back to article The march of Amazon Business has resellers quaking in their booties

Pity the poor resellers, because Jeff Bezos and his Amazon Business business is coming for their business, and they'll play ball with him at their own peril, so an analyst claims. Currently, the division operates in 21 countries, eight of which are in Europe, including Germany, France, Poland and the UK, but is expected to …

  1. Anonymous Coward
    Anonymous Coward

    This is new news?

    Amazon has been a predator for years and its well known.

    Small mom and pop store uses Amazon, Amazon knows what they sell and if the product is hot. They know their suppliers and their customers who purchase thru Amazon.

    Amazon holds the relationship.

    Amazon can then decide if they want to also sell the product and because they already have the infrastructure and customer relationship, the can determine how much of their "partner's " biz.

    And Amazon can change their prices in real time. For example... if their "partner" has a low inventory, Amazon will know and if the product is hot... they can raise their price so that while they are not the cheapest, when their "partner" runs out... they will have product ready to ship. They would capture margins and the customer doesn't know or care. After all, its Amazon.

    If the partner sells direct... go thru them instead of Amazon.

    Anon for a good reason.

    1. Anonymous Coward
      Anonymous Coward

      Re: This is new news?

      Some people will say that if a company can't compete with Amazon they deserve to go out of business and that customers will benefit from lower prices. However, once Amazon has destroyed their competitors the prices will surely rise and by then they will be so powerful they will easily be able to crush any new upstarts that try to compete.

      1. EmilPer.

        "once Amazon has destroyed their competitors the prices will surely rise"

        "once Amazon has destroyed their competitors the prices will surely rise"

        ... is strange how a lot of companies and individuals sell through Amazon to a market a lot larger than they had access to when they ran a brick and mortar store. In the same time the local resellers have the same stocks, products get in stock or out of stock simultaneously, and sell at almost the same prices too, which makes me think they buy from a single distributor.

        Most of my Amazon purchases were from private shops and shipped on their own infrastructure, Amazon being only the point of access.

        Yes, pretty sure Amazon gets info about what is in demand and what is not and what people regard as a good product. The traditional networks could have done the same but they bothered more with exclusivity contracts and gouging on prices now, not in a hypothetical future.

        The scandal about Amazon taxes is about the taxes paid by the smaller shops, the governments in Europe would very much like to have Amazon deliver their "fair cut" directly regardless of what the small shop actually spends while supplying those products.

        1. Anonymous Coward
          Anonymous Coward

          Re: "once Amazon has destroyed their competitors the prices will surely rise"

          "... is strange how a lot of companies and individuals sell through Amazon to a market a lot larger than they had access to when they ran a brick and mortar store. "

          This is false... Many stores can have an internet presence without Amazon.

          What Amazon store front does is allow Amazon to offer more products with no risk to Amazon. They don't pay for the holding costs of inventory and they are using spare capacity of their distribution system.

          So you put your store on Amazon.

          Amazon gets your information. They know you, your customers, their purchases and purchasing habits. They can see what products that you sell are high sellers. They can then get the same product you get, cheaper since they are Amazon and have the ability to purchase more and cheaper if they are not already doing business with the vendor.

          In short, they are your competitor.

          To add insult to injury, you are paying them for the privilege.

          Lets say you sell furby widgets. Its a hot seller. Amazon can see what you sell and how many.

          They too decide that they want to sell furby widgets. Now they are your competitor. They can adjust their price to match yours, or even undercut you if they want. They also can modify the price if they desire based on their knowledge of demand, and knowledge of your inventory on hand. So while you're selling them for $1.00, Amazon can sell them for $1.05 or $1.15 capturing a 5% to 15% additional margin over you.

          Again, all to knowing all about you.

          You sure you want to defend Amazon?

          Now they are using Amazon Prime to incentive Whole Foods shoppers.

          1. LDS Silver badge

            "allow Amazon to offer more products with no risk to Amazon."

            Also it allows Amazon to offer those less mainstream products which would be non profitable to keep on inventory - even at Amazon scale - but still keeps people on Amazon, so they'll buy mainstream product from Amazon, and the less common one from other sellers.

            Just, most of those seller won't be usually able to survive just selling those uncommon products.

            I'm shutting down my late father's shop - and many customers are asking "where will we find now those special items we found only from you?" - just, while years ago they bought both special and common items, now they just bought the few special ones, buying everything else from Amazon & C.

            But keeping that inventory of special items readily available was expensive, and if not sustained also by the larger sales of the common ones, not really sustainable. My father did because he was already retired, and in his 80s, he was still happy to work. But the income, after the expenses, was very little - thus no way to keep it operative.

          2. Nate Amsden

            Re: "once Amazon has destroyed their competitors the prices will surely rise"

            I haven't intentionally bought anything from amazon since 3/2011. I say intentionally. It wasn't until 2013 that I managed to discover woot.com whom I bought some stuff from was owned by amazon(at the time that info was only obvious buried within one of their pages), so of course immediately stopped going there. I was surprised, or even shocked to see a couple of recent purchases this year from Newegg arrive in amazon packaging. If there was an indication that it went through amazon I wouldn't of bought it.

            I moved away from Seattle region in 2011 as well having seen ex-amazon folk spread to just about everywhere there and try to make it like amazon. Conversely when I first moved to the Seattle region(2000) it was a lot of ex MS-people going around, and at least the companies I worked at did not do things like MS was (biggest one being they were using Linux not windows).

            I never really was a Walmart customer but since I saw some documentary on them at least 15-17 years ago I made it a point never to shop there either.

            The amazon effect is felt even stronger in the IT realm with their cloud crap.

            very unsettling times.

    2. Flocke Kroes Silver badge

      Re: This is new news?

      Before Amazon, RS components had a reputation for seeking 'special relationships' with their suppliers. For example negotiate a low price, buy vast quantities to build a huge stock, wait for the supplier to invest in increased production then halt buying and sell from stock until supplier can be bought for a pittance.

      There is nothing new about this business model.

      1. Version 1.0 Silver badge

        Re: This is new news?

        "There is nothing new about this business model." - Walmart was doing this for years before Amazon started up.

        1. Anonymous Coward
          Anonymous Coward

          Re: This is new news?

          Indeed Walmart were doing that but... (there is always one isn't there...)

          Amazon have taken the old WalMart model to a totally different level AND Done it almost over all the planet.

          They are the 'Blitzkrieg' to WalMart's Waterloo.

          Anyone who partners with Amazon is only signing their own death warrant as a business

        2. Steven Guenther

          Re: This is new news?

          The new and extra EVIL part is allowing knockoffs to be sold by Chinese and others. You put your product into the store, and someone else puts in a cheaper version. The product fails, the customer sends you the RMA. WTF?? If you are on Amazon, you are hard pressed to deny the return. Amazon does not police the market place, it is not in their interest. They just ship and do not provide any protections other than strong arming the domestic vendors.

        3. Anonymous Coward
          Anonymous Coward

          @Version 1.0 Re: This is new news?

          You're going to have to explain how Walmart compares to Amazon's business model.

          It doesn't.

          Walmart does not host other companies and acts as their fulfillment center.

          So please fill us in with your wisdom.

          (And Yeah, posted Anon because I've peaked behind the curtain of both companies. )

          1. Warm Braw Silver badge

            Re: @Version 1.0 This is new news?

            I've peaked behind the curtain

            I hope you cleaned up after yourself.

      2. Yet Another Anonymous coward Silver badge

        Re: This is new news?

        CF Marks & Spencers in the UK.

        Suppliers had to have exclusive contracts with M&S, then when M&S came to renew the order......

  2. Thomas 6

    They brought it on themselves

    Unfortunately, the resellers have brought this on themselves. As someone who knows way too much about one of the largest wholesalers and their reseller subsideriaries in the UK, I know just how uniformly useless they are. There is never anything in stock, most of their orders are still done over the phone as they do not have web ordering and they have no idea (on a large scale) of who is ordering what.

    Also, the number of layers between pencil manufacturer and customer can be staggering, each of which takes their own cut meaning stupidly high prices for basic items.

    The only reason these companies are still going is because a lot of business need to purchase via invoice which Amazon did not used to do.

    1. Alan Brown Silver badge

      Re: They brought it on themselves

      "Also, the number of layers between pencil manufacturer and customer can be staggering, each of which takes their own cut meaning stupidly high prices for basic items."

      When there aren't many layers, the middlemen seem to decide to put in stupidly high markups which has much the same effect.

      I've seen US$9000 devices selling from the "exclusive UK agents" at £12000 (where the US maker is offering them FOB Tilsbury at $6000). And then said wholesalers throwing a screaming hissy fit upon being informed that we're buying from a German supplier with much more sensible pricing policies and a pan-european warranty.

  3. AMBxx Silver badge

    You're forgetting something

    At the moment, Amazon Business is just awful. I signed up to it as we already have Prime and you can link your personal account to a Business account.

    Payment by Invoice is a joke. You have to enter the invoice number as the payment reference. The invoice number is normally longer than the reference you're able to enter at the bank.

    Credits aren't automatically allocated. You have to email Amazon telling them which invoice needs to be credited.

    Any problems? Forget trying to call - straight though to India.

    For a small business, you're much better of using the established resellers.

  4. alain williams Silver badge

    Should there be a legal maximum size of company ?

    For companies in more than one market sector. Such that when it exceeds that size the new sectors must be sold off.

    I agree that a mega Amazon might be able to negotiate/sell-at a lower price than anyone else, but where is the benefit to society if you can only buy xxx from one source ? OK: this is more complicated than I suggest, but stopping companies from getting too big must be good.

    I would much rather live in a pond with many minnows than one inhabited by a few sharks.

    1. LDS Silver badge

      Re: Should there be a legal maximum size of company ?

      That's what antitrust regulations are for. When a company becomes so dominant it does set the rules, it can be investigated - just now politics and big companies are so dependent on each other that you really need someone out of the loop, and investigations start - and finish - often too late.

      1. Charles 9 Silver badge

        Re: Should there be a legal maximum size of company ?

        Trouble is, how can you get someone out of the loop to investigate when the government holds the sovereignty trump card?

  5. Duncan Macdonald Silver badge

    Amazon is like a very big supermarket

    And just like the supermarkets wrecked the high street shops, Amazon is now wrecking the supermarkets.

    In many cities there are only 2 ways for small shops to survive - one to sell a service rather than a product (eg hairdressers) or to provide goods in a more accessible manner than supermarkets (local shops with extended trading hours).

    Amazon (and eBay) are taking the expansion prospects away from supermarkets. Supermarkets will continue to exist for products such as food but the high price items that they hoped would bring bigger profits (electronics etc) will instead be bought on Amazon or eBay.

    1. GnuTzu Silver badge
      Big Brother

      Re: Amazon is like a very big supermarket -- Sears

      Also in the news today: Sears filed for bankruptcy. Sears made it's mark with its mail-order catalogs, which covered a very wide range of products. But, Amazon has had a wider array of products than Sears for years now. Yes, when I heard the news about Sears, this was my first thought.

      I also notice that most businesses feel obligated to have a Facebook page because the marketing potential is too great to ignore. Similar to that are brands that have their own web site but also sell through Amazon. I notice one commenter states that the imbalance will never go to the extreme, but I think it's quite clear that current market pressures and the lack of limits make it so that Amazon and Facebook have investor pressures that force them to seek the extreme imbalance--even though it will never be 100%. But, I think the imbalance will grow until most of the independents left will be those political idealists who refuse to cave to monopolization.

      1. Anonymous Coward
        Anonymous Coward

        Re: Amazon is like a very big supermarket -- Sears

        For someone who hates retail, I have spend far too much time in retail...

        That said, Sears was doomed a long time ago. Long before Amazon got out of just being a bookstore.

        You have to go back to Chicago and look at what killed Montgomery Ward

        It gets back to how they managed their retail operations and their branding.

        Sears had expanded in to a lot of diverse businesses and back in the 90's they divested from them, including profitable businesses in order to get back to their core roots.

        Some could even argue that their move from the Sears tower started their downfall, and they would be right.

        There's a lot to what caused Sears' demise.

        Posted Anon for the Obvious reasons.

        1. Uberior

          Re: Amazon is like a very big supermarket -- Sears

          I went into the Sears store at Florida Mall, Orlando last summer.

          The very first thing that I saw as I walked into the store was a "One Dollar Knicker Rail". The rest of the store was just a mess.

          They missed a trick really. Over in Boston there's a branch of Primark, it's as busy as a UK Primark. If, a few years back, Sears had converted a floor of each of their stores as a concession "Primark at Sears", those stores would be getting plenty of footfall. It would be a win-win, as Primark would have access to US stores at the locked-in long term rental rates of as little as $5 a square foot that Sears currently pay.

  6. R69

    MMC

    Isnt this what the monopolies and mergers commission is there for....

    1. Roj Blake Silver badge

      Re: MMC

      But why is there only one Monopolies and Mergers Commission?

  7. Rich 2

    Shut it down

    I'm all for fair competition etc etc, but when a complete disaster is about to unfold, maybe it's time to take pre-emptive action.

    Maybe Amazon (and the likes of Google etc) should be forcibly shut down, or at least severely curtailed. Otherwise, in a few years there will be only one or two retail outfits and that is clearly in nobody's interest apart from the particular retailers.

    It's draconian. It's anti-business. It's lots of things that are against free trade, "market forces", etc etc, but the alternative is to sleep walk into a disaster where we no longer have any high-street shops at all, and no choice at all.

    1. Version 1.0 Silver badge

      Re: Shut it down

      Let's start by simply MAKING them pay their fair share of taxes.

      Currently, the large you are, the lower your tax bill. It's the virtually zero taxes paid by mega companies, versus the standard taxes that are paid by the high-street bricks and mortar shops, that's killing the competition.

      1. LDS Silver badge

        "Let's start by simply MAKING them pay their fair share of taxes."

        Ssshhhh! Many people here prefer to pay less on Amazon and see many business and jobs go away, than having Amazon pay taxes as everybody else, and raise prices a little... just one day, the destroyed jobs can be theirs - as soon as someone like Amazon enters their market....

    2. Daedalus Silver badge

      Re: Shut it down

      I got news for you: before Amazon there were only a few retail outfits, but they traded under a lot of different names. Amazon aren't playing a new game. They're just outplaying all the old gamers.

      Retail has long been a nasty oligopoly with cozy supplier-vendor relations. Bribery, in the form of "rebates" and other jiggery-pokery, was common to ensure prominent product placement in the stores. Suppliers themselves, especially in the grocery area, were and still are large conglomerates owning many brands.

      The real problem is that Amazon are so good at what they do that all the potential competition may die out before getting a chance to adjust.

    3. Steve Davies 3 Silver badge
      Thumb Up

      Re: Shut it down

      Perfectly true and very well said. Have an upvote.

    4. dnicholas Bronze badge

      Re: Shut it down

      No need to shut it down, we just need strong governments with an actual backbone.

      How can it be that everyone's favourite ginger Ed Sheeran pays more tax in the UK than Amazon? That's bonkers and we have politicians to blame, yet again

      1. Charles 9 Silver badge

        Re: Shut it down

        It's simple. Transnationals like Amazon can play countries against each other. You see the same thing with big oil. Not even sovereign governments can get much play on them because they can threaten to move their operations to another country (small ones like Ireland that have low upkeep costs), taking away their tax bases and leaving governments with a dilemma: do you settle for 10% of something or risk 100% of nothing?

  8. Daedalus Silver badge

    In related news....

    Sears is filing for bankruptcy in the USA.

    Now on the one hand Sears was one of the few stores where you had a shot at finding what you needed, rather than what they wanted to sell you. Their vulnerability was the high cost of keeping all that stock, but also the incompetence of their online operation who offered nothing more than was in the store. They could have been a major competitor to Amazon, having the warehouse infrastructure from their catalogue operations, but old-line management just can't adapt to technology.

    Other retailers who concentrate on selling sizzle rather than steak deserve everything they get. And they've been getting it: Macy's etc.

    Funny thing about Sears: they upgraded all their POS terminals so the screen was closer to eye level, but their aging staff got cricks in their necks from tilting their heads back to see through their bifocals...

    1. holmegm Bronze badge

      Re: In related news....

      "Funny thing about Sears: they upgraded all their POS terminals so the screen was closer to eye level, but their aging staff got cricks in their necks from tilting their heads back to see through their bifocals..."

      As a wearer of progressive lenses, let me say (in more than one sense) "ouch" ...

      I suppose I could make the obligatory retort, suggesting that the POS screen be at phone level to attract a younger staff ... cricked necks indeed ;)

      1. Daedalus Silver badge

        Re: In related news....

        Possibly thanks to POS-neck disorder, a lot of Sears staff are indeed significantly younger than they used to be. On the other hand, the equally doomed K-Mart staff were visibly older than you'd expect, before the axe fell.

    2. earl grey Silver badge
      Facepalm

      Re: In related news....

      As Sears said: I could a been a contender...

      But they're not...and not because of "but old-line management just can't adapt to technology."

      More likely because the current Krusty is a money man and not a marketing person in any way.

      1. Steven Guenther

        Re: In related news....

        Sears was getting OUT of mail order when Amazon was starting up.

        If they had put the Wish Book on line and put some effort into it.....

  9. Anonymous Coward
    Anonymous Coward

    HP sales

    "Competing purely on a transactional basis will mean that Amazon Business wins, the HP boss said, but tech suppliers that have an "intimate relationship with their customers" will power through."

    My idea of intimate may be different to yours HP - bending the customer over and shafting them may seem intimate but it isn't universally appreciated...

  10. Mage Silver badge
    Devil

    A borg

    Why are they allowed to take these over?

    See also eBook publishing, Lack of Kindle reader on third party eReader/ePub on Amazon

    CreateSpace now useless. Branded Amazon. What bookstore will stock?

    KDP Select and Prime are evil

  11. Marketing Hack Silver badge
    Alien

    So I guess WALL-E was a documentary?

    If you notice that Amazon is changing it's name to Buy-n-Large, then it's time to get off this rock :)

    1. Charles 9 Silver badge

      Re: So I guess WALL-E was a documentary?

      I think Buy-N-Large was modeled more on Walmart than Amazon (note the hypermart references), but in the end it's just capitalism at work; sooner or later, you're going to have a winner with enough influence to set even governments aside (see the Gilded Age).

      1. Alan Brown Silver badge

        Re: So I guess WALL-E was a documentary?

        "sooner or later, you're going to have a winner with enough influence to set even governments aside "

        Even the Gettys eventually ended up being sidelined by anti-trust legislation.

        1. Charles 9 Silver badge

          Re: So I guess WALL-E was a documentary?

          But can you count on a repeat performance this time, or are the citizenry too dulled to care anymore?

  12. holmegm Bronze badge

    "Why are they allowed to take these over?"

    (Dons Sam Gamgee cloak) ... ahem ... "allowed"?

    1. Charles 9 Silver badge

      I would think for many it was a choice between sell out or cease to exist. Hard to play poker against an opponent with enough on the table to bury you several times over.

  13. a_yank_lurker Silver badge

    Adapt or die

    To many retailers and resellers do not want to adapt to changing markets and blame their failure on who have the current heavy is. A while back over here everyone blamed Wally World aka Walmart for the problems many retailers were having. Now they blame Amazon. But in both cases the fundamental problems were internal not external. Idiots in manager are always a disaster, changing public buying habits have to be addressed by changes in how you do business. What worked 30 or 40 years ago will often not work today. Combine this with a badly overbuilt retail sector over here it is not surprising that many companies are in trouble.

    The resellers have a fundamental problem which is much of what they sell have become semi-commodity products as the market matures. They will have to find a way to justify their prices to the customer or the customer will walk. Most have a strong sense of value versus price. If your price represents a good value for your product you have a good chance of making the sale. If your price is out of line to the underlying value eventually sales will dry up. This has nothing to do with Amazon or Wally World or next year's heavy; it is a basic fact of retail/reselling.

  14. Anne2

    Can only get worse

    After reading they plan to pay money to a Islamic group that supports terrorism it is perhaps time the governments made them pay the full share of tax. Might also be worth hitting the incoming from foreign shores they slip in under the customs radar from outside the EU.

    1. Charles 9 Silver badge

      Re: Can only get worse

      You can't do that with transnationals. They'll just threaten to pull up stakes, meaning no more taxes from them. If they still need to do business in the EU, they'll finagle some splinter company that isn't connected to the mother company to be a go-between with almost no turnover, meaning trying to squeeze blood out of a stone. The problem any country faces is that a transnational can simply relocate their operations outside their sovereign influence.

      1. Anonymous Coward
        Anonymous Coward

        Re: Can only get worse

        "If they still need to do business in the EU, they'll finagle some splinter company that isn't connected to the mother company to be a go-between with almost no turnover, meaning trying to squeeze blood out of a stone"

        EU Anti Tax Avoidance directive - the real reason London's moneychangers and their puppets want Brexit. Obviously it hasn't had any coverage in the usual channels, so you have to look it up at source or or via the moneychangers smokescreens

        e.g. at

        https://ec.europa.eu/taxation_customs/business/company-tax/anti-tax-avoidance-package/anti-tax-avoidance-directive_en

  15. Rol Silver badge

    Gold prospecting made easy.

    "So I supply my own pick and shovel and whatever gold I find you'll buy it off me at less than market value"

    "Yep"

    "And you own the site"

    "Yep"

    "And when I hit it big you turf me off and get your own goons in"

    "Yep"

    "I'd be an idiot to agree to that"

    "Yep"

    "But you own nearly all the prospecting sites, so I have little choice"

    "Yep"

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