The Amazon tax

simonebrunozzi

This is sad, but true. And true for other giant companies, not just for Amazon - Meta/Facebook is another good example. What can we do about it? Not much. This is something that happens when in a "free" market you have a near monopoly, and the antitrust is too weak to even try to fine these companies. One might think that there's a "conspiracy" of a few powerful people / billionaires, but I don't believe it it the case. Individuals are driven by results, profits, targets, metrics, etc... The company as a whole responds to shareholders, not the small retail one but large funds and such that own a significant stake in these companies. They want to make money. They lobby the government to make sure that quasi-monopolies like this one can go on undisturbed. I don't blame Amazon. I think this is a limitation of the (supposedly) free-market society in which we live. By the way, it is not a free market when antitrust does not work, or when you need to bail-out banks, etc. I admire and respect Seth Godin (I even met him once, years ago), and I would love to see if he had any idea of how to solve this.

tchalla

Principal agent problem combined with a monopoly, what could go wrong? In the end, we as a society value convenience more than global optima. So we will always land in some local optima. We deserve it.

automatic6131

Amazon is almost completely unusable for search at this stage. I think perhaps 3/4 of the results are sponsored ads. Three in four. Trying to find a good deal on a product, even if you know precisely what you're looking for, is a real headache of trying to dodge the advertisement minefield.

the_real_cher

Whats going to be hilarious is if brick and mortar companies become popular again because of the painful U.I., scammy companies, and broken search of Amazon.

InsideOutSanta

See also: ads for apps in app stores. These companies effectively monopolize app distribution on their platforms and then make discovery so poor that developers who try to sell apps in their stores must pay for ads in those same stores.

paytonjjones

> They know the best-reviewed, least-returned, best-priced model. The only purpose of the ads is to get you to pick an air fryer that isn’t that one Thoughtless take. Say you've just invented a better looking, better functioning, cheaper air fryer. How do you expect to reach your first customers if not through ads? Sell it to your friends? That's even more invasive and annoying. People's urge to rid the world of ads is similar to our urge to rid the world of "middlemen". It's natural, and I get it (ads are annoying), but this is a forum where I expect people to think a little more deeply about the economics and second order effects of things.

nalekberov

Amazon has the most useless search I know. Also, idk who clicks those 'Sponsored' results, but for me they are an automatic pass. But then again Amazon is such a scumbag company that uses its own brands as a weapon to make sellers pay to be visible.

genghisjahn

Having small mini-pcs in my basement and a couple of Cloudflare tunnels and Tailscale has been awesome. Made me realize that I've gotten used to paying for software that is free because someone else was hosting. But now I host it and it's a way better experience. I'm not crazy about using Cloudflare, but so far it's been great. Having Postgres, rabbitMQ and Redis all running locally (and then realizing my traffic doesn't need a cache or a queue and just doing it all in Postgres) has been awesome.

geerlingguy

It's amazing how poor on-site search has gotten, while at the same time the capability to have better results and more relevancy has gone way up. I normally use Google and/or DuckDuckGo to search YouTube and Amazon, because if I'm looking for a specific video/product, that one will be 3-4 pages in (maybe not even shown). Brand name products are buried 3+ pages deep on Amazon, while the first 2-3 pages are always drop-shipped Chinese knockoffs now. The onsite search is almost entirely useless.

abixb

I've slowly shifted all my consumer purchases from Amazon to local shops and other online platforms, including Etsy. I'm now seriously contemplating deleting my Amazon account of 15 years in one whole swoop. The quality degradation is painfully apparent, and the value add of Amazon in my life has been steadily declining for a while. I've also had terrible experiences with AWS, but that's a different story. Amazon's only core product that they care about now is their stock price.

83457

When searching on Amazon I always change sort to Best Sellers. The default is Featured Items which shows ads at the top and throughout results. For some searches that have a small number of real results, the majority of the list will be ads. Sorting by Best Sellers eliminates all ads in the results.

jmartrican

Maybe we need ad blockers for Amazon ads.

cainxinth

Has anyone found a useable fake review detector since Fakespot and Review Meta went down?

t1234s

Always best to search across Amazon, Ebay and Walmart. Vendors sell the same stuff across all three channels.

wolttam

I would have thought the Amazon tax is “free shipping” that has altered the pricing of every item, and now B&M retail is picking up the same pricing despite a much lower shipping overhead Ads too, I guess

t1234s

Prime is a waste of money. I find most stuff arrives in 2-3 days and its easy to spend the minimum to get free shipping.

johnnyApplePRNG

Amazon has no mercy, so neither do I. In my defense, they started it. (I had purchased a stainless steel muffler with a lifetime warranty off of Amazon Auto, the thing was counterfeit, completely rusted through in less than a year, and Amazon would not honor their written warranty and I didn't care to fight it legally...) So the next time they dropped my package off in my lobby when I have specific instructions to bring it to my front door? I never got it. And unfortunately for them... it keeps happening now? Like every other package that gets delivered?! (They always believe this, apparently... either that, or their agreement with their delivery insurance services must eat the cost). I've more than gotten my muffler refunded now and they're none the wiser, so win win really!

jacobn

The search ads ostensibly solve the cold start problem: If a seller introduces a new product, how is that to be ranked? Well, they can buy some ads, get some ratings, and boot up their sales & search ranking. Great. It of course also creates essentially perfect competition. Amazon will even tell you the top selling products across categories, so that no seller can make excess profits for long - others will quickly jump into the fray to compete that away. This is of course the market working as intended - the sellers compete away any and all surplus. Normally that would be a good thing for consumers! Unfortunately the search ad tax is very real, and siphons off a good chunk of the surplus as monopolist rent. This is all structural. A marketplace like this is a natural monopoly with massive network effects. And the allure of the search ad is irresistible - they literally can't not do it, lest their shareholders rebel. Google ads work exactly the same way. As a seller your only options are to either have better conversion economics than the competition (so you can win the ads bidding war - guess why every successful site on the internet is gameified to all hell, and why the amazon listing titles & descriptions look like they do) or to not play. If you can create a viral hit for a product you can probably eke out excess profits for a few months - people want precisely your branded product and not a cheap knockoff, at least for a while. ("Excess profits" = anything above what will literally make the marginal seller say "it's not worth it", which is a very low bar when competing with the entire world)

solatic

> It leads to two perverse side effects. First, producers realize that if brand reputation matters less than a budget for clicks, they will shift to shoddy and cheap versions of their products so they have a bigger budget for clicks. This assertion lacks evidence. An alternate hypothesis: if you tried to sell literal garbage on Amazon, poor reviews and a high return rate will be visible in the product itself. The ad will earn you a click-through to the product, but buyers will begin to back out instead of following through with a purchase. Ad purchases cannot overcome insufficient revenue - it won't be profitable long-term. Yes, Amazon has a problem with vendors buying good reviews as well. It doesn't overcome a high number of poor reviews, or a high number of returns. > And second, Amazon (and Google before it) have an incentive to make their organic search results worse–giving producers more incentive to buy more ads. Reeks of a conspiracy theory. Most customers simply don't have the time or energy to research any more than the top handful of results. Only a rare person goes 10 pages deep into the search results. Organic search results will produce less traffic when people don't even look at them. But that's not evidence in and of itself that the organic search results were nerfed in some way. I hate to remind people of the basic truth about modern Amazon, but here goes: the vast majority of the inventory is made in China and the exact same product can be found at a tiny, tiny fraction of the Amazon price on AliExpress and similar sites. The value that Amazon adds is their logistic network that can deliver to domestic US addresses in a day or two, compared to weeks. The difference in price between Amazon and AliExpress justifies sellers spending enormous sums on ads and review purchases, because even if they do sell garbage on Amazon, enough people bought it at such ridiculous margins that the seller can tear down the product with the bad reviews and high return rate and re-offer it under a new brand with the same ad and review purchase strategy and still make a profit. But the person to blame for that is not Amazon, and it's not the seller, it's the fool who decides to pay the ridiculous price compared to the AliExpress price. Books are one of the categories where they aren't printed in China, they're not sold on AliExpress, and searching for "seth godin the knot" returns the actual correct listing as the first organic search result. So I'm not sure why the author brings his book up as evidence. He might do better by reminding his publisher that "selling on Amazon" is not a homogenous experience and they ought to reconsider flushing money down the drain on advertisements they don't need.

realty_geek

Would love a similar post breaking down the rightmove (UK equivalent of zillow) tax. Fortunately there is currently a court case against them that might help. I am also starting a #RightmoveHygiene campaign to encourage people to spend less time on there.