Is Amazon using predatory pricing?

Top100EbooksRank · 06-26-2012, 10:06 PM

http://www.graspingforthewind.com/20...ng-and-amazon/

Quote:

Every article I’ve read on this issue has hinged on accusing Amazon of predatory price fixing. What is that, exactly? The short answer is predatory price fixing is one company with deeper financial reserves and capital, lowering their prices on product or services they sell to below cost, with the intent to outlast their competition. Once the competition has been driven out of business, they can once again raise prices much higher than cost to recoup their losses caused by selling at below cost.

. . .

One, Amazon would need to have market controlling power.
Two, Amazon would need to have a larger reserve of capital than its rivals.
Three, there needs to be solid barriers that prevent new competing businesses from starting up.

Once competition is driven out and Amazon has 90% of the ebook market and decide to raise prices. What would happen next?

1) DOJ investigation and lawsuit
2) new competitors who would undercut Amazon

For example, if Amazon raised the price to $15 and profit $5 for every sales, Facebook, Apple, Google or a start-up company could price the book at $12 and profit only $2 for every sales.

Amazon: $15 per book
other stores: $12 per book

Customers will go elsewhere.

pidgeon92 · 06-26-2012, 10:10 PM

Looks like a bunch of hooey to me.

SteveEisenberg · 06-26-2012, 10:10 PM

They used to. I can't vote, as I don't know as of today.

carld · 06-26-2012, 10:15 PM

They already had 90% of the market and basically no competition aside from Sony. They didn't rake consumers over the coals when they had the chance. I don't seem them doing it now, if they even get back to that dominant position which isn't at all certain.

Top100EbooksRank · 06-26-2012, 10:20 PM

A lot of news articles have accused Wal-Mart of predatory pricing?

Has it been proven that Wal-Mart

1) lower prices below cost to drive out competitors
2) once dominant, it raised its prices to recoup their losses caused by selling at below cost

JD Gumby · 06-26-2012, 11:08 PM

No, they're not, and weren't, engaged in predatory pricing (as the DoJ happened to mention during the case against the big publishers). They did use new bestsellers as loss leaders, though, selling them at cost, or just enough above to reach that $9.99 price point (not at a loss, as the publishers were claiming).

KindleChickie · 06-26-2012, 11:45 PM

No. I don't believe their intent on offering a few best sellers below cost was to eliminate competition so they could then gouge consumers. I believe their reasoning was to lure readers to their Kindle and Kindle. At the time, Kindles were very expensive. Most consumers needed to justify their purchase, if even in their own mind, with lower priced ebooks.

If Amazon had sold every single book, or even the majority of books, at a lose it would be different. But they only sold a few high profile ones at a loss. Huge difference to me.

crossi · 06-27-2012, 09:10 AM

Both Google and Apple have more money than Amazon. Both are not dependant on ebooks for income (ebooks are just a sideline). If Amazon got in a price war with one much less both it would lose.

As had been said over and over Amazon was never selling all or even the majority of their books at a loss. Just a few high profile books as a loss leader. A very common marketing technique used by most retailers. Like all grocery stores.

Amazon's marketing philosophy has always been based on high volumes due to low markups. I don't see this as changing. I don't call this marketing strategy "predatory" just smart.

Calling Amazon predatory based on the remote possibility that they might sometime in the future do something that they have never done before is ridiculous. What was that science fiction movie where people were arrested for crimes they hadn't commited yet?

fjtorres · 06-27-2012, 11:28 AM

Minority Report.

There is also the old saw about thieves thinking everybody is dishonest.
The BPHs think that just because *they* would jack prices through the roof, thereby destroying the value of the ecosystem, *everybody* must be that short-sighted.

People buy ebooks from Amazon because they offer a good value--the moment they cease to offer that value, they'll go elsewhere. And there will be no shortage of volunteers popping up to take their money.

Santos · 06-27-2012, 11:29 AM

Quote:

Originally Posted by pidgeon92

Looks like a bunch of hooey to me.

^^^

crossi · 06-27-2012, 12:16 PM

Amazon has always taken the long view. Look at the years they opperated at a loss to build their business. Raising prices in a predatory way while it would give them a short term raise in profits would over the long term lose them customers. And Amazon has always been customer-centric.

If the publishers are really so worried about Amazon's dominance they should sell their books without DRM so the people who but ebooks from Amazon aren't locked into Amazon's system forever.

RainingLemur · 06-27-2012, 12:52 PM

Quote:

Originally Posted by crossi

If the publishers are really so worried about Amazon's dominance they should sell their books without DRM so the people who but ebooks from Amazon aren't locked into Amazon's system forever.

Oh, man. Amen to that.

Nyssa · 06-27-2012, 04:30 PM

Quote:

Originally Posted by crossi

Amazon has always taken the long view. Look at the years they opperated at a loss to build their business. Raising prices in a predatory way while it would give them a short term raise in profits would over the long term lose them customers. And Amazon has always been customer-centric.

If the publishers are really so worried about Amazon's dominance they should sell their books without DRM so the people who but ebooks from Amazon aren't locked into Amazon's system forever.

Santos · 06-28-2012, 08:44 AM

Quote:

Originally Posted by Nyssa

Double

View Poll Results: Is Amazon using predatory pricing?
Yes	8	12.70%
No	55	87.30%
Voters: 63. You may not vote on this poll

06-27-2012, 09:10 AM	#8
crossi Guru Posts: 997 Karma: 12000001 Join Date: Nov 2009 Location: Seattle Wahington U.S. Device: kindle	Both Google and Apple have more money than Amazon. Both are not dependant on ebooks for income (ebooks are just a sideline). If Amazon got in a price war with one much less both it would lose. As had been said over and over Amazon was never selling all or even the majority of their books at a loss. Just a few high profile books as a loss leader. A very common marketing technique used by most retailers. Like all grocery stores. Amazon's marketing philosophy has always been based on high volumes due to low markups. I don't see this as changing. I don't call this marketing strategy "predatory" just smart. Calling Amazon predatory based on the remote possibility that they might sometime in the future do something that they have never done before is ridiculous. What was that science fiction movie where people were arrested for crimes they hadn't commited yet? Last edited by crossi; 06-27-2012 at 09:31 AM.

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06-26-2012, 10:10 PM	#2
pidgeon92 Wizard Posts: 3,144 Karma: 8426142 Join Date: Jun 2008 Location: Chicago, IL Device: Kindle PW2, Kindle Voyage, Kindle DXG, Boox M90, Kobo Aura HD	Looks like a bunch of hooey to me.

06-26-2012, 10:10 PM	#3
SteveEisenberg Grand Sorcerer Posts: 7,354 Karma: 42994616 Join Date: Jun 2008 Location: near Philadelphia USA Device: Kindle Kids Edition, Fire HD 10 (11th generation)	They used to. I can't vote, as I don't know as of today.

06-26-2012, 10:15 PM	#4
carld Wizard Posts: 2,698 Karma: 4748723 Join Date: Dec 2007 Device: Kindle Paperwhite	They already had 90% of the market and basically no competition aside from Sony. They didn't rake consumers over the coals when they had the chance. I don't seem them doing it now, if they even get back to that dominant position which isn't at all certain.

06-26-2012, 10:20 PM	#5
Top100EbooksRank Banned Posts: 304 Karma: 6102528 Join Date: Mar 2012 Device: Kindle	A lot of news articles have accused Wal-Mart of predatory pricing? Has it been proven that Wal-Mart 1) lower prices below cost to drive out competitors 2) once dominant, it raised its prices to recoup their losses caused by selling at below cost

06-26-2012, 11:08 PM	#6
JD Gumby Cynical Old Curmudgeon Posts: 1,085 Karma: 8495696 Join Date: Jul 2011 Location: Halifax, Canada Device: Kobo Mini, Kobo Arc, HTC Desire C	No, they're not, and weren't, engaged in predatory pricing (as the DoJ happened to mention during the case against the big publishers). They did use new bestsellers as loss leaders, though, selling them at cost, or just enough above to reach that $9.99 price point (not at a loss, as the publishers were claiming).

06-26-2012, 11:45 PM	#7
KindleChickie Connoisseur Posts: 65 Karma: 573682 Join Date: Jan 2010 Device: DX, iPad 2, Kindle 3, Nook simple touch	No. I don't believe their intent on offering a few best sellers below cost was to eliminate competition so they could then gouge consumers. I believe their reasoning was to lure readers to their Kindle and Kindle. At the time, Kindles were very expensive. Most consumers needed to justify their purchase, if even in their own mind, with lower priced ebooks. If Amazon had sold every single book, or even the majority of books, at a lose it would be different. But they only sold a few high profile ones at a loss. Huge difference to me.

06-27-2012, 11:28 AM	#9
fjtorres Grand Sorcerer Posts: 11,732 Karma: 128354696 Join Date: May 2009 Location: 26 kly from Sgr A* Device: T100TA,PW2,PRS-T1,KT,FireHD 8.9,K2, PB360,BeBook One,Axim51v,TC1000	Minority Report. There is also the old saw about thieves thinking everybody is dishonest. The BPHs think that just because they would jack prices through the roof, thereby destroying the value of the ecosystem, everybody must be that short-sighted. People buy ebooks from Amazon because they offer a good value--the moment they cease to offer that value, they'll go elsewhere. And there will be no shortage of volunteers popping up to take their money.

06-27-2012, 12:16 PM	#11
crossi Guru Posts: 997 Karma: 12000001 Join Date: Nov 2009 Location: Seattle Wahington U.S. Device: kindle	Amazon has always taken the long view. Look at the years they opperated at a loss to build their business. Raising prices in a predatory way while it would give them a short term raise in profits would over the long term lose them customers. And Amazon has always been customer-centric. If the publishers are really so worried about Amazon's dominance they should sell their books without DRM so the people who but ebooks from Amazon aren't locked into Amazon's system forever.

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