Can we as a society really afford businesses like Amazon.com and Walmart?

[Baptismbyfire]

You may have valid short-term reasons for purchasing off Amazon.com and at Walmart, but in the long run, you are just biting yourself and your children's ass. Do you think Amazon and the like will continue to offer low prices once most of their competitors have died off? Do you think all those closed local shops will not affect the local economy? Sure, Amazon may make more efficient use of resources, but economic efficiency does not necessarily lead to a higher standards of living.

 

[jaqie]

does no one realize amazon is a storefront, a community of businesses, not a single monopolistic entity? All I have been seeing since this and the other cross-post the OP made on this subject is people making discussions and faulty points based on the idea they are a single business and not a storefront...

 

[DaveSimmons]

Also, as I mentioned in the "will Steam turn into an EEEEVIL monopoly!?" thread, this is the internet.

If Amazon somehow succeeds in killing off every other internet storefront then doubles their prices, they will just create an opportunity for new competitors to emerge.

Amazon does not make their books, music, software, electronics, etc. etc. etc. and has no way to stop anyone else who wants to put up a website and add a shopping cart.

 

[Baptismbyfire]

does no one realize amazon is a storefront, a community of businesses, not a single monopolistic entity? All I have been seeing since this and the other cross-post the OP made on this subject is people making discussions and faulty points based on the idea they are a single business and not a storefront...

Even if it's a storefront, the point is still valid, since they take a hefty chunk of the profit. As Amazon gains greater market share, companies that do business through Amazon will lose bargaining power.

Also, even though in theory some other company can open up another Amazon-like company if Amazon decides to raise its prices, I honestly don't know if that's possible. I don't know whether there would be enough investors willing to invest as much money as Amazon did into its system, when they might not see a single cent of profit for years to come.

 

[Muse]

In this age companies have to brainstorm and morph to survive. There are business models that keep on working but even they have to adapt to changing conditions. The best managed companies can increase earnings.

Myself, I do a lot more business with Amazon than Walmart (my keyboard is much more accessible than B&M Walmarts, but there is an item I consume on a regular basis that I will be fulfilling from Walmart online, no other source can compete with their price).
- - - -
"The measure of intelligence is the ability to change." -- Albert Einstein

 

[Craig234]

Also, as I mentioned in the "will Steam turn into an EEEEVIL monopoly!?" thread, this is the internet.

If Amazon somehow succeeds in killing off every other internet storefront then doubles their prices, they will just create an opportunity for new competitors to emerge.

Amazon does not make their books, music, software, electronics, etc. etc. etc. and has no way to stop anyone else who wants to put up a website and add a shopping cart.

That shows a great lack of awareness of how monopolies operate. If it was as simple as 'if they overcharge just compete with them', it'd be a very different situation.

 

[Craig234]

Even if it's a storefront, the point is still valid, since they take a hefty chunk of the profit. As Amazon gains greater market share, companies that do business through Amazon will lose bargaining power.

Also, even though in theory some other company can open up another Amazon-like company if Amazon decides to raise its prices, I honestly don't know if that's possible. I don't know whether there would be enough investors willing to invest as much money as Amazon did into its system, when they might not see a single cent of profit for years to come.

Think of the overhead needed to compete, such as the distribution centers. The pricing leverage. And if you manage to sell for the same price somehow, who are people going to buy from, you or Amazon where they have prime giving them free 2 day shipping on the order?

Not that easy.

 

[DaveSimmons]

That shows a great lack of awareness of how monopolies operate. If it was as simple as 'if they overcharge just compete with them', it'd be a very different situation.

The doomsday scenario here is Amazon drives everyone else out of business, then profits from their monopoly.

But this monopoly would be on selling goods made by other people.

For them to be able to raise prices significantly without fostering competition, they would have to have abusive contracts with their supplies, like Apple tried to do with ebooks. That would be an abuse of monopoly power, and every potential competitor would be yelling for the DOJ to investigate.

Perhaps I'm missing something. How could Amazon significantly raise prices on their storefront, without abusive contracts with suppliers, and still block competition from becoming attractive?

Or are you thinking they would stick closer to the wal-mart model and keep prices low for consumers forever, and try to squeeze suppliers like Wal-mart does? If so, and that opens up a significant spread between the wholesale and retail prices, that still opens a window for competitors to undercut Amazon and make money.

 

[VirtualLarry]

does no one realize amazon is a storefront, a community of businesses, not a single monopolistic entity? All I have been seeing since this and the other cross-post the OP made on this subject is people making discussions and faulty points based on the idea they are a single business and not a storefront...

Of which, primarily, Amazon profits.

I had a discussion with a small business owner the other day, and I brought up geeks.com closing and Amazon, and he said that he has yet to make money selling through amazon. He said he sold something for $100, and received $17. I think he was giving me a hypothetical, but based on the facts of prior transactions he had done. He was basically saying that it was much easier to make money on Ebay, because you knew how much of a chunk Ebay was taking. Apparently that amount was unclear with Amazon. He said something about having to use their distribution centers too.

 

[Craig234]

The doomsday scenario here is Amazon drives everyone else out of business, then profits from their monopoly.

But this monopoly would be on selling goods made by other people.

For them to be able to raise prices significantly without fostering competition, they would have to have abusive contracts with their supplies, like Apple tried to do with ebooks. That would be an abuse of monopoly power, and every potential competitor would be yelling for the DOJ to investigate.

Perhaps I'm missing something. How could Amazon significantly raise prices on their storefront, without abusive contracts with suppliers, and still block competition from becoming attractive?

Or are you thinking they would stick closer to the wal-mart model and keep prices low for consumers forever, and try to squeeze suppliers like Wal-mart does? If so, and that opens up a significant spread between the wholesale and retail prices, that still opens a window for competitors to undercut Amazon and make money.

I'm not going to try to list a huge number of ways that monopoly creates harmful advantages.

And monopoly is degree, not absolute, here.

As a company increases monopoly, it has any number of ways to milk the advantage, with the high cost of entry and ability to threaten competition protecting it.

During the period of increasing market share, it usually is a very attractive option.

Let's take the Wal-Mart situation. With the world-class distribution system they designed that relies on their massive volume, that's just one critical piece of competitive advantage.

There's a reason why so many businesses go out of business when Wal-Mart comes to town - and yet they can extract wealth from the community in massive amounts.

Some of that is 'legitimate value'. But when that power prevents competition, allowing monpolistic abuse, that's a problem.

It's a little like why the phone company had to be broken up - you couldn't just practically start a competitive phone servive with the advantages dominance gave AT&T.

At some point the advantages of massive size change from being efficiencies passed on to the consumer into protective devices to maintain monopolistic abuse.

Innovation tends to be just one of the casualties.

 

[DaveSimmons]

Of which, primarily, Amazon profits.

I had a discussion with a small business owner the other day, and I brought up geeks.com closing and Amazon, and he said that he has yet to make money selling through amazon. He said he sold something for $100, and received $17. I think he was giving me a hypothetical, but based on the facts of prior transactions he had done. He was basically saying that it was much easier to make money on Ebay, because you knew how much of a chunk Ebay was taking. Apparently that amount was unclear with Amazon. He said something about having to use their distribution centers too.

I'm afraid he did not give you correct information.

"Fulfilled by Amazon" is just an option offered by Amazon to stores and manufacturers who do not want to handle their own warehousing and shipping. With that option, you bulk ship a pile of widgets to Amazon and let them handle the rest. Your items even become eligible for free Prime shipping.

If you go to Amazon and look at third-party seller listings, most do not use this option.

If you were a band for example, and self-published your CDs then you might prefer to just ship 100 to Amazon and let them take care of the rest. But that's your choice.

Amazon taking 83% of the retail cost is also absurd and not credible, definitely a case of "citation needed."

 

[momeNt]

The doomsday scenario here is Amazon drives everyone else out of business, then profits from their monopoly.

But this monopoly would be on selling goods made by other people.

For them to be able to raise prices significantly without fostering competition, they would have to have abusive contracts with their supplies, like Apple tried to do with ebooks. That would be an abuse of monopoly power, and every potential competitor would be yelling for the DOJ to investigate.

Perhaps I'm missing something. How could Amazon significantly raise prices on their storefront, without abusive contracts with suppliers, and still block competition from becoming attractive?

Or are you thinking they would stick closer to the wal-mart model and keep prices low for consumers forever, and try to squeeze suppliers like Wal-mart does? If so, and that opens up a significant spread between the wholesale and retail prices, that still opens a window for competitors to undercut Amazon and make money.

When you invoke monopoly power, anything is possible, both liberal and conservatives have their hair literally set on fire, and something must be done ASAP!

The only monopolies that are sustainable in the long term are government monopolies. When you see Wal-Mart with a standing army and a justice system let me know. Until then monopolies are boogeymen that benefit the smaller good (the less competitive firms that cry to the lawmakers).

 

[BoberFett]

Wow, this just made me so sad. I remember shopping with them around 1996-7. RIP online business.

Perhaps the fact that people remember shopping there 15+ years ago has something to do with their closing...

 

[BoberFett]

http://www.slate.com/blogs/moneybox...xist_but_the_company_keeps_on_keeping_on.html

That's not the article I originally read, but it's a commentary on Amazon's business practices, and it mentions lack of profit.

Edit: Here's another one:
http://seekingalpha.com/article/837041-amazon-no-profit-equals-sell

I find it interesting that when a company makes too much profit, it's wrong because... profit. A company that makes too little profit is also wrong because... It's not making enough profit and others can't compete.

That certainly is quite a pickle to be in. How does a company go about making sure that it profits enough to not create a hostile environment with other corporations, but yet not make so much profit that it's evil?

 

[BoberFett]

Let's see. I save a dollar here, a dollar there. Those dollars add up. And then, those dollars go toward taxes to pay for the social services provided to the employees of those places, because they don't get the good benefits that a lot of the mom & pops had been able to provide.

Mom and pop shops have never, in my experience, paid well or had good benefits. Those typically come from larger corporations.

 

[ElFenix]

there's a reason only abuse of monopoly position is illegal. walmart's distro system and amazon's distro system are better mousetraps.

 

[Craig234]

When you invoke monopoly power, anything is possible, both liberal and conservatives have their hair literally set on fire, and something must be done ASAP!

The only monopolies that are sustainable in the long term are government monopolies. When you see Wal-Mart with a standing army and a justice system let me know. Until then monopolies are boogeymen that benefit the smaller good (the less competitive firms that cry to the lawmakers).

Cllearly we need the public better educated on the harms of monopoly.

You'd think 2008 offered some lessons on the dangers of too little competition in finance.

 

[monovillage]

Cllearly we need the public better educated on the harms of monopoly.

You'd think 2008 offered some lessons on the dangers of too little competition in finance.

With the government having a monopoly on education, good luck with that.

 

[fskimospy]

With the government having a monopoly on education, good luck with that.

When did they close down all the private schools, all the charter schools, all the parochial schools, and most of the universities?

 

[momeNt]

Cllearly we need the public better educated on the harms of monopoly.

You'd think 2008 offered some lessons on the dangers of too little competition in finance.

Well we do have a monopoly on money in the USA. That is a government imposed monopoly on the specie and interest rates.

Are you suggesting that we start there? Or is that the freebie monopoly and we'll start somewhere farther down the chain of finance?

 

[DaveSimmons]

Mom and pop shops have never, in my experience, paid well or had good benefits. Those typically come from larger corporations.

And many of them press-gang their kids as unpaid labor.

Re: Amazon profits: one primary reason why Amazon profits are usually low is because of their ongoing focus of growing into new markets and improving distribution, without the buffer of massive income from existing products that Apple and MS have.

MS loses a billion on Surface or Bing and it's easily covered by Office and Windows sales which have huge margins. Amazon sets up 10 new distribution centers with a large one-time startup cost or buys a shoe seller (Zappos) and the money comes out of the much lower margins on selling books and CDs.

It's not accurate to point to low overall profits as proof of predatory pricing, when the cause is investing in growth.

 

[VirtualLarry]

I'm afraid he did not give you correct information.

"Fulfilled by Amazon" is just an option offered by Amazon to stores and manufacturers who do not want to handle their own warehousing and shipping.

Amazon taking 83% of the retail cost is also absurd and not credible, definitely a case of "citation needed."

So you have personally sold through Amazon marketplace yourself, and can disprove my first-party source information?

 

[Born2bwire]

Perhaps the fact that people remember shopping there 15+ years ago has something to do with their closing...

The very thing that sprung to my mind too as I scrolled through all the comments saying that they bought such and such from them back in 1998.

 

[DaveSimmons]

So you have personally sold through Amazon marketplace yourself, and can disprove my first-party source information?

Your "first party information" claimed:

- Amazon must fulfill all orders. Obviously false, I've ordered from many third party sellers that shipped their own merchandise. And Amazon specifically marks items coming from their warehouses as "sold by X, fulfilled by Amazon."

- Amazon collects 83% of the retail cost. You admitted this was possibly "hypothetical", but it's absurd anyway. Here is the actual pricing page (which also proves that the "amazon must fulfill" claim was false):

http://services.amazon.com/selling/pricing.htm?ld=SEUSASOAGbrASFEEb4

For a $100 item, it looks like the fees could add up to as high as 25-30% if it was fulfilled by Amazon. For a $10 item, 38% if you ship it or 57% if they do all of the work including using their warehouse space.

Edit: note that that includes per-order fees, so if someone bought 2+ items the Amazon share would be lower. Also remember that "fulfilled by amazon" means they take care of the warehouse space, labor costs for picking and packing orders, and the shipping costs.

 

[DrPizza]

Mom and pop shops have never, in my experience, paid well or had good benefits. Those typically come from larger corporations.

Let's not make the mistake of comparing apples to oranges. By larger corporations, are you referring to corporations that are retail store chains? Or corporations like major manufacturers? In my experience, if you compare Wal-mart to smaller independently owned grocery stores, etc., the latter offers better benefits to their employees.