1. Manufacturing does not happen in America anymore.
2. The proliferation of counterfeiters does not allow dropshippers to scale to a meaningful size. Everyone is game to Alibaba.
Within our industry of paper goods, our manufacturers have to get their parts and raw materials from overseas.
The larger FBA mom and pops will design and market their products here in the US using American workers and have them manufactured overseas completely or in-part.
The impact of Amazon’s monopoly power on American online product businesses is less jobs that pay well.
- Less accounting and bookkeeping jobs
- less marketing jobs
- less design jobs
- less seller fulfilled packing and logistics jobs
Nothing you mentioned harms consumers. To me it sounds like the situation is as follows:
- Amazon offers a marketplace to sellers, which happens to be the largest marketplace with the most potential buyers.
- Amazon charges a fee to list on their site.
- Amazon doesn't let buyers sell their products for lower on a site that isn't Amazon. (Makes sense; they want to be paid for attracting consumers.)
- Buyers are cost sensitive and buy the cheapest product.
The outcome seems to be the most favorable condition for consumers. The complaint here seems to be that Amazon is so efficient that people would prefer to buy from them.
Cept the part about Amazon not letting you sell your goods cheaper elsewhere. That keeps the price inflated and is anti-competitive since it squashes competition from other marketplaces, not because their platform is better, mind you, but because they have all the power.
Amazon only controls their market. You play by their rules if you sell with them, and that is totally valid. You can sell your product for any price you want so long as you don't use Amazon or don't undercut them if you choose to use them.
That is totally valid. Amazon provides the eyes; they don't want to provide a service for free. Think of all the people that go to best buy to feel a product and then buy it online. Amazon doesn't want that to happen to them.
That's the point. They are by far the largest player in the game, and can ( and do) use their size to squash competition. You don't have to use their marketplace but as a small business you don't have many options that can compete.
Hell, they're even extremely anti-competitive with their employees. Their NDAs are very restrictive and have threatened non-senior employees with them, even ones that they let go.
Yeah, but if you search and replaced the part where the $88 is to pay the manufacturer, and instead say it is to pay they employees and the cost of materials, it's not like that suddenly looks like a viable business.
Except it has been for decades. In traditional retail, the split is 60% store, 40% seller. So your same $200 product would be $80 to the seller, not $88. And manufacturers have been operating with that split for a long time.
You're talking about gross margin/mark up, and there really isn't a "traditional retail margin". It varies a lot by product, but, as an example, the typical mark up for grocery stores is 15%. I used to do retail sales for appliances, including BBQs. The markup could get as high as 50%, even more for high end BBQs that sell in the $800+ range, but was generally more like 30%... and discount outlets or online retailers, it was much more like the grocery store mark up. A $200 BBQ with a markup of 150% like you're describing is not a thing I ever saw.
Are talking about markup from cost of goods? The manufacturer costs usually take into account their overhead; assembly line, warehousing, transport, running the business, profit etc. Amazon is taking over some of those things for sellers, so yes they take a bigger percentage than a normal retail store.
Comparing to retail is not apples to apples. The overall margins on Amazon tend to be lower across the board. So, yes, there's a problem with comparing directly with retail in general. Amazon is taking on distributor costs, but they aren't really doing anything to reduce manufacturer costs. Manufacturers still need an assembly line, warehousing, shipping (to get it to Amazon), & running their business... maybe they're not getting any profit, but that's the problem we're talking about.
While amazon is covering their own warehouse & fulfillment shipping costs, that's really that different from costs normally borne by retailers who have warehouses and handle delivery to their retail outlets.
And saying just don't use FBA is no solution either. Shipping large heavy stuff is expensive, and I best Amazon has much better rates negotiated with the carriers.
Storage plus shipping through FBA isn’t cheap. The problem isn’t that FBA is expensive, the problem is that selling on Amazon but not via FBA is heavily punished with placement and appearance leading to poor conversion rates.
Yes this is the issue for consumers as well. The first 16 pages of every search are nearly identical low quality fba products. Need a search layer to find the small sellers!
Why? This doesn't make any sense. Why would a vertically integrated business that provides the most efficient outcome for the consumer need to be broken up?
The thing is, an importer adds real value to their clients by selecting the products, taking the risk of moving the goods, etc.
You are right that the current state of dropshipping is an abomination, and there's not much left to save of that job. But the reason for that is that more and more of the job and benefits from that business are being taken by Amazon, and the sellers are left with that doesn't really justify their position.
What they're left with - being a plausible scapegoat and discovering new products - is not their choice, it's the part that is not profitable to Amazon.
