binarysolo
Joined 15 years ago
Joined 15 years ago
Amazon as the marketplace facilitator has an interesting job to run:
1) It wants customers to get exactly what they want (as measured by the minimal amount of clicking/scrolling/time it takes for a customer to hit the landing page -> complete shopping). This is mostly customer-centric.
2) It wants to promote as much competition as it can between products and brands so that no seller dominates the market. This is... mildly customer-centric so big sellers can't rest on their laurels, and mostly self-serving (so no single seller/brand can gain enough power to threaten Amazon).
3) Amazon has to strike a balance of #1 and #2 so that there's some opportunity for new entrants to enter any product space. Back in the days they structured search so that some percentage of results would be new sellers and products, and new products would get some amount of sessions to prove they convert within a certain statistical distribution to land a certain rank (BSR). Note the rise of alphabet soup Amazon brands is partially because they allowed for disposable brands that could be black-hatted, and partially because for a few years these sellers were just generating tons of new brands to share new SKU real estate on search results (so when you searched for "small kitchen colander" or what not, you'd find the same product being sold by 10 sockpuppet sellers occupying 10 search spaces, taking result space away from the other sellers).
But what if they can get everyone to partially pay for #3? Enter ads, where basically new and old brands pay to play for eyeballs on Amazon.
So if you think about it, Amazon is a search problem where you wanna push results such that the expected value of the results pushed yield the highest expected value, something along the lines of: Expected Value (EV) of your product = [your sales price] x [your product's conversion rate in the past X days] x [some confidence level of said conversion rate] - [returns] + [whatever other Amz secret sauce] + [Amazon PPC]
Amazon can get people to pay for their eyeballs, swap some seller blackhat tactics for others, and more or less keep OK results. So that's Amazon's end.
As an established seller -- I know my product converts at X%, so as long as the math works out where I spend $Y/click, expect it to convert at X%, and my profit Z > Y * X it's what I do (and the tax I pay), and I move that up and down depending on my inventory situation. If possible, yes, I would pass some of that down to price raises as long as the market's willing to bear it, so I can make a minimum margin requirement off my Amazon channel (which is the lowest, compared to my D2C website or through offline B&M channels, but I do so because my biggest volume is on-Amazon).
As a customer... yeah the default search results are "good enough" for the 80-20 crowd; the convenience, ease-to-checkout, and 1-2 day shipping wins them over. As a "nerdy" customer who likes researching products to get the best one, I used to research via online reviews and reddit (most of which are gamified in their own ways)... but now I use AI (ChatGPT, *not* Amazon's Alexa Shopping because it's not great) and mostly call it a day.
"No brand name" flag is tricky because the Amazon catalog team actively does A/B tests to hide brand names as part of their goal of commodifying all the sellers to increase price competition, when they see you're selling a commodity item.
Same goes to wellknown brands that get caught in the crossfire because they're using their brand name from another language but don't make sense in English.
Agreed that it's an interesting idea, but execution has a LOT of false positives.
About a year ago, one of our account managers had a life issue, ghosted us, and she held a fairly critical role in the business and gate-kept a bunch of knowledge to some high value vendor accounts.
Because we ran our ops in Google Workspace, we essentially had off-the-shelf RAG and was able to get answers to a lot of things by asking Gemini to go through all her emails/docs/calendar/meetings, reverse engineer what she did, and create an onboarding doc for her successor.
This happened once more a few months later when one of our analysts broke his wrist on vacay, and we were again able to replicate what they did to cover for their absence, this time dabbling in AI agents ("gems") to do a bunch of the regular simple tasks and again it covered things without too many issues.
I def expect Amazon/shopify to at some point replace all of us brand owners with AI bots if they can, but we'll see how long the gravy train goes on.
(Have a MBP with fun case covers that I take off when I do a work presentation.)
Thanks Endless Toil!
-The old kindles are great products that last a long time -I don't expect Amazon to support them forever, but kindasorta bricking them on their way out is a dick move -Jailbreaking is straightforward but this probably hits older people who are not very tech-savvy the most. Like quite a few others here, I too have an elderly family member who I had to help resolve this
I feel there's gotta be some compromise between letting old electronics age gracefully so they don't occupy landfill and a company's need to support aging products over a long time... though I'm not sure what's a good model.
I do think that by not having physical stores, it directly/indirectly promoted a decline of product quality as well as misrepresentation of product, with Wish and Temu kinda exemplifying that to an extreme. Price differentiation is way greater now which I guess is a net positive to the consumer.
As a brand owner of midtier kitchen products (cheaper versions of designer OXOish products, but more expensive than your baseline Walmart stuff), our products look visually similar enough to both ends of quality, but shines more when a person gets to interact with the items themselves, feel the product texture, press the lever action, etc. So I do value B&M for their place in the economy and want to make sure they can have some margin (even though I'm selling the same thing in my Amazon store and Shopify and can make more money there).
Once FBA started failing during COVID due to warehouse restrictions + sellers and 3PL third party logistics centers really stepped up did FBM even become a thing (and Amazon smartly gave access to Prime badges for FBM sellers who could deal with stringent shipping times).
IMHO the other big superpower Amazon has is to force sellers to eat returns and provide retroactive refunds when a product gets recalled.
If I know I can go online and it'll be some % cheaper, I'll wait and order it online, defer my gratification for a few days, and end up with a cheaper product.
Not sure about Poland, but most B&M brick and mortar stores in the US are distributors/resellers of the brand, they buy for $4 and sell for $10, and their rent/labor/etc costs $3 and they profit $3. Another distributor let's say is an e-commerce website, they can setup a warehouse in a rural area with cheap labor so it costs them $1 and they profit $5... so they can afford to discount it to $7 and make $2... which the B&M store can't do because they won't profit at all.
1. Amazon is a search engine for product
2. It values being the cheapest destination for products (MFN most favored nation clause to sell on their website), and basically will suppress your listings from search if they can find you selling it cheaper elsewhere.
3. Amazon is def one of the more expensive ecom channels to sell, BUT they've got a huge audience as well due to decades of consumer-first policies, so sellers still go there because even if they have loyal customers with strong brand loyalty, you still end up with at least 30% of customers going to Amazon first after seeing your ads elsewhere + the lure of NTB new-to-brand customers you can acquire there.
So the crux of the case is dependent on whether they can do #2 with impunity -- which Amazon considers "consumer friendly" (but obviously it's win-win for them too).
Basically different distribution channels (speciality shops, big box marketplaces, and ecom stores) have very different levels of overhead, so if each channel was allowed to set their own price, you'd end up with brick and mortar stores doing a lot of showrooming and then online stores gaining the bulk of sales because they're cheaper (because their overhead is low).
This pretty much happened in the early 2000s-2010s so over time brands became VERY particular about enforcing MAP.
I feel you on this. :)
For advice, caffeine, and what not, drop me a ping! Minimum effort & bot filter -- ROT13: [email protected]