think that'd be great. Would be a great opportunity for some other retailer to do this. Wal-mart? Target?

triangleman• 10 years ago

ShopRunner was giving out 1-year trials and extended them every year for quite a while. I almost never used them.

djrogers2• 10 years ago

You can actually use Amazon payments for that...

kristianc3• 10 years ago

AWS is a gigantic platform for doing just this. It's not just a retail thing.

shostack2• 10 years ago

Is there any evidence of this? I have to admit, the amount of data Amazon would have about the intimate inner workings of companies using AWS is terrifying.

kristianc3• 10 years ago

It's hard to be sure that that's what Amazon is doing with AWS, but Simon Wardley has done some detailed and compelling analysis to suggest that they are and why.

One of Wardley's central theses is that it would make little sense for Amazon to do AWS if not to act as a sensing engine:

http://blog.gardeviance.org/2014/03/understanding-ecosystems...

arprocter• 10 years ago

Online retail is always a race to the bottom, as mostly all anyone cares about is price. When I was in the business, it was a continual hunt for new/unknown products we could sell at a decent profit before other sellers got on them and the margin got trashed.

For a niche product it seems a little odd that Amazon would make their version half the price. Then again, they may argue that theirs is a 'budget' version, and thus it doesn't compete with the original.

csours• 10 years ago

Ug. I know exactly what you are saying, but at least some people also care about quality; however, in the race to the bottom it is very difficult for the customer to assess quality and for the supplier/manufacturer to maintain quality.

I don't know if there is a solution to this.

bitL7• 10 years ago

I think most e-commerce companies end up the following:

-1-2 person companies where one person does competitive software and the other hunts for products with good margins to sell

- large established companies with special deals with e-tailers no small sellers can compete with

cc4383• 10 years ago

The reason AmazonBasic's offerings tend to dominate their respective markets isn't because they are the cheapest option. They dominate because they are the cheapest option which you can trust to work and continue working for whatever is considered a reasonable lifespan for that category of good.

You're right in that people care about quality, it's just that quality products don't have to cost as much as you think they do.

unchocked• 10 years ago

"Your margin is my opportunity" -- Jeff Bezos

morgante3• 10 years ago

a) The product is not that niche. If it were truly niche, Amazon wouldn't be interested.

b) Even at $20, I'm sure they are making plenty of profit. It's basically just a hunk of metal.

drpgq• 10 years ago

I wonder what happens when people give low ratings to Amazon basics items.

joemi4• 10 years ago

If you're suggesting giving low ratings as a reaction to what Amazon's done and not because it's actually a bad product, I really wish you'd reconsider. Seems like a rather slippery slope, to start basing product reviews on something other than the products.

programminggeek• 10 years ago

Pretty much everybody selling on amazon should expect this. It's not exactly news.

JustSomeNobody2• 10 years ago

Isn't this similar to what Grocery stores have done for years? Cereal, pasta, bread, canned goods, you name it, there's a store brand.

overcast2• 10 years ago

Big difference with food, is that it's usually not quite as tasty. They cut corners to make it cheap. Whether that translates into some silly plastic thing Amazon is taking over production of, I don't know.

joemi4• 10 years ago

I always thought the store brands of things like that weren't independently developed, but just batches of the product it's cloning that didn't pass that company's standards or something like that.

JustSomeNobody2• 10 years ago

Yeah, I doubt Amazon is cutting any corners. /s

awinter-py• 10 years ago

AMZN's growth prospects increasingly resemble abuse.

Half their success at breaking into new business is consumer trust / lock-in. ('they already have my address & payment info, let's do business with them again').

The situation isn't as nice for their merchant customers; this is amazon's achilles heel. Companies like crowdsupply are the leading edge of a trend to use logistics & sales smarts to help merchants rather than compete with them.

amazon has ridden the wave of consolidation until now, but let's cross our fingers that the tendency will toggle to diversification.

massysett• 10 years ago

'they already have my address & payment info, let's do business with them again'

I had hoped Apple Pay would help here. I order a lot on the phone. No way I am going to input address, payment info, and create a password just so I can spend $15 on something from the phone. I will just buy Amazon or wait to go to the store.

With Apple Pay I would think the address info could be transmitted to the merchant and I could pay with my thumbprint. The hoopla on Apple Pay was on point of sale transactions, but that was a yawn to me--saves me a swipe, who cares? It's shopping on the phone that needs a boost. But it seems few online merchants take Apple Pay and Apple has no easy way to find those that do.

I guess Google Shopping is going for this problem but it doesn't deliver to my area.

chatmasta3• 10 years ago

Watchya gonna do about it? Amazon makes merchants an "offer they can't refuse." Fear of Amazon cloning your product (whether physical via Amazon Basics, or virtual via AWS) is not enough reason to avoid selling on Amazon altogether.

If your product is easily cloned by Amazon, and you cannot afford to sell it for less than Amazon, then you do not deserve to have the dominant market position.

A good, sustainable product is more than just marketing and engineering. It must also be defensible, meaning you need to have an advantage in either product-development (patents, expertise, first-mover advantages) or supply-chain (exclusive manufacturing contracts, access to greater economies of scale). It's almost impossible to beat Amazon in the supply-chain economics, unless you have a highly specialized product and deals with the manufacturer, so you are left to compete in product development. Your product needs to be sufficiently innovative and defensible in order to avoid Amazon cloning it.

x5n1• 10 years ago

Amazon has economy of scale, it can make deals for more units and therefore drive down the cost. It also has negotiating and brand power to coerce suppliers to give a better price much like Wal-mart. Amazon competing with its own retailers is a stupid idea and will cause many of them to pull away. Say you offer 1,000 products. Do you really want Amazon knowing which ones are popular?

Just like everything else is now the case with Amazon. You can't build your own business on someone else's platform.

Hell if they start stealing data from AWS from their competitors I would run like hell away from their services.

What you are going to do about it is run away from Amazon. That's what.

chatmasta3• 10 years ago

Sure, you can run away from Amazon. But then you lose the marketing, fulfillment, and shipping channels offered by Amazon that you cannot possibly achieve yourself. Many customers will only purchase from Amazon, not some janky online store where they need to enter their credit card number. So you lose those. And you could contract with custom fulfillment centers and achieve two day shipping, but you're not going to be able to offer the shipping for free (prime), and the fulfillment will cost you more than Amazon unless you're moving huge volume.

If you offer 1,000 products, as you say, then you're in the wrong business. Did you develop every one of those products? I highly doubt it. So you are just a store selling thousands of products from different manufacturers. In that sense, you are a competitor to Amazon. How can you possible beat them? You've already lost.

The article is not referring to selling thousands of products, it's referring to developing and selling one single, specialized product, and then getting it "stolen" by Amazon. In this case, you are not originally competing with Amazon, but rather using their platform to sell your product. Once they clone your product, then you are competing with Amazon. At that point, if you have not established defensibility, you deserve to be undercut by Amazon.

There are many ways to establish defensibility: patents (Amazon cannot clone your product without paying a license fee); branding (customers will only buy your product, not some cheap clone); custom development (Amazon cannot clone your product without hiring specialized experts). If you are selling some cheap run-of-the-mill product from China, and all you have for defensibility is branding, then you are going to lose to Amazon. But if you have invested years of experience and engineering talent into a custom product protected by strong patents, and branded it well enough that customers know the product is only good if it comes from you, then you will beat Amazon and you can sell to their customers without worrying about getting cloned.

morgante3• 10 years ago

Do you really think Amazon's proprietary data is that essential?

Even if this product were not sold on Amazon it would be easy to see that pursuing it would be profitable. It's high margin and obviously popular. It's hard to keep those facts secret for long. The fact that the project was originally sold through Amazon is really just a red herring. Companies have been entering competition with high-margin incumbents for centuries.

This is just capitalism at its finest: the world does not owe you a business model, and you cannot expect to capture excess profits on stable product lines for long. Either scale or innovate (preferably both).

blakeyrat2• 10 years ago

Apple's done this for years. Most recent case I can recall is that f.lux program on iOS. AFAIK, people kind of mildly call them out on it and then forget about it a week later. It certainly hasn't seemed to actually damage Apple's business at all.

MBCook3• 10 years ago

The term for that is Sherlocking, referencing a 3rd party tool they 'integrated' in either OS 8 or OS 9 (sorry, don't remember exactly).

I'd argue the f.lux case is a bit different.

Either way, haven't big retailers (Walmart, BestBuy, etc.) always done this?

EdHominem5• 10 years ago

We expect products to get better and people to learn from public ideas. For customer's it's a good thing.

But this really does burn developers of those original products who were originally brand partners.

I don't think Apple "owes" them anything, but I think they would help themselves by treating it as if they did. Especially where it's obvious that the OS-bundled app will win simply by virtue of being bundled. It's probably a legal issue where if they gave someone anything they'd open the door to being sued for a fortune, but it's horrible PR towards their developers.

BurningFrog• 10 years ago

The damage would be that fewer people bother developing software for their platform.

Seems very hard to measure. So it's safe to speculate!

capote5• 10 years ago

It's almost impossible to beat Amazon in the supply-chain economics, unless you have a highly specialized product and deals with the manufacturer

Yeah. And the opposite of a highly specialized product is exactly the example the article gave--a piece of metal to hold up your laptop. I don't think there's anything we stand to lose from this happening to products so simple and generic. Or is there?

tryitnow• 10 years ago

The biggest risk is that Amazon will act as a monopoly and jack up the prices of the products once it's destroyed competitors.

Honestly, I don't think that's too likely as amazon's business model is built around razor-thin margins.

cc4383• 10 years ago

I think the consumer can only gain from such entries into the market. AmazonBasic products are often just a standardization of a simple product in a market with too many options. Consumers trust Amazon to deliver on their promises and when confronted with a choice between 800+ USB hubs, I'll choose the cheapest option that is guaranteed to work. There is almost 0 utility for the consumer in choosing a "better" USB hub than AmazonBasic's offering but the downside of choosing a "no-name" hub is measurably significant.

The genius in AmazonBasic concept was in realizing that building the better mousetrap doesn't always mean building the best mousetrap, it means building the best mousetrap for the price. There are so many goods with a market that falls into just two categories, ones that work and ones that don't. Whichever brand is able to gain consumers trust in knowing their offering will work will quickly rise to dominate such a market.

bsder• 10 years ago

I don't think there's anything we stand to lose from this happening to products so simple and generic. Or is there?

The thing you stand to lose is the original making of that product.

While making the laptop stand is "simple" (and I object to that statement as manufacturing anything is rarely "simple"), getting it in front of people, marketing it, and selling it is not. Amazon sits back and looks for any products that now sell over $X million dollars and then simply walks in.

So, now if I'm a manufacturer, I will do several things:

1) I might avoid Amazon. Ever. Decreasing choice on Amazon certainly hurts the consumer, no?

2) I might make a shitty product specifically for Amazon to sell so it doesn't cannibalize my good product. I hope you like wading through even more crappy products on Amazon. That hurts the consumer, no?

3) I might simply not make the product. If I think that Amazon might clone me, I either might not develop the product or I might artificially restrict the sales if I know that Amazon flags products above "n units sales or $m total revenue".

This is not new. WalMart was the offender last time. http://www.fastcompany.com/54763/man-who-said-no-wal-mart

Note that Snapper got bought by Briggs who then decided that Sears and WalMart were just fine. Quality seems to have suffered, as expected.

illumin8• 10 years ago

I actually just bought the Rain stand for my rMBP a week ago, and have to say that I'm impressed with the industrial design. Sure, it's just a laptop stand, but it's solid aluminum and has solid design principles - it's a heavy piece of metal that looks and functions well enough it could have been designed by Apple and Jony Ive himself.

I'm fairly certain the AmazonBasics stand isn't the same quality, but that's not really the market they're going for. They're going for good enough and cheap - AmazonBasics cables are a good example of this - they're not high end, but they're affordable and when you just need an HDMI cable, they work fine.

Honestly, Amazon is in the perfect position to compete with their partners like this, and I don't see the harm. If anything the customer experience is even better because we now have reasonable low-priced options to buy that might not have been there before.

dragonwriter3• 10 years ago

What to do about it? One thing might be to not invest in any company that is dependent on a retail sales channel that doesn't have a specific plan to avoid getting Amazoned this way. Amazon's basically found a great way to free ride on other firms product and market development -- which is fine, up until the reduced expected return from those investments dry up capital to invest in those areas for products that might be exposed to Amazon's tactics.

Oh, you mean what for existing firms with business models that are threatened...

bencollier49• 10 years ago

Whatchya gonna do about it?

Break up Amazon a la Bell. It's an abusive monopoly. I'm sure the European Union will get around to doing this before long.

tomp2• 10 years ago

So... one company is upset that another company has entered their market, after they've been scamming consumers, selling a $20 item for $40 for years?

Color me shocked.

ericabiz• 10 years ago

Just like Shake Shack is "scamming" people by selling an $8 burger when McDonald's sells a burger for 99 cents. What scammers! (sarcasm)

tomp2• 10 years ago

Shake Shack doesn't complain about McDonald's entering its market.

tmaly2• 10 years ago

For me there are positives and negatives to this type of move. The small mom and pop stores are supporting local jobs in some cases. In other cases where the product is mass produced overseas, I would prefer the lower priced Amazon Basics product.

CVS a pharmacy in my area does something like this. The slot on the shelf for the brand name product you want is usually empty. The generic CVS brand of that same product is fully stocked right next to it. I sometimes just go to a non-chain pharmacy just so I can get the brand I want.

learc83• 10 years ago

I sometimes just go to a non-chain pharmacy just so I can get the brand I want.

Is this for drugs or something else? Generic drugs are regulated by the FDA and have to be completely identical to brand name drugs.

542458• 10 years ago

The medical ingredients are identical. Everything else may or may not be. You might want children's medication in a given flavour, or the "fast acting" delivery mechanism that may not be available in the generic format.

Tenhundfeld• 10 years ago

Not OP but I see it for many different types of items. Think bandages, ankle wraps, mouth wash, antacids, OTC pain relievers, etc.

You might say that antacids and OTC pain relievers are drugs, and that's fair. But there are other concerns besides the active ingredients. For example, I might prefer the taste of Tums to CVS brand. Or for a personally-true example, I used to find the CVS brand ibuprofen gelcaps to have a funny, sour smell that I didn't notice with Advil. (I don't notice that anymore.) Or my grandmother used to buy a specific brand of some contact lens cleaner (can't remember which), because she found the top much easier to open. The point is it's not always about the efficacy of the drug; sometimes it's about the overall experience.

conductr• 10 years ago

I've noticed this issue too. Some people prefer to use a brand like Tylenol instead of the store brand acetaminophen. But the store will just not keep the Tylenol stocked to force you to by their brand.

They are both the same acetaminophen. However, I do notice that with some meds the store brand isn't an equal because they don't make the gel tabs I prefer (because it's more fast acting than the chalky white tabs), specifically talking OTC allergy meds

willglynn4• 10 years ago

Bioequivalence and pharmaceutical equivalence are different.

It's true that generic drugs have the same active ingredients in the same dosage and form, and they're tested to have the same general absorption characteristics. This does not necessarily mean that a brand drug and its generic version are completely identical. For example, many patients prefer Synthroid (a brand-name synthetic thyroid hormone) over levothyroxin (its generic equivalent). The inactive ingredients sometimes affect how a drug's active ingredients behave within an individual, and these are allowed to differ between brand and generic drugs.

This usually doesn't matter; most of the time, brand drugs and their generic versions are close enough. However, generic drugs aren't exactly just a different label on the same medicine, and the differences can be clinically significant. Thus, the medical world has the ability to specify "dispense as written" on prescriptions and on the corresponding insurance claims.

tmaly2• 10 years ago

I mean for more OTC stuff like bandages, lotions, etc.

MicroBerto• 10 years ago

I have it on good authority that supplements will be coming too. Probably starting with basics like a multivitamin.... No clue how deep they'll go though.

gmantom• 10 years ago

Amazon is a lot like China.

You go make your stuff in China it's cheap, they have the factories, the facilities. You do well.

Once they, in China and at Amazon, notice that what you're doing is selling quite well they make the same thing and cut you out.

Edit: Spelling.

tn13• 10 years ago

If you have a successful product there will always be a competitor. I think that is a good thing.

Kiro• 10 years ago

I've never understood how that Rain stand could cost so much and still be so popular (I have one myself). At first I thought it was an official Apple stand but no.

rdl• 10 years ago

I'm wary of business models built around just selling hardware, long term -- it seems like hardware + service combination is the way to prevent this kind of activity from vendors, ghost shift manufacturing, other counterfeiting, and such. Also good for the consumer in a lot of cases. The problem is the products run the risk of being orphaned if the manufacturer stops supporting them at some future date.

fabulist3• 10 years ago

Why is this legal? Aren't they using their dominance in one market to enter another market? Isn't that what antitrust suits are for?

I'm not being rhetorical, I'm actually asking.

djrogers2• 10 years ago

It's not an anti-trust case because there are literally thousands of other retailers - both online and brick&mortar. Amazon has nowhere near a monopoly on anything here, they are running a store. Just like walmart, target, costco, Safeway, etc - all of which have their own house brands.

fabulist3• 10 years ago

I find it incredibly hard to believe that Amazon is not a monopoly. This Forbes[0] article from 2013 states that Amazon had more sales than it's next 12 competitors combined, and that it's sales were growing faster than overall online sales. If we take this as read, that means Amazon is probably more dominant in 2016 than it was in 2013.

That doesn't seem like meaningful competition, that seems like the other retailers are keeling over.

[0] http://www.forbes.com/sites/timworstall/2013/09/01/fascinati...

joemi4• 10 years ago

Amazon would do (and probably still does) this in another way, too. When I was selling on Amazon for a bookstore, our strategy was try to find books that Amazon didn't have on the site, then sell them, and if any sold well we'd send massive quantities to Fulfillment By Amazon so we'd sell a lot and not have to ship each copy individually. The first time this happened, we sold something really well for 5 or 6 months, and then it stopped selling completely. Turns out Amazon started carrying it and was selling it far below list price. Then it happened again with another book after a few months of good sales. And then again. After the third or fourth time Amazon suddenly undercut us like that, we gave up on the practice, since between the already low FBA margins and the cost of returning all the unsold products to us (and the publisher) since we couldn't move them anymore, we weren't making enough for it to be worth the effort.

mindotus• 10 years ago

Ouch, what did you guys end up doing? Move to your own platform?

rpgmaker• 10 years ago

Right, because everyone just has their own "platform". And one that can compete with Amazon no less.

joemi4• 10 years ago

We stopped shipping things to FBA. Sadly we still had to sell on Amazon since it's the best way to sell books online, even with their shenanigans. But without FBA benefits there's no way to compete with Amazons deep discounts on new books, so we pretty much only sold used books.

It feels absolutely horrible knowing that the only way to make any money online with books is to sell on your biggest competitor's site.

thefastlane• 10 years ago

everyone hates banks but, come on, AMZN is about as filthy of a corporation as they come.

mesh2• 10 years ago

Related PlanetMoney episode:

Episode 586: How Stuff Gets Cheaper http://www.npr.org/sections/money/2014/11/28/366793693/episo...

merb• 10 years ago

I don't see the competition, I would still buy the non Amazon Basic one. The only time I grab a Amazon Basic product when I don't need it a "long" time. actually even the amazon basic batteries are worse than any cheap vatra. if people would care about quality they would mostly spend less money on rebuying the same damn thing.

btw. on the german website the amazon basic thing looks very different when I search for laptop stands (only a direct search 'AmazonBasic laptop stand' would give me the thing in the news and actually even then there is another competitor that isn't Amazon and 10 € cheaper than the Rain Design). it is more close to a product by hama which was there LONG LONG before the Rain Design product. Also Rain Design has sometimes flaws. According to buyers, sometimes you get scratches or rough edges. For 50 bucks thats definiv a NoGo!

sunstone• 10 years ago

Like Bezos needs to move in on a niche aluminium computer stand business. Pick on someone your own size Jeff.

morgante3• 10 years ago

Welcome to capitalism, supercharged.

There's a reason that in the long run economic profit of firms is theoretically 0. If you're making substantial margin off a product, and doing so in volume, other companies will naturally want to compete with you to sell it. You either have to innovate faster than them (and thus win customer loyalty) or get into a brutal price competition which pushes both your profits to 0.

Keeping your products off Amazon isn't even a defense against this. It's hard to keep a lucrative product secret for long. Cash cows eventually moo.

Your margin is Amazon's opportunity. Get used to it.

transfire• 10 years ago

Anti-trust action is going have to come down on Amazon eventually.

thesmileyone2• 10 years ago

They have been doing stuff like this for ages.

If you sell a product on amazon and they decide they want in, you are forced to give them your source or they terminate you. Then they go to your source (or more likely their source) and buy in bulk then undercut you or minimise your listing... and so you are priced out of the market.

Got a Hot Seller on Amazon? Prepare for Amazon to Make One Too

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