alt Hacker NewsThe Amazon tax
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> The highest-yielding ad my publisher has tested so far is the search “Seth Godin The Knot“
I think it would be interesting to see legal action here. I’m not a lawyer, but I feel like there should be at least three ways to go after this:
1. Trademark infringement. If Amazon is using someone’s search that is clearly searching for a specific product, possibly trademarked, it seems inappropriate for them to serve up an ad for a competitor at higher priority than the actual result.
2. Fraud. If I search for a product that Amazon sells and Amazon shows me an ad for a different product first and hides the product I searched for below the fold, they are effectively telling me that they don’t have the product I searched for and possibly that it doesn’t exist. It seems to me that this is deceiving me for commercial gain.
3. Fraud again. If I search for a specific book and Amazon shows me an ad for that book, I think they’re trying to trick me into clicking that ad so they get extra revenue even if I don’t intend to click an ad. (And they’ve defrauded the ad buyer too. Those clicks are bogus. Seth Godin should not be charged for a click when the clicker was searching for the book by a good approximation of its name!)
Someone should file the multi-hundred-billion-dollar class actions :)
This is a lot of words to describe rent seeking. Google, Amazon, Instagram/Meta, ultimately all of these are earning their outsized margins through market-dominance enabled intermediation of commerce. I search for 'foo' and the top result is either Foo paying through the nose for what should really should be organic traffic or Bar 'buying' the click instead. In the absence of anti-trust the only winning move is to buy stock in the monopolists, their ability to extract these rents from an ever-growing proportion of the economy is only getting stronger.
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.
It doesn't have to do with Amazon. It is just how ads work.
Of course when you buy a product that is heavily advertised you know that you are paying for it, Amazon or not. That's why, when I see an ad campaign for a product I may want, it is a signal for me to look elsewhere. Some competitor may use what would be ad budget towards offering lower prices or better quality.
As for Amazon, it is not cheap! It is convenient, fast delivery, easy returns and all that. But if you forego that convenience, there is usually a cheaper option: local shops, Chinese platforms, direct sales, etc...
>If you’re searching for an air fryer, Amazon already knows quite a bit. 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 (or for the best air fryer, to keep you on track to buy the one you wanted in the first place).
What if I made a new air fryer that hasn't received a lot of reviews and costs a little more because of its quality? How would I break through, if not ads?
Amazon is a net-negative overall but I don't think this understanding is correct:
> The only purpose of the ads is to get you to pick an air fryer that isn’t that one (or for the best air fryer, to keep you on track to buy the one you wanted in the first place). The ads make the search worse.
This is only true in extremely simply scenarios. In reality, most of the time individual consumers may prefer something other than "the highest ranked item in this category." Maybe another company has a feature that increases cost but adds utility, maybe there's a brand you trust more that makes a slightly less popular version, etc.
The problems of parasitic advertising still exist. People still see ads for products they will like less than the top rated search, but it's wrong to imagine that Amazon actually knows what that person would like best. If matching people to products was that easy you'd have all kinds of 3rd party recommendation services making very specific recommendations to make money off affiliate links. Instead we have a million "top 10" sites that work about as well as picking the #1 seller in an amazon category: not that well.
I don't love (but use...) Amazon but I think if done properly, ads can be relevant even when searching for a specific thing.
Let's use a Google Example: I search for Toyota RAV4 and get an ad for Mazda cx-50. Obviously Toyota hates that but as a consumer it has a chance of making me aware of something I didn't know but would want to know, especially as a part of a purchase decision. That's why Mazda pays for that ad slot, and also why Toyota makes it expensive for them :)
Obviously google in this scenario comes out ahead and it is annoying for some users but can be highly valuable if done well.
It's not how I search or shop but plenty of people do.
> Amazon makes enough in search ad revenue to give every single one of their employees a $35,000 cash bonus and still have change left over.
There was study not too long ago that showed that 48% of Amazon's employees were paid so little that they were forced to depend on some form of public assistance to meet their basic needs. Not only would an extra 35k a year prevent amazon employees from needing foodstamps and housing assistance, but I'd be willing to bet that amazon would make back some of it in increased amazon purchases too. It'd be great if the government cracked down on corporations who use taxpayer money to subsidize their labor expenses
This has been true for years on Amazon and is true for most big services now.
Over time the concept of search has mutated from 'locate the exact item I'm looking for' to 'show me a list of semantic search results'. Somehow nobody noticed.
Oh and of course those are not random results - you can literally feel how the platform is trying to nudge you into buying what IT wants, not what you wanted. The search is just purchase intent, the platform will choose what you'll buy.
Powerful algorithms, subliminal design - I feel like a lamb in a dark forest full of wolves when I search on amazon, netflix, prime video ..
There are no '0 search results' anywhere.. each search yields thousands of results.
I remember what a revelation Google search was when it came out in 1999 - it would actually find the exact thing you were looking for ! You no longer had to sift through directories of links, you could just filter it..
We're back to pre-google, but it's a lot worse now, since this is by design, not by lack of technical knowledge of how to make search work.
The new (to me) Amazon Haul storefront is (to me) hilarious. I was stunned when I first saw it: https://www.amazon.com/haul/store
I didn't dig very deep to compare prices, but it appears to compete with Aliexpress/Taobao/Temu, with a larger marketplace fee (presumably justified by the "Amazon" brand recognition and customer capture?). Even after the absolute mess that Amazon made with their "Ships via Amazon" and "Ships from third party" schemes, this feels like a new low.
Paired with the article, it seems to me like the natural conclusion is that the company wants to move away from distribution and towards pure rent-seeking, in the most blatant ways possible, trying to squeeze as much cash as possible from their name while it has any value.
This also happens in physical stores. In Walmart and others, good quality and good price items are at hard to find, let alone notice places. That happens because lower quality more expensive products pay Walmart for better placement.
Imagine there's a best-selling toaster. Amazon can recommend it and many people will be happy buying it. Then, one day a new toaster comes out, and it might be even better than the old best-seller. How would it get sufficient traction to be recommended by the algorithm? To send a strong enough signal, it would probably need a level of sales that could only be achieved with some level of advertising.
Separately, I'd note that Amazon doesn't want high levels of returns (which it has to pay for in many cases), so they still try to herd people toward products that they will find acceptable. Might they not love them as much as some others? Perhaps, though this is a fine line to try to walk, and I'm not sure that Amazon is actually trying to walk it.
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.
I'm in the UK, and I've found that pretty much anything I can get on Amazon I can also get at John Lewis. It's probably more expensive - I'm in the lucky situation that I'm not particularly price-sensitive - but I much prefer the feeling of buying from JL. Very occasionally I'll buy something from Amazon like photo paper or some small gizmo that's difficult to find elsewhere. The one kind of physical shop I really miss is the kind of place where you can buy one screw, nail or picture hook etc. I hate the number of 10-packs of things I get where I only need one. (Luckily I live in a block of flats where there's a good community, so often I get those for free just by asking on our Signal group!)
> Amazon is stealing from the customers they said they were here to serve.
I am always surprised that people apparently think corporations want the best for their customers. They want the best for their shareholders. Sometimes the latter overlaps with the former, but mostly that's not the case.
> The only purpose of the ads is to get you to pick an air fryer that isn’t that one (or for the best air fryer, to keep you on track to buy the one you wanted in the first place). The ads make the search worse.
"The best" is not a static product. If Amazon had no way for vendors to showcase their product, the best would be a stale product that accumulated decades of reviews. Maybe it's still the best , maybe not. But there is value to show some noise in the search long term.
Another way to look at it is through the vail of ignorance. Suppose you're a manufacturer of air fryers, but don't know where you stand in terms of how competitive or popular your product is. Would you want to live in a world in which you CAN'T bump your placement? Sure if you're the top 3 manufacturer, maybe you would prefer not to pay the tax. But if you're not, you'd much rather prefer the system in which you can.
> They know the best-reviewed, least-returned, best-priced model
That's assuming two things -- user desires and valuation models are identical (they're not, even within a single product view)
and that the state of products is static -- Once a product is best there cannot be a new best in the future. You have to have buyers try new products, some of them disappointed, to plot the shape of what is best or worst. Charging companies a fee means they have to be really sure/serious that what they have to offer is market satisfying (else they're wasting their money).
What we really need is for consumers to stop being so short term thinking and buying the cheapest item (on BNPL no less) and for Amazon to be held accountable for how they penalize people who legitimately compete with them (imo an anti-trust issue).
> When there are plenty of ads, the maker of the best air fryer now has to bid on ads as well, if only to protect the sales they were entitled to in the first place.
They’re entitled? By whose standards are “best air fryer” to be determined? Do all buyers have the same criteria for what “best” means to them?
I've tried to replace Amazon with other vendors where possible. You can get partway there, but half the time, my orders get delivered from an Amazon warehouse anyway. Smaller vendors have basically surrendered logistics to Amazon entirely. At least I'm not giving Amazon ad revenue if I don't order directly through them!
> It’s not technically a tax. Taxes produce valuable public benefits, like medical research and parks. This is simply legal theft.
An economist would not read past this first sentence.
I live in Italy, Amazon opened its Italian branch about 15 years ago. Initially it had a smaller catalog of products, with products sold almost entirely by Amazon. They were delivering packages in 3 days and the price was almost always much better than any other online or physical shop.
Over the years they largely improved the delivery time. Now if I am ordering a package before 4PM there is a high chance I will get it the next day in the morning. Prices however became higher and higher, at the point that for many products Amazon is not that convenient anymore: if you need home appliance (TV, dishwasher etc) other online or physical shops are now significantly cheaper. If you look sport equipment (e.g. climbing, mountain bike, hiking) the specialized shops are usually cheaper as long as you are OK to wait for longer delivery time and maybe combine 2 or more products to reduce the shipping costs.
I still find Amazon convenient during prime days and black Friday, and because of the large catalog with many alternatives and sometimes useful reviews (need a new shower head, a new mouse, a hole puncher, a tire for the bicycle...) but prices are not as good as they used to be. But if you need something in a hurry, the fact that you can order today and get it tomorrow is a big plus.
Amazon search has been terrible for as long as I can remember. Not to disregard the scourge of ads that has infested the results but I've been frustrated with Amazon search for almost 2 decades.
Oh sure, their search gives you the impression you can filter/sort but due to zero policing anyone can say whatever they want about their product and I have the feeling Amazon just sucks at this on top of the seller malice.
Just try to filter down to the dimensions you need, the connector you are looking for, the material you'd prefer and you'll be inundated with tons of items that share not resemblance to the filters you entered.
I only want X brand, here I hope you want to see results from Z, W, Q brands as well!
I only want items under 2ft wide, here are 4ft, 1ft, 6ft options!
I want only <1' cables, here are 12ft cables.
It's all a miserable experience. Often I skip the filters because if they are so bad at keeping out the trash then I worry I'll also lose legit options because I have zero trust in Amazon's ability to accurately filter.
I won't pretend running Amazon is easy but I'm constantly in shock at how absolutely terrible Amazon's website is to use. The number of UIs that are clearly optimized around data retrieval optimization instead of serving the customer is insane.
This is the virtual equivalent of manufacturers paying for premium floor/shelf space in a brick and mortar store. The way to avoid it is to ignore the sponsored results and do some actual browsing - just like comparison shopping in a physical store.
Really Amazon just has to overhaul their ratings system.
That ads are fine, it's not difficult to see what is labeled "sponsored".
What isn't fine is the hardcore gamification of reviews.
If reviews are fixed and you want to pay to advertise your 2-star hand mixer? Sure, but you are probably just paying to show off that you suck.
I can see a simple solution to this problem. STOP BUYING FROM AMAZON!
I do, you can too.
Not identical problem, but similar. If I have just read "Dombey & Son" and want to read more Dickens, I search "Dickens" and get Monica Dickens? ok, more fool me. But if I search "Charles Dickens" and get "in the style of charles dickens" or "based on charles dickens" then I am very unhappy, especially if that "search" was actually clicking the blue highlight link under the specific volume of dickens I just read.
I asked an Amazonian about this once, and they said the algo worked for them in sales, because enough people go to the "in the style of" or actually want that and so I am SOL.
You would think there could be a search setting "specific author name == author, no extras" or something, if they wanted to maximise utility and choice.
As awful as Amazon has become, I still use it for the same reason I started using it many years ago: books.
It's the one place I can find all the books my kids need for school. You search with an ISBN and always find exactly what you want.
Other things I buy elsewhere.
But this is how ads work? The entire concept of programtic ads is based on bidding for the highest leverage time and placement with $$.. So even you have the best product and your competitor outbids you, they get seen more and most likely get bought more?
And even if you go into a normal retail shop with a product in mind, all the available options showcased can "distort" your actual intent. Because that's what the shop is designed to do: to showcase, and even in that showcase, some products are placed/showcased so they catch your attention.
I doubt anyone chooses to create shoddy products just so they have more money to market them..
Don’t supermarkets allow companies to pay for shelf position? They also allow companies to do paid promotional sales activations renting floor space.
It doesn’t seem all that egregious to me.
Advertising may introduce a stranger. But charging a merchant to meet his own customer is highway robbery with a receipt.
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.
Worth mentioning that Google has the same tax in Google Maps.
It is bad for the same reasons that the Amazon Tax mentioned in the post is bad…
Many times I search for a restaurant like McDonalds and the top result won’t be the one nearest to me…it will be a sponsored result for one that is farther away from me.
Pretty wild that Google does this. It’s bad for people. It’s bad because instead of picking the best choice to be the top, Google is showing a worser choice for money.
The same reason why this blog mentions that the Amazon Tax is bad.
This assumes that people only (or at least) mostly depend on Amazon's search results' ordering to decide which products to buy. This is not true, at least not for everyone. I, e.g., visit review websites like Wirecutter to decide. Something tells me I'm not the only one.
"If you’re searching for an air fryer, Amazon already knows quite a bit. 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 (or for the best air fryer, to keep you on track to buy the one you wanted in the first place)"
I don't get this part. Aren't those things unrelated? The aim of ads is to convince to buy regardless of the quality and other data points.
Only very tangentially related of course, but for all of that money going into search/ads/targeting, etc., searching 'shirt without stripes' on amazon today still returns shirts with stripes.
Per the classic https://github.com/elsamuko/Shirt-without-Stripes
Paraphrasing:
> Advertisement serves to increase purchase of the inferior product.
> The best product, which previously didn't require ads [on Amazon] now must pay Amazon to compete for eyeballs.
Advertisement, when successful, increases the purchasing of any product, generally. That the best product is subject to this effect and competition has nothing to do with Amazon or technology.
I think the point of this piece is that advertising ruins platforms. Maybe so but Amazon is hardly the first platform to be ruined by it. The same logic applies to other platforms - like subway platforms or television or even restaurant menus.
Subway platforms are filled with ads and force us to think about upcoming sales and broadway shows.
Television is full of ads and makes us think about all kinds of things we don't care about.
Restaurant menus advertise the items at the top of the menu to the detriment of the items in small print down below.
Memes of all kinds live or die by their attention fitness. If a book, play, or video game fails to get enough attention it dies, goes out of print, never makes it to broadway, and never gets ported to the new system. So if there is a way to cheat the attention system by paying a little money to push the thing in front of a few more eyeballs, makers and publishers are gonna do it.
Advertising is fundamentally un democratic because it assumes an imbalance of power - the power of those who control the publishing, the power those who can pay more.
"If you’re searching for an air fryer, Amazon already knows quite a bit. 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 (or for the best air fryer, to keep you on track to buy the one you wanted in the first place). The ads make the search worse."
This is it.
I moved from the US to Australia recently, and Amazon isn’t really a thing here. Yes, it exists, and it is heavily marketed, but the range available in the store is at a guess less than 1% of what’s available in the US store. I occasionally go to amazon.com.au to look for things, have the same issue having to wade through irrelevant slop in the search results, find nothing suitable, and leave.
And then I do what it seems most Australians still do — go to a mall, or visit a specialty retailer, or use a specialty retailer’s clunky website and find exactly the thing I need and order it there and get it a few days later.
It’s quite refreshing to go out on the shopping streets or to the malls, and see many people out and about shopping. Likewise, the staff in stores are well-informed and helpful, and make the shopping experience pleasant and efficient.
Amazon is why we can’t have nice shopping experiences in the US.
> If you’re searching for an air fryer, Amazon already knows quite a bit. 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
At least ads give the sellers a chance to compete for eyeballs 'legitimately'. The same marketing budget will not just vaporize if there is no ad space. It will be spent on fake reviews and even fake customers.
People who hate ads don't realize buying ads is the least evil way to compete for customers' attention.
First you create the value, then you capture it...
I can't comment on the economics of it but amazon search is awful, and I think it's by design, not just by design though.
I was recently searching for some draw runners of a certain fixed size. Just cheap ones for some drawers I'm making for a workbench.
Found some cheap ones but not the correct length, but it made me realise something; If I sorted by price low to high the cheap ones did not show on any of the results pages. Amazon was purposefully showing me more expensive products.
I took some info from the cheap ones, searched for that, and the ones I wanted showed up in the search.
I wonder if anyone has trawled all of Amazon, and made a better search tool that doesn't try to rip anyone off?
Anyway, I am starting to find products cheaper outside of Amazon, including p&p.
Isn't it funny that marketers are usually the first people to complain about paying for marketing?
FWIW - I agree with the premise of the article, but I have to say - the reason these types of practices are acceptable in American culture is exactly because of prominent "marketing gurus".
If you are living in Germany I can not recommend https://geizhals.de/ enough. It is "just" a price comparision website, but it features most relevant online stores for me, annd more importantly their filters are just amazing and allow you to find products extremly efficient.
I'm hoping AI will disintermediate most retail and we'll finally get an aggregator that isn't going to add a tax on both sides of the market.
"Buy me the best Air Fryer" -> finds the best given my preferences and constraints and directly purchases it from the cheapest distributor
Always best to search across Amazon, Ebay and Walmart. Vendors sell the same stuff across all three channels.
Haha, that's the classic thing with platforms that have demand aggregation. They extract a lot of stuff. DTC, Telehealth, all these things end up paying Meta and Google a large fraction of their revenue. Same with Stripe et al. The idea is to take a rake on all spending. It puts you in an unfathomably strong position. It's why Visa and Mastercard are such good businesses.
To get something in front of someone you need to do some work. These guys have the people so they charge you to show it to them. I'm realistically not going off Amazon. If you want to list the ebook on your website maybe I'll buy it there, but if you do a physical copy your 'tax' is going to Shopify. That's how it is.
lots of people here defending amazon blindly seem to be unaware of the full picture of how amazon ads works in the context of the marketplace.
the point is that, if airfryer B is rival of A, and B buys ads (to let amazon show B ahead of A even if they searched for A), and A doesn't buy ads, then if B resorts to marketing to lower the quality just enough to compete, then all the quality focus of A will not end up increasing their sales.
more importantly, to have a good view on which products are good which one are the best is not available inside of amazon that easily. reusing sku, tricking people into buying inferior ones does not impact amazon in any way since return costs are paid by the fba vendor, or seller.
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.
I see the exact same thing on Play Store, and I think Google is outright complicit in fraud. The top result when you search for an app, even if by exact name, is always, literally 100% of the time, not the app you are looking for, but some other ad-infested knockoff spyware shit whose developer paid Google to be placed before the real thing.