The Amazon tax

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.

This is simply, a monopoly. Whatever mechanism they came up with to squeeze the final dollars out of the system, such a system would exist because they can.

This reminds me of SABRE preferring American Airlines flights see https://en.wikipedia.org/wiki/Sabre_(travel_reservation_syst.... Back in 1984 this "Preferential display" was considered illegal by the US government. How times have changed....

In Europe, it led to the creation of the competing Amadeus system which did not keep display preferences and now dominates the market.

Similarly, this is also why Google stopped enforcing trademarks years ago. It allows more people to bid on terms, increases competition, increases CPCs & of course pads their bottom line.

Same reason why the top ad on Google when you search for a brand is for the brand itself -- "brand bidding" is a thing, and if you don't bid on ads for your own brand, a competitor will. If Google can do it why not Amazon!

I do not understand why sellers accept this practice. I'd assume it would run afoul of some trademark law but the distinct lack of lawsuits indicates that either the legal grounds are shaky... or the sellers themselves find some advantage in it.

The income tax in UK has this quirk: once you fall near the top tax bracket, you retrospectively lose all tax-free allowances you could have availed, had you not fallen in the top tax bracket.

Likewise, once corporations blow past a revenue cap, they shouldn't be eligible for lower rate of corporate tax. If the US is any cautionary tale (it always is), it's a moral imperative not to let corporations get too big. Letting corporations grow big and still avail tax cuts, is like feeding your own cancer.

"Your margins are my opportunity"

The great Bezos said ones and people, companies, stock market loved it. Now new CEO is noticing Amazon customers also have some margin and hence more opportunity for Amazon.

if your highest performing ad is against searches for literally the title of your book, isn't that a signal that you don't need to buy ads? people are searching for your book. they will buy it whether you advertise or not. so why by the ad?

this is framed as amazon doing something wrong, but it sounds like what's actually happening is that his marketer is wasting money. of course amazon is going to accept money if you give it to them for the things they're already doing for free. why shouldn't they?

Lower and lower S/N on the internet.... and businesses adding to the N so they can charge for the S. If enough become aware of this, they will vote with their $$ and Amazon (et al) will lose market share. But sadly the TicToc generation doesn't seem to notice :-()

> paying Amazon a dollar to show you an ad for the book you searched in the first place.

This is the worst part.

Google Ads are the same. I pay about $2 per click for my EXACT PRODUCT NAME search, otherwise 6 other competitor ads are shown on top of google search before the actual results

> 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.

Theoretically. Amazon doesn't give a shit about well being or enrichment of it's employees. Every single one of the them. They tried to squeeze the productivity and since the Stock has been doing well, many employees have made a reasonable money. But forget the well being or profit sharing aspects with the employees.

I'm having trouble understanding how this differs from traditional ads - even pre-Internet...? Didn't manufacturers pay to get premium shelf space in a store?

The article mentions that the "best" airfyer seller also has to place bids on their names / keywords, but I don't think there's a best, just like there's no best shoes. There are so many niches that exist in products — does it fit in a tight space, what's the shape, what's the air-frying technique, do the buttons work with oven mitts — so there are different bestsellers in each subcategory.

An idea I've played around with in the past is to have some sort of law that limits how much revenue a company can make from ads. For example, a law that says "A company cannot make more than 10% of its gross revenue from ads or selling customer data".

This kind of law would wreak havoc for certain companies (and content creators). However, just like prediction markets, ads distort and ruin the very thing they are trying to optimize.

> This study argues that an ecommerce site with search ads actually sells fewer items than the same site without ads.

Shouldn't the very same marketing companies buying these ads know this? Why are they misleading their clients?

It looks less like an advertising but more like a rent extraction with a casi toll on commerce that ultimately gets passed on to consumers

Imo it's all about all ads. And then it is about all middlemen.even real estate agents make ir more expensive for both - seller and buyer

That's one tax. The other tax is that companies raise their prices elsewhere so that they aren't lower than the list price on Amazon, because that would violate Amazon's policy.

In the product search results game, I imagine Google and Amazon will soon have competition from AI chatbots linking to product pages in response to user queries. Also, OpenAI is getting into ad business. Seems like that will add a different place where book publishers could run ads? They will also need to optimize their web pages to be useful to bots looking for information.

"...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."

No company is "entitled" to any sales.

For a while Amazon was good at discovering new books to read. Nowadays my ad-blocker blocks everything except for the book I am directly navigating to from the page. No discovery of new books is happening for me there anymore.

Another place to discover new books was Goodreads. Bought and left to rot by Amazon.

I don't buy many books anymore.

Some European countries, including UK, have enough of a strong network of local supermarkets and department stores that Amazon is simply not necessary. I have not used Amazon in the last five years. Most of my family and friends rarely use it either.

There is little reason to when you can walk into a supermarket or department store, often with three or five of them within 1000 feet, and buy what you need at the normal marked price. If you cannot go there yourself, most of them offer home delivery anyway. You also know who you are buying from, you do not have to worry about questionable third-party sellers, and if there is a problem you can telephone a human being or simply walk back into the shop. What is not to like?

But yeah, not every city or country is lucky enough to have such a strong retail network. Amazon makes sense in many parts of the world. But I also think its success in those places is a sad indicator of weak local infra and underinvestment in local retail.

The world would probably be an economically healthier place if every town and region could support a strong network of supermarkets, department stores, and indie shops. It keeps more money circulating locally, supports more local jobs and improves local economy instead of funnelling all the money through one gigantic company.

This is so true!

I rarely order anything from Amazon these days, maybe once or twice a year. Everything feels like a rip-off or fake. I don't trust the search function at all. Nor do I trust the customer ratings. The only exception is if I buy from a brand I already know that has its own brand-shop, owned directly by the manufacturer.

Amazon is nearly worthless to find anything anymore. Same items repeated dozens to hundreds of times, with minor changes, but all pointing to the same item.

It's like GOogle when ads outweighed your search results. Amazon has become a garbage pit.

I think Ads improves discovery as well as is the most profitable part of amazon - https://s-1.vercel.app/posts/marketplaces-airbnb-future-foun...

Respectfully, this is nonsense. The consumer experience I have is that Amazon sells products at lower prices with better quality, support, variety and transparency than pretty much every other store out there.

Sponsored products do not dampen my consumer experience of Amazon. Paying 2$ more for the exact same good at Target or some other online store does dampen my experience.

If I as a consumer am paying a tax for sponsored products, then when I go to Target why isn’t the price cheaper? Let me give you a hint: you wouldn’t even get a shelf at target. Let’s stop pretending that Amazon is the only evil storefront that market manipulates for profit at the expense of consumers. Which store doesn’t? Which marketplace doesn’t?

Amazon gives you the option to sort and their sorts are actually useful. Ever use sort by best rating? It actually shows the best rated products. Sort by lowest price and prime? You can find good stuff down there.

Call a spade a spade, Amazon delivers on its price, availability and service. Just because the market is crowded and you need to spend money to get your stuff in front of people doesn’t mean you can make up ideological drivel.

Probably the most egregious human written article I’ve read in the ai era.

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)

This is by far the most annoying thing about Amazon to me. They clearly are doing a disservice to their consumer with this. Many times I go straight to google to search for Amazon products, which leads to better results

I respect Seth quite a bit and have been an avid reader for two decades, but this post struck me as odd.

It reads as though he’s just discovering how the digital advertising industry works (and he's a marketer) ... not just Amazon, but also Google etc.

I think Ad's may be the best and most profitable part of Amazon.

https://s-1.vercel.app/posts/marketplaces-airbnb-future-foun...

Amazon has many decisive conflicts of interest:

- improving search results vs less ad revenue

- promoting their own products vs merchants'

- streamlining the shopping vs trying to sell more stuff

As long as these fundamental conflicts aren't resolved, it's not going to improve.

The real amazon tax is getting people to think shipping fees are part of the item, and causing one $5 cable+shipping to be $10. Three $5 cables and shipping is $30. tbh if amazon went up in smoke like wildberries I would not even flinch.

My current strategy is to skip ads and skip any name that is just a jumble of letters. But the garbage producers are getting so good with AI they can create entire websites with US addresses and pictures of buildings and employees and none of it is real.

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.

One could argue that Google Ads are jacking up the prices of hotels.

To me, this is an equivalent of a platform fee. If you didn't have a search platform, you'd most likely go with the big players, overpay, have a bad experience & be worse off.

Sort by "Best Sellers" always on Amazon. "Featured" is driven by ads. Also? Firefox with Ublock Origin blocks ads (but it's an endless cat and mouse game).

Closed amazon account when Bz decided to get into politics. I realize I can buy everything I need “in the real world” and thru manufacture websites directly. I do not miss it.

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

I don't understand the "theft" or "stealing" angle here, other than as a clumsy rhetorical device. I can see an "unfair" angle, and the behavior is definitely bad for customers, but it's not theft. Theft and stealing are when someone unlawfully[1] takes something that belongs to you. But here, it's never established that whatever was taken ever belonged to either the consumer or the maker in the first place.

[1] The author tries to escape this requirement by calling it "legal theft" but that's an oxymoron.

The only reason I have Prime these days is for the unlimited photo storage and then some extra storage for video. It’s hard to find a convenient and cost effective way to free my data.

I can recommend looking up Yanis Varoufakis and his Technofeudalism.

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!

I'm curious how similar/different this is to buying shelf space or aisle placement in physical stores.

Offtopic: Amazon has removed the option to not store your credit card details when checking out items. There used to be a checkbox that allowed you to choose not to save your credit card details for future purchases.

It's gone and confirmed and acknowledged by their support which made me take a screenshot of the popup where the card details are entered to confirm it. They in turned wanted to give me a 15€ gift card for the inconvenience and told them that I wasn't there asking for a gift card or discount and refused it.

So every single time you purchase with your credit card if you do not want your details to be saved, you have to MANUALLY go to your personal settings and remove the added card from your last purchase. Fucking amazing.

On top of that listings are overflowed with chinese brands and/or items that have no correlation to what I'm looking for.

Can someone suggest better alternatives here in Europe?

> The ad system they built isn’t illegal, but it’s pretty clear who it’s for.

"If you're not the customer, you're the product".

Well, Amazon actually did it. They made us the customer _AND_ the product. Hooray.

Like LOTS of other people, I, of course, use Amazon. But, more and more often... if I can find a product somewhere else within, say, 5-6%... I'll buy it that someplace else. Especially if that someplace else is actually a building I can walk into and inspect the thing I'm buying before I pay for it.

Shopping on Amazon is getting worse every day. How can it be good for Amazon in the long run that every time I buy something from their site, I actually have to spend time convincing myself that I'm not getting a knock-off product?

In the modern world, every single time money leaves my bank account I feel like I'm potentially being scammed. I hate it.

This is why we must kill ads. Ads fund evil - be it Google, Amazon, you name it.

The solution could be common evolving public protocols to create large alternative non-profit marketplaces.

You have to pay me to engage with Amazon.

They have become so big that they harm the buying power of the consumer and the selling power of the producer.

I know this first hand. Company had to give away 1-2 million in free engineering labor for the opportunity to obtain their business.

Have not bought anything from them in over 10 years and never will again.

Don't hate the player, hate the game. This is no different than grocery stores selling shelf space. It is not at all like theft (morally wrong) or taxes (infamously inefficient). And if you don't do it, you go out of business since you aren't competitive with someone that does. It's sad that such obvious rage bait makes it to the top of hacker news.