Legal web site: "Please stop calling Amazon a monopoly"

[taustin]

Originally Posted by fjtorres

Non competitive prices?
Not for long.
Remember, Amazon is all about data mining and maximizing the utilization of their infrastructure.

If a product's price means it's not pulling its weight they haggle a better price or drop it. (And they do drop products from their catalog regularly.) One way they do it is by letting one of their affiliated vendors get the sale.

They can always drop the price and take a loss just to get it out of the system.

They are also familiar - as are all competent retailers - with the concept of "loss leader." you sell something at, or below, cost, to draw people in, in hopes (well founded, if you know what you're doing) that they'll buy other stuff at the same time, at full price. You don't make anything on the loss leader, but you get sales on everything else you never would.

Take, for example, the real life example of a hot water heater. Its' a big ticket item, and people shop, and shop hard on the price of it. So everybody who sells them, and I do mean everybody, sells them at, basically, cost. But when you buy it, you'll need other stuff to install it - the flexible lines to hook it up, a gas line, short pipe nipples, telflon tape, etc. And those install kit items, people do not shop around on so much. And once they're in a given store to buy the heater, they're not going to go somewhere else on the off chance the install kit will be cheaper. And the install kit stuff is not only at full price, it's probably priced as a high margin item, to make up for the lack of margin on the heater itself.

I suspect Amazon gets less benefit from that kind of approach, but I'll bet it's not zero.

(And yes, this is a standard retail business practice, and has been for a century or so. Everybody does it, because those who don't, don't last long.)

[SteveEisenberg]

Originally Posted by taustin

And yes, this is a standard retail business practice, and has been for a century or so. Everybody does it, because those who don't, don't last long.

I suggest reading The Great A&P and the Struggle for Small Business in America

http://us.macmillan.com/thegreatapan...a/marclevinson

From what I read there, so long as it was family owned, A&P operated with a low everyday price policy, avoiding promotional pricing. That seems to me to mean no loss leaders.

There's a story related in the book where a competitor from somewhere in the Midwest wrote to the A&P home office in New York complaining that his local A&P locations were pricing some items below cost, trying to put him out of business. The home office then went to great lengths to investigate, prove the competitor correct, and discipline the local A&P managers.

And A&P was then the world's largest retailer.

After the long-time pair of family managers died, A&P went the promotional pricing route and basically died. Now it is a local grocer, mostly in the New York City market.

I'm not saying loss leader pricing retailers always die. But I do think there are other ways to go.

US retailers of today experiencing success without predatory pricing include Wegmans and Costco.

Except for price matching, I don't see WalMart pricing food below cost:
http://www.simplifylivelove.com/usin...ve-at-walmart/. Not sure about books.

[Rizla]

So Amazon is a monopoly. Should it be broken up?

[DiapDealer]

Originally Posted by SteveEisenberg

US retailers of today experiencing success without predatory pricing include Wegmans and Costco.

"Without predatory pricing."
Meaning you're suggesting that Amazon IS guilty of "predatory pricing;" meaning you're either guilty of purposely misusing the inflammatory term for emphasis and effect, or that you just simply don't understand what it actually is.

That fact that some retailers choose not to employ (and even manage to thrive) without loss-leader pricing is not proof that loss-leader pricing is "bad" or "predatory" (or that other companies should stop doing it).

Please stop trying to falsely conflate loss-leader pricing with predatory pricing. One is perfectly legal, the other is not.

[tubemonkey]

Originally Posted by Rizla

So Amazon is a monopoly. Should it be broken up?

It should be. They should spin off BeautyBar.com and call it good. That'll break the behemoth up

[SteveEisenberg]

Originally Posted by Rizla

So Amazon is a monopoly. Should it be broken up?

No.

I'm not all that interested in finding legal remedies for social problems.

Should Amazon treat all authors of publishers they don't have a contract with at least as well as they treat Paul Ryan? Yes, and, I hope, voluntarily.

If they ever do run into Sherman Act legal problems regarding eBooks, a more reasonable sanction might be to require that ePUB be supported, and made convenient, at the same level as mobi. However, I'm not familiar with the Fire -- do they already do that on Fire models?

[pwalker8]

Originally Posted by DiapDealer

"Without predatory pricing."
Meaning you're suggesting that Amazon IS guilty of "predatory pricing;" meaning you're either guilty of purposely misusing the inflammatory term for emphasis and effect, or that you just simply don't understand what it actually is.

That fact that some retailers choose not to employ (and even manage to thrive) without loss-leader pricing is not proof that loss-leader pricing is "bad" or "predatory" (or that other companies should stop doing it).

Please stop trying to falsely conflate loss-leader pricing with predatory pricing. One is perfectly legal, the other is not.

So what definition do you have of predatory pricing? One of the issues with being a monopoly, i.e. holding a dominate market position is that there is a different standard of behavior which it comes to such tactics. What might be simply a loss leader in someone else, can easily become predatory pricing in a company that holds the dominate market position. It's really not as straight forward as you seem to think.

[DiapDealer]

It is just as straightforward in this case as I think it is. Claims that Amazon was practicing "predatory pricing" were found to be lacking. Holding a <for the love all that's holy>DOMINANT</for the love of all that's holy> market position and all.

Besides, it's clear that Steve was suggesting that all promotional, loss-leader, or below-cost pricing is predatory. And while he's free to believe that, it certainly doesn't make it true.

[murg]

Originally Posted by Rizla

So Amazon is a monopoly. Should it be broken up?

Well, we did have the Baby Bells.

I guess Amazon would become the Tributaries...

[fjtorres]

Me, I'll go with the lawyer (and the DOJ's) definition.
Low prices =/= predatory pricing and neither is loss leader/basket pricing. That is settled law.

So no: no monopoly, no monopsony, no predatory pricing.

But, hey, there is absolutely no evidence that Bezos isn't the antichrist.

The "Amazon is eeeevile" gang can hold onto that accusation a while longer.
And it even fits in with Patterson's religious war claims!

[pwalker8]

Originally Posted by DiapDealer

It is as just as straightforward in this case as I think it is. Claims that Amazon was practicing "predatory pricing" were found to be lacking. Holding a <for the love all that's holy>DOMINANT</for the love of all that's holy> market position and all.

Besides, it's clear that Steve was suggesting that all promotional, loss-leader, or below-cost pricing is predatory. And while he's free to believe that, it certainly doesn't make it true.

I don't get the idea that he is suggesting that, I think that he is simply responding to the statement that everyone uses loss leaders because if they don't, they go out of business with some examples of successful companies that don't use loss leaders. Of course, he might be, I can't read his mind, but I didn't take it that way.

Predatory pricing can be hard to prove. Lack of evidence isn't the same as proof that they aren't doing it.

On a somewhat different line here is an interesting blog posting about Amazon's DOMINANCE (feel better? )

http://dearauthor.com/ebooks/has-eve...ket-to-amazon/

Basically, the blogger discusses how the fading competition with Amazon over ebooks hurts author, including a few points that I hadn't considered, such as reduced visibility of books as well as points that I had considered such as likely reduced profitability for authors (she mentions that Amazon has already cut the royalty rates for indie audiobooks now that they own Audible).

kind of in line is this blog post from digitalbooksworld that talks about how difficult it is to track market share, as well as how some smaller publishers are starting to move to Apple for the simple reason that Apple is giving them visibility.

http://www.digitalbookworld.com/2014...er-in-the-u-s/

[pwalker8]

Originally Posted by fjtorres

Me, I'll go with the lawyer (and the DOJ's) definition.
Low prices =/= predatory pricing and neither is loss leader/basket pricing. That is settled law.

So no: no monopoly, no monopsony, no predatory pricing.

But, hey, there is absolutely no evidence that Bezos isn't the antichrist.

The "Amazon is eeeevile" gang can hold onto that accusation a while longer.
And it even fits in with Patterson's religious war claims!

Lawyers tend to argue a view point to make a case, not because it's necessarily true. Amazon has around 65+% of the market and the next nearest competitor is around 12%. Pretty hard to argue that doesn't meet the legal definition of monopoly (i.e. Dominate market position). Thus, said lawyer is left to argue so odd things such as "you can't be a monopoly if you are selling something supplied by someone else". Lawyers tend to throw up all sorts of odd (the term in the business is novel) theories to see if any of them can gain traction. A lawyer's job isn't the truth, it's to convince someone to vote his client's way.

[DiapDealer]

Originally Posted by pwalker8

I don't get the idea that he is suggesting that, I think that he is simply responding to the statement that everyone uses loss leaders because if they don't, they go out of business with some examples of successful companies that don't use loss leaders.

Of course he was suggesting just that; no mind-reading necessary: "Here are examples of retailer's who've experienced success WITHOUT predatory pricing."

Does that not clearly imply that those who HAVE experienced success using a different pricing method than his exalted examples ARE using predatory pricing?

[pwalker8]

Originally Posted by DiapDealer

Of course he was suggesting just that; no mind-reading necessary: "Here are examples of retailer's who've experienced success WITHOUT predatory pricing."

Does that not clearly imply that those who HAVE experienced success using a different pricing method than his exalted examples ARE using predatory pricing?

No, I don't think it does imply that. Why not simply ask him if that is what he thinks, rather than just assume it must be what he thinks? A lot of arguments can be avoided simply by asking for clarification.

[DiapDealer]

Originally Posted by pwalker8

No, I don't think it does imply that. Why not simply ask him if that is what he thinks, rather than just assume it must be what he thinks? A lot of arguments can be avoided simply by asking for clarification.

Avoided simply? Oh, you must mean somewhere other than on the internet.

But I'll bite:

Steve, do you believe retailers who use loss-leader-, basket, or promotional-pricing strategies that result in below-cost prices on certain products in their inventory is being "predatory?"