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The problem with this is that it's built in the backs of brands who were at one point well recognized brands on Amazon. Amazon took their sales data, determined

The problem with this is that it's built in the backs of brands who were at one point well recognized brands on Amazon. Amazon took their sales data, determined it was a good market to move into, created specifications and reached out to their hundreds of sellers for a "private label opportunity". Cue making dozens of companies compete to supply Amazon with the manufacturing contract and constant downward pressure and you get a good product from Amazon at a good price. Not a problem right? Until the private label brand forces 90% of those formerly quality-focused small brands to shut down and due to their "algorithms" detecting less competition, begins raising prices again. And now the expertise of small brands is gone and no competition springs up in the market. I've seen this happen in a couple product lines over the year and is one reason we pulled off Amazon. Amazon customers are entitled pains in the ass, and the margin there isn't sustainable. The only way for small brands to make Amazon work is to aggressively sell a single SKU and put in remarketing/back-channel outreach to customers and make the conversions to the rest of your product line off Amazon. This is explicitly against Amazon's policy, but their policy is in place to ensure they profit and you never gain traction so you remain reliant on them until they day they put you out of business with their own private label line.

GarrisonPrime 8y ago
“Star Trek abundance” is coming ever faster, but the transitional period will be painful for many. Let’s hope to make it brief.
- mmirate 8y ago
  Citation needed. As far as I can tell, post-scarcity is almost fundamentally unachievable; and, at best, achievable with technology that today's eyes would confuse for magic.
  - ceejayoz 8y ago
    > best achievable with technology that today's eyes would confuse for magic That's a pretty low bar, isn't it? Show an iPhone's capabilities to, say, a WWII soldier or industrial revolution textile worker, and they'll deem it pretty magical.
    - mmirate 8y ago
      Show it to the people who designed the PDP11 at the time they designed it, and chances are they won't. The uneducated masses of soldiers and workers are much easier to dazzle and fool than technical personnel; and I apologize for not qualifying my previous comment enough to convey the idea that the Star Trek replicator, if it were to exist and be transported to the present day, would indeed be magic to any sane scientist or engineer.
      - gaius 8y ago
        The uneducated masses of soldiers and workers are much easier to dazzle Time Traveler: look at this iPhone! WW2 soldier: that’s a flimsy looking walkie-talkie, wouldn’t last a day fighting the Waffen SS. Do you mind? I got work to do.
        mmirate 8y ago
        Superficial; after, at worst, a brief demonstration, a stereotypical Nokia would elicit a different response.
        bluGill 8y ago
        No, you would be very disappointed. The vast majority of usefulness from a smart phone happens because it is connected. Since there would be now towers for the phone to connect to, most of the things you want to show couldn't be done. You could use it as a personal organizer - but without connectivity it can be argued that a paper organizer is easier to use. There are a few other programs that will also work in a fashion, but again lacking connectivity the paper equivalents are as good if not better. There are also a few games that will work: you can really impress them with the games you can play. The only thing impressive will be the camera - a full color picture that you can zoom in on and save is interesting. Having 10000 photos (plus some videos) in your pocket will get attention. Of course once the phone breaks you lose all that, but still it will be impressive.
        8y ago
  - NeedMoreTea 8y ago
    Seems like it's more an economics issue than technology. We're already most of the way there as seen by the sheer quantity of throwaway product - where it's cheaper to make another than allow repair and maintenance. (I'm ignoring DRM on repairs - that's a different issue). We could probably have post-scarcity as Keynes envisaged right now if we hadn't created rampant throwaway consumerism along with increase in capability post WW2. The moment an issue is "solved" fake problems will be invented to sell a needless alternative. e.g. The creation and marketing of liquid soap that's worse in essentially all respects to bar soap, or the whole creation of body and looks insecurity to sell a cosmetic or cream. So, surely in x years when technologically we're able to achieve post-scarcity it'll just spawn another fake solution to another fake problem? Another reason to keep working 40 hrs instead of dropping to 20. Maybe it can truly appear after World War 3, the banking and finance wars.
    - mmirate 8y ago
      You're thinking solely about materials, and thusly forgetting about energy. (So did Star Trek, I reckon, but I degress.) Humans require a timely supply energy to live and act. Converting energy into human-usable form, requires energy. Recycling and remanufacturing require energy just like mining and "unsustainable" manufacturing do. And even renewable sources can collectively provide only a finite amount of energy per unit time.
alexchamberlain 8y ago
Should own brands be banned to avoid monopolistic behaviours?
- Gustomaximus 8y ago
  That seems a bit all or nothing. It could be worth considering if someone has monopolistic power (or some oligopoly) in one area such as distribution of products, any product business must be run separately via Chinese walls or just not allowed. People seem to forget a fundamental part of capitalism is that government should intervene to maintain a level playing field. Then...what defines a level playing field..
  - TulliusCicero 8y ago
    That's fair, but Amazon has only a small % of total retail sales (4% in 2017, according to a quick search). I'm not sure at what point it's commonly assumed that a company has monopoly or market power, but I'm pretty confident it's not 4% or even close to that. edit: another quick googling says that US courts apparently almost never conclude a company has market power if they have less than 50% market share: https://www.repository.law.indiana.edu/cgi/viewcontent.cgi?referer=https://en.wikipedia.org/&httpsredir=1&article=1388&context=fclj https://www.repository.law.indiana.edu/cgi/viewcontent.cgi?r... Amazon is still growing at a good clip but I'd be really surprised if they were able to pass even 20%, let alone 50%.
    - emodendroket 8y ago
      Or forty-four percent of online sales. https://www.cnbc.com/2018/01/03/amazon-grabbed-4-percent-of-all-us-retail-sales-in-2017-new-study.html https://www.cnbc.com/2018/01/03/amazon-grabbed-4-percent-of-...
      - TulliusCicero 8y ago
        I'm not sure that's a super meaningful distinction for market power. It's a different method of selling, but ultimately you're selling largely the same things. You probably wouldn't separate out "Ford has this much market share in dealerships vs online sales" most of the time, for example.
TulliusCicero 8y ago
> The problem with this is that it's built in the backs of brands who were at one point well recognized brands on Amazon. Amazon took their sales data, determined it was a good market to move into, created specifications and reached out to their hundreds of sellers for a "private label opportunity". Not sure I'm seeing the problem. On the surface it sounds pro-consumer. Plus, this is already common in brick & mortar stores, I think Costco is particularly well-known for doing this (and of course private-label/house/generic store brands are hardly uncommon elsewhere too). If it was that destructive, why do we still have brand names in regular stores as it is?
- philjohn 8y ago
  Until the second part of OP's story happens - which is the competitors die off and then Amazon jacks up the prices. Most of these sellers are much smaller than the brand names you see in supermarkets, and also much newer. Spigen, Anker etc. don't have the same sentimental decades long attachment that Kellogs, or Pepsi have with consumers either.
  - ctvo 8y ago
    The second part of the theory has been the hammer dropping for 15 years. Amazon makes no money in retail to drive out competitors and when that day finally happens! Just you wait! The prices! I'm still waiting. The ride has been beneficial so far.
    - chottocharaii 8y ago
      The stock market has priced in those future increases in the present day inflated stock price. That's a pretty decent indication.
      - Nasrudith 8y ago
        The stock market isn't psychic. They believe all sorts of irrational things and are perfectly capable of being turkeys who vote for Thanksgiving. Price raising on commodities hasn't worked out all that well in general. While the network effect helps it isn't omnipotent. People are already returning to brick and mortar for better prices.
dkasper 8y ago
If they start raising prices then others will be able to re-enter the market and compete.
- sp332 8y ago
  Why would anyone enter the market knowing that Amazon could put them out of business again quickly?
  - jonknee 8y ago
    Because that's how capitalism works? Walmart still has plenty of competition despite their giant purchasing and pricing power.
- rickdeckard 8y ago
  The way this system works is not normal brand vs. brand competition, it's the sales channel (distributor) which starts to compete with the established supplier. This is what creates the imbalance in the competition. The distributor uses a private-label to bundle the sales of a lucrative product-tier that is sold across multiple brands in his channel into a single in-house brand. For the original-brand to enter this channel again after it has left, it would have to be _cheaper_ than the private-label (to exceed the profit the channel makes with its private-label product), or prove that it can sell MORE VOLUME than the private-label for whatever reason (=more profit for the channel). Unfortunately for both cases the brand is entering at a steep disadvantage, because it would have to finance its own brand to overpower the brand of the private-label, market their product to push sales, yet sell-in at a lower price, and even rely on the very same brand it now competes with (100% of the channel customers are shopping there because of the channel-brand). At this point in the game, creating consumer-value becomes a niche-topic, because the barrier is now to create more profit for the channel, otherwise he will not allow you to reach the consumer... That's one of the reasons why we keep seeing an increase in own-brand stores of major companies. It's the lack of "brick and mortar net-neutrality"...
crazygringo 8y ago
How is that different from large supermarkets determining own-brand cereal and peanut butter are good markets to move into? It's just capitalism at work. Yesterday's high-quality high-price item becomes today's low-priced low-quality commodity. Quality-focused small brands in every industry and every market need to be constantly improving, developing new product improvements, new niches, new products. (E.g. an even-higher quality version for the luxury niche.) It's extremely unlikely that Amazon will be be able to raise prices long-term on an own-brand item with "no competition" simply because... well, capitalism. As soon as they do, manufacturers in China or whoever sells the equivalent product at Wal-Mart will list on Amazon for a lower price and make money... so Amazon lowers the price again... and as always, the invisible hand of capitalism keeps prices low for the consumer.
- emodendroket 8y ago
  Well, maybe, if we judge that Amazon does not exercise monopolistic control over online retail. But a lot of people are going to never look anywhere besides Amazon (gotta take advantage of that Amazon Prime subscription, of course) and just buy the product and not know that a lower-price option is available.
- geofft 8y ago
  The invisible hand of capitalism works slowly. The fingers of the invisible hand are unhappy consumers communicating their demand; the thumb is holders of capital hearing it and building better products. This process requires time to communicate that information and time for new suppliers to enter the market, and in the meantime consumers are unhappy and existing suppliers aren't making as many sales as they could. The invisible hand corrects mistakes, but that's no defense of making mistakes.
- bigjimmyk3 8y ago
  I think it's different because of intent. Supermarkets and large retailers (e.g. WMT) seek deals to relabel and sell products as "house brand" but it's generally done in such a way that they are selling to customers who would not have purchased the name brand in any case. That's the pitch anyway, and judging from the longevity of these arrangements it's likely that the "name brand" is seeing enough benefit to continue in that way. The two entities seem to find a way to balance their interests. With Amazon, I don't think they are seeking that balance at all. I do not think it's a good long-term move for their retail side. The problem with stabbing all of your friends in the back is that you also have a back.
deltron3030 8y ago
>The problem with this is that it's built in the backs of brands who were at one point well recognized brands on Amazon. Amazon took their sales data, determined it was a good market to move into, created specifications and reached out to their hundreds of sellers for a "private label opportunity". It's different imo. They see what private label products sell on FBA (and the specs they need to fulfill), and then can just negotiate better deals from the same suppliers, because most FBA sellers ship straight from chinese factories to Amazon warehouses it's no secret where it's coming from. And for many product categories there aren't that many high quality factories anyway. The important part are the specs and quality of the product, if you don't specify and interact with the factories, you'll get crap, if you spec by focusing on the wrong things you pay too much and still get crap. The FBA sellers are basically just testing the right mixture until Amazon steps in adopting their formula. A successfull low cost product is just that, a good enough quality at an as low as possible price.
yuy910616 8y ago
that's how competitions work....in your second part, some other people who can make the stuff cheaper will just come onto amazon's platform, preventing the price from going up. If you're looking from a supplier side, yeah this business is bleak. But keep in mind someone will always accept a lower margin, run the same business more efficiently, or can produce your goods at a lower cost. Just because you guys can't stay in the game, doesn't mean the game is broken. You got beat by open competition.
- user3359 8y ago
  There's definitely something to be said about economies of scale and efficiency. But I'm talking about design and product expertise. People sourcing knockoffs can create a cheaper version 1 of a product, but only a brand connected to it's customers will use their feedback for version 2, 3, 4, n+1. I'm a little insulated in the food niche because product quality and freshness and expiry dates are huge risk factors, but this applies to other industries as well. You can buy a knock-off Amazon branded chain lubricant from China that lists the same ingredients if you want, and it may work well in low impact situations. But for my motorcycle, you bet your ass I'm spend 2-3x the lowest price I can find on Amazon for a well known brand with a reputation and uses quality inputs and filters and has no additives. When my health is on the line, brand expertise is essential. Same with food. There's a floor for quality, and you can't escape the value trade-off. Something being cheaper doesn't mean it's quality is unaffected, but the short-term, inexperienced people at Amazon don't care about that. I can buy and sell our "product" at half price by buying last year's crop or a lower grade, and I can sell that garbage exclusively through Amazon and "win" the completion, but nobody really wins in that case - me or the customer or our competitors - only Amazon.
amyjess 8y ago
Nah, this is no different from what brick-and-mortar retailers have been doing for decades. Buying private-label items in supermarkets over name brand has been recommendation #1 in personal finance circles for at least as long as I've been alive. Hell, some private label products are better than brand... I'll go out of my way to buy Kroger's private label ice cream and sodas. And it's not just food. Half the stuff you see in Walmart is private label, including clothing and pharmacy products (and I've found that I actively prefer their private label sleepwear over name brand). And whenever I buy OTC meds at CVS, of course I always take the private-label bottle, which has the same ingredients yet is half the price. > I've seen this happen in a couple product lines over the year and is one reason we pulled off Amazon Oh, I see. You have a personal financial stake in spreading FUD against private-label brands because you operate a name-brand business.
patrickg_zill 8y ago
Much of this strategy was developed by Wal-Mart.
Tiktaalik 8y ago
Netflix is doing the same thing with tv/movies.
fredophile 8y ago
That's an interesting take but I think there's a bigger problem. Because of how they handle inventory, buying the Amazon brand of something is the only way for me to know that the item I'm buying is the item that I ordered.
nwatson 8y ago
> The problem with this is that it's built in the backs of brands who were at one point well recognized brands on Amazon. Amazon took their sales data, determined it was a good market to move into, created specifications and reached out to their hundreds of sellers for a "private label opportunity". I believe Costco (Kirkland brand) and likely Amazon also contract with one of the major brands (e.g., Tide detergent) to make a store-label parallel product with perhaps slightly different formulation, but often the exact same formulation. The name brand saves on their marketing costs and sells at higher margin, Costco gets a great product they can sell to customers for less than the competition, and customers willing to trust the Costco "Kirkland" brand save a lot of money ... it's a three-way win. From https://www.wideopeneats.com/store-brand-vs-name-brand-why-kirkland-signature-brand-is-just-as-good/ https://www.wideopeneats.com/store-brand-vs-name-brand-why-k... ... >> It’s a common misconception that the generic is made from a cheaper brand. >> Sometimes the generic is made overseas with inferior products, but a lot >> of Kirkland Signature products are actually the exact same product as the >> name brand product. ... Sometimes, they’re even manufactured in the >> same facility! I've bought a few Amazon-brand products, e.g., USB cables, backpacks. The Amazon Basic backpack is quite good quality, seems very similar to the Targus brand backpack designs, and handles some decent abuse. EDIT: backpack experience
- dv_dt 8y ago
  The thing I suspect about Costco Kirkland brands is that even if the same maker makes the item, Costco often elects to upgrade the quality in some way. Especially in ways where the maker could do, but doesn't for market reasons on their general line of goods. In a similar way, a lot of supermarket generic goods have some sort of minor downgrade in the quality of ingredients to differentiate with the original makers product.

GarrisonPrime 8y ago

“Star Trek abundance” is coming ever faster, but the transitional period will be painful for many. Let’s hope to make it brief.

mmirate 8y ago
Citation needed. As far as I can tell, post-scarcity is almost fundamentally unachievable; and, at best, achievable with technology that today's eyes would confuse for magic.
- ceejayoz 8y ago
  > best achievable with technology that today's eyes would confuse for magic That's a pretty low bar, isn't it? Show an iPhone's capabilities to, say, a WWII soldier or industrial revolution textile worker, and they'll deem it pretty magical.
  - mmirate 8y ago
    Show it to the people who designed the PDP11 at the time they designed it, and chances are they won't. The uneducated masses of soldiers and workers are much easier to dazzle and fool than technical personnel; and I apologize for not qualifying my previous comment enough to convey the idea that the Star Trek replicator, if it were to exist and be transported to the present day, would indeed be magic to any sane scientist or engineer.
    - gaius 8y ago
      The uneducated masses of soldiers and workers are much easier to dazzle Time Traveler: look at this iPhone! WW2 soldier: that’s a flimsy looking walkie-talkie, wouldn’t last a day fighting the Waffen SS. Do you mind? I got work to do.
      - mmirate 8y ago
        Superficial; after, at worst, a brief demonstration, a stereotypical Nokia would elicit a different response.
        bluGill 8y ago
        No, you would be very disappointed. The vast majority of usefulness from a smart phone happens because it is connected. Since there would be now towers for the phone to connect to, most of the things you want to show couldn't be done. You could use it as a personal organizer - but without connectivity it can be argued that a paper organizer is easier to use. There are a few other programs that will also work in a fashion, but again lacking connectivity the paper equivalents are as good if not better. There are also a few games that will work: you can really impress them with the games you can play. The only thing impressive will be the camera - a full color picture that you can zoom in on and save is interesting. Having 10000 photos (plus some videos) in your pocket will get attention. Of course once the phone breaks you lose all that, but still it will be impressive.
        8y ago
- NeedMoreTea 8y ago
  Seems like it's more an economics issue than technology. We're already most of the way there as seen by the sheer quantity of throwaway product - where it's cheaper to make another than allow repair and maintenance. (I'm ignoring DRM on repairs - that's a different issue). We could probably have post-scarcity as Keynes envisaged right now if we hadn't created rampant throwaway consumerism along with increase in capability post WW2. The moment an issue is "solved" fake problems will be invented to sell a needless alternative. e.g. The creation and marketing of liquid soap that's worse in essentially all respects to bar soap, or the whole creation of body and looks insecurity to sell a cosmetic or cream. So, surely in x years when technologically we're able to achieve post-scarcity it'll just spawn another fake solution to another fake problem? Another reason to keep working 40 hrs instead of dropping to 20. Maybe it can truly appear after World War 3, the banking and finance wars.
  - mmirate 8y ago
    You're thinking solely about materials, and thusly forgetting about energy. (So did Star Trek, I reckon, but I degress.) Humans require a timely supply energy to live and act. Converting energy into human-usable form, requires energy. Recycling and remanufacturing require energy just like mining and "unsustainable" manufacturing do. And even renewable sources can collectively provide only a finite amount of energy per unit time.

alexchamberlain 8y ago

Should own brands be banned to avoid monopolistic behaviours?

Gustomaximus 8y ago
That seems a bit all or nothing. It could be worth considering if someone has monopolistic power (or some oligopoly) in one area such as distribution of products, any product business must be run separately via Chinese walls or just not allowed. People seem to forget a fundamental part of capitalism is that government should intervene to maintain a level playing field. Then...what defines a level playing field..
- TulliusCicero 8y ago
  That's fair, but Amazon has only a small % of total retail sales (4% in 2017, according to a quick search). I'm not sure at what point it's commonly assumed that a company has monopoly or market power, but I'm pretty confident it's not 4% or even close to that. edit: another quick googling says that US courts apparently almost never conclude a company has market power if they have less than 50% market share: https://www.repository.law.indiana.edu/cgi/viewcontent.cgi?referer=https://en.wikipedia.org/&httpsredir=1&article=1388&context=fclj https://www.repository.law.indiana.edu/cgi/viewcontent.cgi?r... Amazon is still growing at a good clip but I'd be really surprised if they were able to pass even 20%, let alone 50%.
  - emodendroket 8y ago
    Or forty-four percent of online sales. https://www.cnbc.com/2018/01/03/amazon-grabbed-4-percent-of-all-us-retail-sales-in-2017-new-study.html https://www.cnbc.com/2018/01/03/amazon-grabbed-4-percent-of-...
    - TulliusCicero 8y ago
      I'm not sure that's a super meaningful distinction for market power. It's a different method of selling, but ultimately you're selling largely the same things. You probably wouldn't separate out "Ford has this much market share in dealerships vs online sales" most of the time, for example.

TulliusCicero 8y ago

philjohn 8y ago
Until the second part of OP's story happens - which is the competitors die off and then Amazon jacks up the prices. Most of these sellers are much smaller than the brand names you see in supermarkets, and also much newer. Spigen, Anker etc. don't have the same sentimental decades long attachment that Kellogs, or Pepsi have with consumers either.
- ctvo 8y ago
  The second part of the theory has been the hammer dropping for 15 years. Amazon makes no money in retail to drive out competitors and when that day finally happens! Just you wait! The prices! I'm still waiting. The ride has been beneficial so far.
  - chottocharaii 8y ago
    The stock market has priced in those future increases in the present day inflated stock price. That's a pretty decent indication.
    - Nasrudith 8y ago
      The stock market isn't psychic. They believe all sorts of irrational things and are perfectly capable of being turkeys who vote for Thanksgiving. Price raising on commodities hasn't worked out all that well in general. While the network effect helps it isn't omnipotent. People are already returning to brick and mortar for better prices.

dkasper 8y ago

If they start raising prices then others will be able to re-enter the market and compete.

sp332 8y ago
Why would anyone enter the market knowing that Amazon could put them out of business again quickly?
- jonknee 8y ago
  Because that's how capitalism works? Walmart still has plenty of competition despite their giant purchasing and pricing power.
rickdeckard 8y ago
The way this system works is not normal brand vs. brand competition, it's the sales channel (distributor) which starts to compete with the established supplier. This is what creates the imbalance in the competition. The distributor uses a private-label to bundle the sales of a lucrative product-tier that is sold across multiple brands in his channel into a single in-house brand. For the original-brand to enter this channel again after it has left, it would have to be _cheaper_ than the private-label (to exceed the profit the channel makes with its private-label product), or prove that it can sell MORE VOLUME than the private-label for whatever reason (=more profit for the channel). Unfortunately for both cases the brand is entering at a steep disadvantage, because it would have to finance its own brand to overpower the brand of the private-label, market their product to push sales, yet sell-in at a lower price, and even rely on the very same brand it now competes with (100% of the channel customers are shopping there because of the channel-brand). At this point in the game, creating consumer-value becomes a niche-topic, because the barrier is now to create more profit for the channel, otherwise he will not allow you to reach the consumer... That's one of the reasons why we keep seeing an increase in own-brand stores of major companies. It's the lack of "brick and mortar net-neutrality"...

crazygringo 8y ago

How is that different from large supermarkets determining own-brand cereal and peanut butter are good markets to move into? It's just capitalism at work. Yesterday's high-quality high-price item becomes today's low-priced low-quality commodity. Quality-focused small brands in every industry and every market need to be constantly improving, developing new product improvements, new niches, new products. (E.g. an even-higher quality version for the luxury niche.) It's extremely unlikely that Amazon will be be able to raise prices long-term on an own-brand item with "no competition" simply because... well, capitalism. As soon as they do, manufacturers in China or whoever sells the equivalent product at Wal-Mart will list on Amazon for a lower price and make money... so Amazon lowers the price again... and as always, the invisible hand of capitalism keeps prices low for the consumer.

emodendroket 8y ago
Well, maybe, if we judge that Amazon does not exercise monopolistic control over online retail. But a lot of people are going to never look anywhere besides Amazon (gotta take advantage of that Amazon Prime subscription, of course) and just buy the product and not know that a lower-price option is available.
geofft 8y ago
The invisible hand of capitalism works slowly. The fingers of the invisible hand are unhappy consumers communicating their demand; the thumb is holders of capital hearing it and building better products. This process requires time to communicate that information and time for new suppliers to enter the market, and in the meantime consumers are unhappy and existing suppliers aren't making as many sales as they could. The invisible hand corrects mistakes, but that's no defense of making mistakes.
bigjimmyk3 8y ago
I think it's different because of intent. Supermarkets and large retailers (e.g. WMT) seek deals to relabel and sell products as "house brand" but it's generally done in such a way that they are selling to customers who would not have purchased the name brand in any case. That's the pitch anyway, and judging from the longevity of these arrangements it's likely that the "name brand" is seeing enough benefit to continue in that way. The two entities seem to find a way to balance their interests. With Amazon, I don't think they are seeking that balance at all. I do not think it's a good long-term move for their retail side. The problem with stabbing all of your friends in the back is that you also have a back.

deltron3030 8y ago

>The problem with this is that it's built in the backs of brands who were at one point well recognized brands on Amazon. Amazon took their sales data, determined it was a good market to move into, created specifications and reached out to their hundreds of sellers for a "private label opportunity". It's different imo. They see what private label products sell on FBA (and the specs they need to fulfill), and then can just negotiate better deals from the same suppliers, because most FBA sellers ship straight from chinese factories to Amazon warehouses it's no secret where it's coming from. And for many product categories there aren't that many high quality factories anyway. The important part are the specs and quality of the product, if you don't specify and interact with the factories, you'll get crap, if you spec by focusing on the wrong things you pay too much and still get crap. The FBA sellers are basically just testing the right mixture until Amazon steps in adopting their formula. A successfull low cost product is just that, a good enough quality at an as low as possible price.

yuy910616 8y ago

that's how competitions work....in your second part, some other people who can make the stuff cheaper will just come onto amazon's platform, preventing the price from going up. If you're looking from a supplier side, yeah this business is bleak. But keep in mind someone will always accept a lower margin, run the same business more efficiently, or can produce your goods at a lower cost. Just because you guys can't stay in the game, doesn't mean the game is broken. You got beat by open competition.

user3359 8y ago
There's definitely something to be said about economies of scale and efficiency. But I'm talking about design and product expertise. People sourcing knockoffs can create a cheaper version 1 of a product, but only a brand connected to it's customers will use their feedback for version 2, 3, 4, n+1. I'm a little insulated in the food niche because product quality and freshness and expiry dates are huge risk factors, but this applies to other industries as well. You can buy a knock-off Amazon branded chain lubricant from China that lists the same ingredients if you want, and it may work well in low impact situations. But for my motorcycle, you bet your ass I'm spend 2-3x the lowest price I can find on Amazon for a well known brand with a reputation and uses quality inputs and filters and has no additives. When my health is on the line, brand expertise is essential. Same with food. There's a floor for quality, and you can't escape the value trade-off. Something being cheaper doesn't mean it's quality is unaffected, but the short-term, inexperienced people at Amazon don't care about that. I can buy and sell our "product" at half price by buying last year's crop or a lower grade, and I can sell that garbage exclusively through Amazon and "win" the completion, but nobody really wins in that case - me or the customer or our competitors - only Amazon.

amyjess 8y ago

Nah, this is no different from what brick-and-mortar retailers have been doing for decades. Buying private-label items in supermarkets over name brand has been recommendation #1 in personal finance circles for at least as long as I've been alive. Hell, some private label products are better than brand... I'll go out of my way to buy Kroger's private label ice cream and sodas. And it's not just food. Half the stuff you see in Walmart is private label, including clothing and pharmacy products (and I've found that I actively prefer their private label sleepwear over name brand). And whenever I buy OTC meds at CVS, of course I always take the private-label bottle, which has the same ingredients yet is half the price. > I've seen this happen in a couple product lines over the year and is one reason we pulled off Amazon Oh, I see. You have a personal financial stake in spreading FUD against private-label brands because you operate a name-brand business.

patrickg_zill 8y ago

Much of this strategy was developed by Wal-Mart.

Tiktaalik 8y ago

Netflix is doing the same thing with tv/movies.

fredophile 8y ago

That's an interesting take but I think there's a bigger problem. Because of how they handle inventory, buying the Amazon brand of something is the only way for me to know that the item I'm buying is the item that I ordered.

nwatson 8y ago

> The problem with this is that it's built in the backs of brands who were at one point well recognized brands on Amazon. Amazon took their sales data, determined it was a good market to move into, created specifications and reached out to their hundreds of sellers for a "private label opportunity". I believe Costco (Kirkland brand) and likely Amazon also contract with one of the major brands (e.g., Tide detergent) to make a store-label parallel product with perhaps slightly different formulation, but often the exact same formulation. The name brand saves on their marketing costs and sells at higher margin, Costco gets a great product they can sell to customers for less than the competition, and customers willing to trust the Costco "Kirkland" brand save a lot of money ... it's a three-way win. From https://www.wideopeneats.com/store-brand-vs-name-brand-why-kirkland-signature-brand-is-just-as-good/ https://www.wideopeneats.com/store-brand-vs-name-brand-why-k... ... >> It’s a common misconception that the generic is made from a cheaper brand. >> Sometimes the generic is made overseas with inferior products, but a lot >> of Kirkland Signature products are actually the exact same product as the >> name brand product. ... Sometimes, they’re even manufactured in the >> same facility! I've bought a few Amazon-brand products, e.g., USB cables, backpacks. The Amazon Basic backpack is quite good quality, seems very similar to the Targus brand backpack designs, and handles some decent abuse. EDIT: backpack experience

dv_dt 8y ago
The thing I suspect about Costco Kirkland brands is that even if the same maker makes the item, Costco often elects to upgrade the quality in some way. Especially in ways where the maker could do, but doesn't for market reasons on their general line of goods. In a similar way, a lot of supermarket generic goods have some sort of minor downgrade in the quality of ingredients to differentiate with the original makers product.