Tuesday, October 19, 2021

Amazon Knockoffs and Search Placement

Aditya Kalra and Steve Stecklow (via Hacker News):

A trove of internal Amazon documents reveals how the e-commerce giant ran a systematic campaign of creating knockoff goods and manipulating search results to boost its own product lines in India - practices it has denied engaging in. And at least two top Amazon executives reviewed the strategy.

Adrianne Jeffries and Leon Yin (via Hacker News):

An investigation by The Markup found that Amazon places products from its house brands and products exclusive to the site ahead of those from competitors—even competitors with higher customer ratings and more sales, judging from the volume of reviews.

Nick Heer:

Earlier this year, Mother Jones cited several journalists who, in the words of one, claimed that Amazon is “the only company [they have] dealt with that has directly lied to me”. Several reporters used that word, “lie”, or said the company was deceitful in its responses to journalists — that it goes far beyond a typical carefully worded corporate message.

Manish Singh (via Slashdot):

Five members of the House Judiciary Committee have accused (PDF) Amazon’s top executives of either misleading or blatantly lying to it about its business practices and said they are considering an investigation following publication of two damning reports last week.

John Gruber:

There’s a good argument for Amazon on this front that store brands are as old as retail. That Sears did the same thing a century ago, and that Walmart does it now. And that of course retailers with house brands — including Amazon — look at sales data to choose what to make. But that’s not what Amazon — and Jeff Bezos in particular — have said under oath. Bezos left Jassy with a serious mess to clean up here.


9 Comments RSS · Twitter

Kevin Schumacher

If Amazon lied to Congress (and I think that's a pretty foregone conclusion at this point), they deserve to be lynched.

That being said... I have never understood this furor over using sales data of what's selling to choose what own-brand products to make. Obviously they're going to do that. That seems like a no-brainer. It's like being upset they're using sales data to decide whether to carry Pillsbury or Betty Crocker cake mixes; in both cases they are disadvantaging someone based on sales data. (I realize that, without actually researching it, there's a pretty good likelihood both brands are owned by the same conglomerate, but I think you get my point.)

I'm also not convinced I see a huge problem with them favoring their own products in search results, unless it's overriding customer sorting. Their search has never really worked for much of anything, in my experience, and their filters are all but useless. But if it's supposedly sorted by customer rating and their less-well-reviewed products are appearing ahead of better-reviewed competitors, that is a problem.

1. There is a difference between putting the more popular of two third-party products on your shelf, and deciding to consolidate power by unfairly competing with third-party sellers who are essentially required to use your store front.

2. Lots of things aren't problems until somebody with the wealth and power of Amazon does them.

3. As a society, we should aim to create a system of laws and rules that benefit people. This seems self-evident, but it obviously isn't.

Kevin Schumacher

> 1. There is a difference between putting the more popular of two third-party products on your shelf, and deciding to consolidate power by unfairly competing with third-party sellers who are essentially required to use your store front.

Let me revise my example. Do you really not think that every single grocery store that has own-brand products is not doing the exact same thing? Essential Everyday versus Betty Crocker. And where do food manufacturers go if they want to sell directly to consumers other than grocery stores? (Depends on the product, of course; some would work in convenience stores and other settings that haven't gotten to doing their own-brand stuff yet, but quite a lot would not, like cake mix.)

Nobody is required to use Amazon, merchant or otherwise (unlike actual grocery stores, of which there are two in my town, both owned by the same company as of an acquisition of one by the other last year, and the next nearest major competitor is about 1 hour 45 minutes away). And the number of brands that absolutely refuse to do business with Amazon and block their stuff from being sold on there at all, even by third parties, is evidence that companies can survive without them. Yes, they're huge. That doesn't mean they are the be-all end-all of online shopping.

Where I would draw the line, and maybe it's naïve, is in making false claims like "best product" or "most sold" or any kind of sorting that would be confusing for the consumer. This should be a no-brainer to regulate and enforce.

Brick and mortar stores collect vastly less data than Amazon can, and that data is far less detailed. Amazon tracks what people search for but don't find, how long someone's mouse cursor hovers over a particular item, and what third-party websites they visit before coming to Amazon. And then, Amazon can personalize their store to a far greater degree for each individual visitor based on that individual's data, including the prices of products, unlike your local grocer that must at least provide some kind of baseline price for all (and perhaps provide coupons). This is all greatly expanded upon in "Amazon's Antitrust Paradox" by Lina M. Khan, which I recommend at least skimming to anyone interested.

So while I do think that brick and mortar grocery stores are probably doing the best they can to maximize their profits as owners of and competitors in the same marketplace, it's hard to argue they're doing exactly the same things as Amazon. They simply aren't capable of it.

Kevin Schumacher

@Moonlight I grant you that Amazon has more information about its customers available to it. I quibble with the idea that grocers are basically blind, though.

Maybe 30 or 40 years ago, that would have been true. With the rise of loyalty cards, and especially now apps and full-featured shopping websites, there is a metric ton of information about buying habits available to the retailers. It is not as granular, pre-purchase, as seeing the customer in the physical store aisle debating between Betty Crocker and Pillsbury (although that is coming, too) but retailers have successfully trained consumers to always get their card or app swiped or scanned, and as a result have entire purchase histories for untold numbers of their customers. Many grocers also have websites where they can obtain the exact same information as Amazon can on Amazon's own site.

And the dynamic pricing that you reference is entirely possible now, too, at least for purchases driven by marketing channels started outside the store. As an example, my husband and I are both signed up for a local store's email list. Once a week, on Wednesdays, they send out a blanket email with a "preview" of the flyer that starts the next day. That is the same for both of us. But on Mondays and Thursdays, they send out "email deals" that are always different for each of us, and seem to be a combination of two to three things we have each purchased in the past (we have separate loyalty card numbers, long story) and one to two things we have never even considered. It is very clearly tailored to our purchase histories. And pricing varies from email to email, even for the same item. I might get an email on Monday with chicken strips for $3 off, and my husband will get one on Thursday for $2 off.

"Do you really not think that every single grocery store that has own-brand products is not doing the exact same thing?"

Just to make sure I understand your argument: you think that if a grocery store achieves a monopolistic market share, there is absolutely no problem with them using their position to destroy their smaller suppliers? Because I think this is wrong, too.

You're not really defending one shitty thing by making an analogy with another shitty thing, you're just underlining how shitty it is.

"Nobody is required to use Amazon"

I mean, that's obviously false. If you had said "not everybody is required to use Amazon," then I'd agree with you, but "nobody" is just false. There are companies I personally know about that have strong presences outside of Amazon, but still make half of their revenue on Amazon. Without Amazon, these companies would cease to exist.

Kevin Schumacher

@Plume The irony with your statement is the place that Amazon is the most dominant by a long shot (versus their relative market share in other categories), which is books, movies, and music, is one place that sales data doesn't really help them that much. Knocking off a particular messenger bag, for example, is pretty straightforward, because anybody who liked the original will presumably like the new one, at least superficially. But knocking off a popular book is impossible to do in the same manner, and even if they come up with something similar, the chances of success are completely unknown until it's in such a state as the largest cost is behind you (paying the writer).

So, with that said, I don't necessarily agree they have achieved monopolistic market share in the categories that are at issue here. And I vehemently disagree that using sales data from your own company's sales (of your own products or others' products sold in your store) to direct product lines is inherently a bad thing.

> Without Amazon, these companies would cease to exist.

Then they probably shouldn't be in business. If their entire existence relies on another company continuing to be benevolent to them, they aren't strong enough to survive in the first place.

"Then they probably shouldn't be in business"

I think it is pretty obvious that the difference here is that I would prefer to have systems that benefit society as a whole, not just Amazon, so I'm not in favor of telling small businesses that they have no right to exist just because they financially depend on the biggest online retailer. The question is: why are you in favor of that?

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