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Has Amazon become a monopoly?

MJ DeMarco

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I'm not here as an anti-capitalist obviously, but it really opened my eyes to the human cost of Amazon's fairly amazing ability to deliver anything to your door in less than 48 hours. And thats just in America.

Amazon treats their customers great ... but from what I hear, everyone else is treated like garbage, 3rd party sellers, employees, etc. The latter is monopolistic behavior the likes of the old robber barons.

This is clearly not the issue with Amazon

Low prices could be merely the short game. The long-game, not so sure...

As they say, the road to evil (hell) is paved with good intentions.
 
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biophase

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Amazon treats their customers great ... but from what I hear, everyone else is treated like garbage, 3rd party sellers, employees, etc. The latter is monopolistic behavior the likes of the old robber barons.

Low prices could be merely the short game. The long-game, not so sure...

As they say, the road to evil (hell) is paved with good intentions.

I don't think they are a monopoly. In my mind a monopoly is your cable company that charges $99 for internet. If you don't like it, you can go get DSL, worse quality for about the same price. A monopoly is when there are no alternatives to the product that you need/want. Or there are only 2-3 choices and they all suck.

Amazon is sort of the opposite now (from a consumer side). When I need something that is $30, I can always look for the new seller that is trying to rank for $9.99 and buy that instead. You are on Amaonz, but within Amazon you have a ton of choices for everything.

As for your original post in audio books, is there an alternative to audible besides buying CDs? In the old days, you could sell your own mp3s, but the interface would suck and people would just copy and send it to their friends.
 

Raoul Duke

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Col. erran morad is here to save us!

HotSpecificHummingbird-size_restricted.gif
 

SquatchMan

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Anyhow, if Amazon's ruthlessness continues unchecked, there might come a day when 90% of your consumer goods, from food to healthcare to clothing to shoes -- is all bought at Amazon. And at prices that are punitive.

This is the end goal.

HOWEVER, I don't think he'll jack up the price at that point. It will just lead to too many government problems, anti-trust stuff, consumer unrest (don't get in the way of consumers and cheap goods!), and competition (eventually). He's too smart to do that.

His end goal is complete and total power, not money. Look at his napkin drawing. There is no arrow for pulling out profits. He's using cheap consumer goods and convenience as the cheese for his power mousetrap.

We probably won't see any towel wringing directed at the consumers with that end goal in mind. The mice will just find another mousetrap (competition eventually appears when there is a traditional monopoly).

Instead we'll see the unpersoning of any dissidents to his plan and other methods to ensure he has long-term global (galactic?) control. Remember, he always thinks long-term and BIG.

"You don't have to use Amazon. We're a private company, not the government." Will be the defense they use as they unperson any dissident to Bezos power.

Imagine if someone were to be banned from the Amazon platform in 15 years or so. No access to banking, health insurance, web hosting, the biggest online retailer, groceries, product shipping, and a whole host of other industries that Amazon will enter.

Scary stuff.*

On the bright side, you will be able to get consumer goods delivered to your door in 15 minutes for a great price, so it's all OK.

*It's already happening, on a very narrow scale (banned social media, PayPal, domain hosting, domain registering, advertising channels), to people on the extreme far-right of the political spectrum. It won't stop there.
 
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rybanez

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On the bright side, you will be able to get consumer goods delivered to your door in 15 minutes for a great price, so it's all OK.
The consumer might not have a choice, eventually. And most won't care so long as they get low prices and convenience.

But at that point, small businesses won't have a choice either. Amazon's monopoly might not be based on price after all, but rather the control which they possess over the marketplace (i.e. if a business doesn't advertise and sell exclusively on Amazon, they will be at a severe disadvantage).
 

MJ DeMarco

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Imagine if someone were to be banned from the Amazon platform in 15 years or so. No access to banking, health insurance, web hosting, the biggest online retailer, groceries, product shipping, and a whole host of other industries that Amazon will enter.

And this is what I mean.

Not only that, but they could destroy your livelihood if you're dependent on an Amazon business, which many people are.

It's like a few years removed from a bad Black Mirror episode.

You've been banned from Amazon and poof, your income is gone AND your ability to purchase the necessities of life. Sounds ridiculous? It's a few years away. And having one organization with that kind of power is very "Black-Mirrorish".
 

kkoasdfawfqwe2

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As a European I rarely read much about Amazon aside from what I dig up myself for specific purposes..

But one thing I come to notice, which for some reason haven't crossed my mind before, is that most of Amazon's businesses is all marketplaces.

Amazon.com (Sellers and buyers)
Amazon pay (Merchants, acquirers, customers)
Amazon Kindle (Sellers and buyers)
Amazon Audibles (Sellers and buyers)

Maybe AWS is not I suppose, but I still find it somewhat of a weird thing they have in common.

And we see all the companies that really take off in a very short time frame usually supports this kind of model.

E.g. Google, Facebook, Uber etc.

It makes me think, maybe they are just so extremely good at making the framework for both the buyers & sellers so everybody goes with them.

Because when I think about a marketplace-like service of any kind, the challenge that appears to me is always how you go about pleasing both parties, as you can almost always make it better for one or the other.

They are an interesting company, I'm not sure how to feel about Amazon.
 
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Eisenstein

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Well, there is a reason he wanted to name his company "Relentless" :rofl:
No blaming! I'm deeply impressed and he's my role model.
I'm not afraid about this monopoly thing. I also know companies who refuse to sell on AMZ, and they thrive anyway. So what? :smile2:
 

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Is it good to open a business on the Amazon? Something that everyone is doing right now (entry barrier is bad) The store on your own website seems better when it comes to CENTS ?
 

rogue synthetic

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It makes me think, maybe they are just so extremely good at making the framework for both the buyers & sellers so everybody goes with them.

If you think of economic behavior in the abstract, this is really all any transaction is: efficiently bringing together buyers and sellers.

If you've got the technology to make that efficient, and somebody like Bezos with the vision and the determination to pull it off, then you'll out-compete anything that doesn't have those advantages, at least in the short term.

There are lessons here from the ecological model. One lesson I already mentioned. If the invasive organism completely upsets the native environment, then you get total collapse of the original ecosystem. In practical terms, that means you wind up with the corporate mono-culture that @SquatchMan and @MJ DeMarco are (rightly) worried about.

But it doesn't have to be complete devastation. One of the upsides here is that it becomes much harder to predict the future. Amazon came from nothing and it could just as easily be nothing in 10-20 years time. The price of playing with power-laws is the Black Swan.

It could be another competitor. It could be complete collapse of the system. It could be political intervention. It could be a revolt (soft or hard) from people sick of it all. It could even be Neal Stephenson's prophecy of cryptocurrencies bowling over anything recognizable as a state or corporation. Taken to its fundamentals, cryptocurrency is the essence of economic transaction in code -- if we're extrapolating trend-lines, Amazon or the beast that succeeds it will have to tame this or be eaten itself.

Anyway. I try not to be doom-and-gloom. As @MTF pointed out, there is a lot of opportunity opening up here as well. It really is a gigantic question mark right now, which is what is so anxiety-inducing.
 
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Envision

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Is it good to open a business on the Amazon? Something that everyone is doing right now (entry barrier is bad) The store on your own website seems better when it comes to CENTS ?

When half the country is buying their shit on there, yes there is no better place. But it will be a blood bath between you and the 9-15 other people trying to play on page 1.

-Build a brand
-Leverage Amazon
-Scale your website
-Grow your business
-????
-Sell to Amazon
 

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Is it good to open a business on the Amazon? Something that everyone is doing right now (entry barrier is bad) The store on your own website seems better when it comes to CENTS ?
The issue with opening an Amazon store is that you are paying for your own failure. If you product doesn't sell, it's your loss. If it does sell, Amazon will get a cheaper knock-off and compete against you and you will eventually fail. Either way, Amazon wins.
 

Kak

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There will come a time when investors slow the gravy train and Amazon will have some issues.

There currently isn’t much profit to show for it. The only thing they have proven is that perception is more valuable than reality.

All things considered, they have played it pretty safe. When the day of reckoning comes, I anticipate they shed the new divisions as quickly as they’ve created them.
 
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BD64

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There will come a time when investors slow the gravy train and Amazon will have some issues.

Investors pushed them into the stratosphere and like any good CEO, Bezos spends the money and expands.

There currently isn’t much of substance to show for it. The only thing they have proven is that perception is more valuable than reality.

All things considered, they have played it pretty safe. When the day of reckoning comes, I anticipate they shed the new divisions as quickly as they’ve created them.

Could you expand on this? Really interesting POV
 

Kak

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Could you expand on this? Really interesting POV

They have excited investors... Price to earnings ratios are the main metric to look at here. Generally, new and exciting companies get a higher price to earnings ratio because people are betting on the future. The p/e will eventually fall, everyone knows that, but investors are betting either growth will outpace a gradual fall or they have shorter horizons.

Amazon literally dominating to the point some might call it “maturation” of their bread and butter, internet sales, yet still having a sky high price to earnings ratio does not bode well for the new growth required to not kick the stock price in the nuts.

That’s a natural capitalistic cycle and will open the doors to competition when, not if, it does happen.
 
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Tommo

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if bezoz didn't sell amazon stock he'd be the first trillionaire.

hell he might still be the first trillionaire if his space endeavors pay off in his lifetime.
No the first trillionaire is going to be Chris Kelsey according to himself, he was on here a while ago stating he'd set up a digital bank, probably landfill now. He was in the British newspaper a few days ago (daily mail) bigging himself up as usual. It never ceases to amaze me at how some people have no idea of how they are perceived especially those folk with massive egos.
Back to the thread, the meaning of monopoly as I was taught is "the only game in town", as in mono being one. As long as there is ebay and other countries versions then it isn't strictly a monopoly yet.
 
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Tommo

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I'll correct myself. Amazon is a monopoly because it dominates an industry and leaves little choice for customers.
 

BD64

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They have excited investors... Price to earnings ratios are the main metric to look at here. Generally, new and exciting companies get a higher price to earnings ratio because people are betting on the future. The p/e will eventually fall, everyone knows that, but investors are betting either growth will outpace a gradual fall or they have shorter horizons.

Amazon literally dominating to the point some might call it “maturation” of their bread and butter, internet sales, yet still having a sky high price to earnings ratio does not bode well for the new growth required to not kick the stock price in the nuts.

That’s a natural capitalistic cycle and will open the doors to competition when, not if, it does happen. They won’t get a free ride forever. I can guarantee that.

Given the money, they had to do something with it or they wouldn’t get more. So their only real option was to take the money, spread out, and get into other businesses. It’s what I would have done too. There’s also a reason Bezos has sold some of his stock. He knows this.

Does this help?


Brilliant man thanks for the breakdown and really clear explanation. Always enjoy your take on things +rep.
 

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I stumbled upon this article while reading about the topic (I love this stuff).

Killing Amazon: Trump, Kroger, Zume And The Next Big Thing In Retail

The author worked as a business consultant for Deloitte, Amazon, Kroger, and a few other companies, so he's familiar with this industry.

He thinks Amazon will spin off AWS to appease the feds if they start talking about regulation.

He also predicts that grocery delivery will be the next "big thing." He's convinced Kroger can beat out Amazon and strategic partnerships between Amazon's competitors (everyone) will form. Some already are forming such as Microsoft and WalMart.

Grocery has the potential to be Amazon's "bridge too far" according to him. I know Sears started expanding into financial services and lost focus on their bread and butter. Who knows if Amazon will make the same mistake.

Good article. Definitely recommend reading it for anyone interested in this stuff.
 
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MTF

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Interesting article about Amazon's impact on book publishing: The Authors Who Love Amazon

This part pertains most to the monopoly discussion:

People outside of Amazon warn that Kindle Unlimited and Amazon’s publishing model more broadly are threatening the very foundations of the industry. “It’s a cancer. It’s going to undermine the entire publishing industry,” Mark Coker, the founder and CEO of Smashwords, an e-book distributor for indie authors, said to me about Kindle Unlimited. Though authors may feel like they’re benefiting in the short-term, he argued, the Unlimited model is training people to read books for what feels like free. “Amazon is putting the thumb on the scale—although customers will happily pay for books, they give these books out for even cheaper,” he said.

Kindle Unlimited is essentially a Spotify for books, and Spotify has resulted in lower revenues for artists; there’s reason to think Kindle Unlimited could unleash the same havoc on the publishing business. If people only read through subscription services, he said, they’ll stop buying single books. Retailers will continue losing market share, and Amazon will gain it. Even losing a small share of readers to Kindle Unlimited could be fatal for retailers. Barnes & Noble reported a 5 percent decline in sales in its last fiscal year, for instance, sending shares tumbling. Amazon is, he argues, creating a market with fewer retailers. Then, when all the other options have disappeared and Amazon completely dominates the market, Amazon will raise prices and charge authors less, and authors and readers will be trapped, he speculated. (In response to this, Amazon said that authors set their own prices for books.)

Amazon does have a history of hooking people on products and services and then changing the terms. This year, it raised the cost of an Amazon Prime membership to $119 from $99, and it has raised fees on third-party sellers who depend on Amazon to reach shoppers. (An Amazon spokesman told me that authors find it valuable to participate in KDP Select, and that 95 percent re-enroll in the program every month.)
 

MJ DeMarco

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He's convinced Kroger can beat out Amazon and strategic partnerships between Amazon's competitors (everyone) will form.

Interesting. To back this up, Kroger recently bought Vitacost (a mid-sized vitamins/grocery mail order company) and I use them often, like weekly.

They are cheaper than Amazon, offer 1 day shipping, and have light years better service. So in this small realm, Amazon is being beaten.
 

MJ DeMarco

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Aside from the political undertones, it does shed some light on how Amazon treats its employees.

I'm all about capitalism and getting rich, but not at the expense of treating people like dirt. Again, it's all a facade. Amazon treats customers like GOLD, but everyone else in the supply chain can go F-themselves. If you're a supplier and ever had to deal with their so called "customer service", you know what I'm talking about.

Jeff Bezos's $150 Billion Fortune Is a Policy Failure - The Atlantic

On a Fastlane "money system" note, Bezos would have to spend $28,000,000 a day just to stop accumulating wealth. Now that's some passive income!
 
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RB96

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Its absolutely crazy but as a Consumer I love Amazon but from reading whats been written here it is scary what disruption power Amazon has!
 

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Amazon is good at one thing: Logistics.

Amazon will be beat eventually when someone else can figure out how to deliver products faster then they can from the retailers who sell them.

This sounds crazy and far fetched, but remember those systems of suction tubes from the Jetsons? You put something in the capsule, and it delivers it instantly through a network of tubes? Make that happen and have one going to every house in an underground network and amazon will be obsolete.
 
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BUT....the reason we all give Amazon our business is that they are doing all of the above things while providing a better service at a lower cost.

True, but the same can be said about USA's collective decision to outsource manufacturing to China. In the short term we've benefited hugely from it, but I believe we're reaching the end (if we haven't already) of the benefits of that strategy. Not to mention the fact that we've totally shafted the blue collar worker over the last 50 years.

Circling back to the Amazon debate, that's why monopolies are so dangerous. In the early stages all people see are the benefits, but when ZERO competitors are left because they've all been run out of business, the last man standing is free to charge whatever he wants!
 

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Amazon is good at one thing: Logistics.

Amazon will be beat eventually when someone else can figure out how to deliver products faster then they can from the retailers who sell them.

This sounds crazy and far fetched, but remember those systems of suction tubes from the Jetsons? You put something in the capsule, and it delivers it instantly through a network of tubes? Make that happen and have one going to every house in an underground network and amazon will be obsolete.

Holy crap that sounds expensive. I doubt even Apple with their $1T market cap could afford that. If anyone does it first it'll BE Amazon.

I think if 3D printers get much more advanced they could disrupt SOME of Amazon's business model... until they get bought out.
 

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I am guilty of feeding the machine. I order nearly everything online, and probably 90% of my online purchases are made at Amazon. It is people like me who give them all this power.

I get all my physical books from thrift stores, but >90% of my purchases are digital through audible or kindle.

I get my groceries from Costco, and my major computer supplies from a small local vendor that I like to support. Other than that nearly everything I purchase is off of amazon. I like not having to leave my house, fight traffic, and then wander store isles looking to find what I want. I can get out of my phone or hop on the computer and just click a few buttons and have it show up the next day.

Amazon tells me I have 33 orders so far in 2018, 65 orders in 2017, and 58 in 2016. I don't see myself moving away from the platform either. But at the same time they do scare me. Hmmm... Is this like the Americans that complain that Mexicans are stealing their jobs, and then go to the corner and hire them as soon as they need labor done?
 
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Amazon will become the ultimate monopoly, the final manifestation of hyper capitalism. Seems like they can win at everything they enter, and I believe it is inevitable that they get into beef with the other giants (and win).

No other company has managed to succeed in branching out as much as Amazon, even with all the gimmicks and crazy startups that Google and Facebook acquire they are still a one trick pony - online advertisement platforms. Amazon are much more "offline", which is so much harder to achieve when you think about it. A few years old SAAS can easily dominate a niche worldwide, for a company to dominate offline, well, it has to be like an oil conglomerate controling men with guns...

Alexa has the potential to destroy Google, and it ultimatelly will.

Facebook's Marketplace is a move on Amazon. Not sure how Amazon will respond. My personal opinion is that Amazon will release a phone-like device, trying to push Amazon owned apps.

Weirdly, I think that the giant most resistant giant to Amazon is Microsoft. They seem to be making the right moves, especially with LinkedIn and Github. Still, I'm sure Amazon will find a way to devour them in the future too.

Their end can only come from a blockchain entity that will be somewhat publicly owned and reward users in some hybrid model between capitalism and UBI. Otherwise we all end up working somewhere in and for the Amazon world.

Ok, I know, this is a little scifi, but it's fun and I think there could be some truth in it :)

Cheers
 

Walter Hay

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True, but the same can be said about USA's collective decision to outsource manufacturing to China. In the short term we've benefited hugely from it, but I believe we're reaching the end (if we haven't already) of the benefits of that strategy. Not to mention the fact that we've totally shafted the blue collar worker over the last 50 years.

Circling back to the Amazon debate, that's why monopolies are so dangerous. In the early stages all people see are the benefits, but when ZERO competitors are left because they've all been run out of business, the last man standing is free to charge whatever he wants!
I know this is a side track from the thread topic, but greed was the basic reason for the move, not only by the people of the USA, but every western country to shift manufacturing to China.

The benefits (greed for lower cost products) have been largely ephemeral and illusory. Chinese suppliers have been able to dominate large parts of the market to the extent that they have for a long time been calling the tune on price and quality. This is part of the reason for Taiwanese companies, who years ago set up factories in China have been steadily shifting production to places like Vietnam, Cambodia and Bangladesh.

It's also part of the reason for the re-shoring that has been gathering pace in recent years, whereby manufacturing has been steadily shifted back to western countries by the multinationals who began the stampede to China.

In many cases the presumed and expected cost benefits were not there in the first place. Production of many low labor cost products was shifted to China without good reason, and I have been in factories where I have seen automated machinery being used that I knew was imported second hand from the factories in the USA, Australia, UK where it had been successfully churning out relatively low cost products.

One side effect of the crazy move to ship jobs to China, was the loss of quality. The concept of quality was not well understood in China and they have been slow to learn it. I demanded high quality and got it when I first started importing from China in 1987, but it was a constant battle to maintain that high standard.

Efforts to train Chinese manufacturers in the value of producing quality goods was severely hampered by big retailers demanding lower and lower prices. They got them, but they also got lower and lower quality.

Just consider the high return rate on some products carrying famous old brands. How much have they really saved? Mind you a lot of those famous brands have surrendered and sold their trademarks to Chinese companies without any publicity.

Walter
 

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