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Sat Mar 10 2018 16:55:14

Amazon Leads in the Race to the Bottom

By: Bob

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AuctionBytes blogger Bob says Amazon's pressure on booksellers to lower their prices has an unintended consequence: sellers are exaggerating the condition of their books to try and squeeze enough profit out of selling on the site, leading to poor buying and selling experiences.

Revision of an old joke: "Six times I cut my Amazon prices and, still, I make no profit!"

By encouraging energetic micro-competition (meaning competition between numerous small-ish sellers), e-platforms mainly take one aspect into account - consumer prices. These platforms are constantly pushing those prices downward while most sellers witness ever rising costs (fees, supplies, shipping). 

With this squeeze it's becoming more and more difficult to maintain a business that supplies a decent income and Amazon is leading this push to the bottom. Take Amazon's book category as an example, as this is pretty much where Amazon's story began. 

Search for a book on Amazon. Most likely if it's a book you can think of - it's there (First Edition Gutenberg Bibles don't count). Notice that Amazon's default settings begin with the cheapest price which, not coincidentally, is typically the worst condition (Acceptable). In fact, if a buyer wants a "Very Good" condition book they might have to search through a few pages to find one. 

At the same time, Amazon's seller rating system is really, really bad (can I say: sucks?). While 90% might be a fantastic grade for a high school math test, it's a deplorable selling statistic. Most buyers don't seem to recognize this. But as above, if a buyer does want to purchase from a seller with a decent rating, a person they can trust with writing accurate descriptions, they might have to search through a few pages to find them.

Searching pages and pages of listings to find a quality-condition book being sold by a high-rated seller can be a tedious chore for buyers. And this is where the problem blossoms.

Now, when you list a book on Amazon and when you get to the place to set your price, Amazon not only points out your lowest priced competitor (regardless of condition or rating), but they implore you to match that price! Worse, later on they'll send you messages about how you should drop your price by 30% to match the price offered by someone with an 85% feedback score (true story) who probably stores their books in a musty, bug-ridden basement.

All this while the big guys try to drive smaller sellers out of business by taking full advantage of their lower fees and bulk shipping discounts while paying minimum-wage employees to robotically list their books - thereby undercutting already low prices. 

These issues lead to big problems for small sellers trying to pay bills.

Smaller sellers can't really compensate by lowering their costs. They can check out other venues for lower fees but there are only a few options - and each one has their own problems. They can't reduce their shipping costs (the post office, Fed Ex and UPS don't negotiate with the little guy). Many are already using unpadded Manilla envelopes to ship. They can't work more hours because they already suffer from sleep deprivation. And, really, how much cheaper can yard sale books be sold for? ("Sorry, a buck is just too high. I'll give you 87 cents for it"). 

So, what do sellers do? Well, many of them lie. They call their "Acceptable" or "Good" grade books "Very Good" (but with a low price) hoping their buyers won't note the difference. This is most obvious with the abundance of "Ex Library" books listed as "Very Good" or even "Like New" when, clearly, Amazon's own condition guideline insists that an ex-library book's best grade can only be "Good" (to be VERY good, a book must be unmarked and undamaged). How difficult would it be for Amazon to search their own listing for mis-graded Ex-library books?

Of course, this is one reason why finding an Amazon seller with a rating above the mid-90s is becoming increasingly difficult. Long term, this is simply bad for the entire business. It drives good, honest sellers (I'd even claim the best sellers) out of business, hands a near monopoly to the biggest and less reputable sellers and discourages buyers who are expecting a Very Good book while getting one with ink stamps, library-pockets and fingerprint stains. 

I can't understand why this way of doing business is preferable to focusing on quality products and excellent customer service - and the higher prices needed to encourage both. Higher prices mean higher commissions for the platform and less work for the seller (it takes about as much time to list a hundred-dollar book as it does to list a penny book). And while some people will place the blame for all this on greedy sellers or apathetic buyers (or Russia, or China), this is clearly the model that Amazon has built its business around.

About the Columnist
Bob has been buying and selling online for almost 20 years. Some experts claim that his limited budget was the major cause of the 2001 dot-com crash. He denies the charge.




Comments (14) | Permalink

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This user has validated their user name. by: eXtinctBay

Sat Mar 10 20:27:48 2018

Guess What, Bob (and everyone else)??

This is also a path eBay is taking.

I have had HORRIBLE customer service experiences with the items I have bought lately on eBay. The most common is ''sellers'' who do not respond to e-mails. Ever.

There is just no excuse for this behavior. If you sell online, communication is key. Also, if you have a smartphone, e-mail is always accessible.

The condition (or misgrading of condition) issues and poorly packaged, unprotected goods are two more problems. Dropshippers who do not have the item in hand themselves are at least partially to blame for this.

On Amazon, FBA sellers now basically rule the landscape. And since Prime members can get free shipping on Amazon-fulfilled merchandise, a seller who is not FBA is constantly pressured to offer the lowest price.

And as soon as you (think) your price is lowest, BAM! The auto-repricing software used by a high-volume seller ensures their price is lowest to gain the almighty Buy Box.

Newbie sellers think they can just offer a price at the fraction of what other sellers are asking on an Amazon item to gain sales. But it is usually not the case (except if their competitor is also an inexperienced seller).

Another phenomenon is what I call ''Lowjacking''. You list a low price on something, then the software takes over. When you go to war with someone (with a repricing program) and your price then becomes impossibly low, the other seller then raises his price to a more normal amount.

You look at your inventory list, and it is shown you have the lowest price. But if you do not have the time to go and research each item, you will not know what the second lowest price is. Yes, you may have someone buy your merchandise, but for much less than competitors.

Wonder if eBay has it planned for all sellers to be able to have access to these reprice tools once they go to a product-based format? On used items, just having the lowest cost is not important. Condition and optional accessories are factors in making a purchase decision.



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by: geoffreymason This user has validated their user name.

Sat Mar 10 20:43:10 2018

I will not buy books on Amazon. I phone Strand Books in NYC, place my order, and wait for the books to arrive. A very pleasant experience.

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by: Chicago48 This user has validated their user name.

Sun Mar 11 07:57:48 2018

Once AMZ started allow book sellers to sell books for 1c, it was over.  That race to the bottom began.  There should be a floor limit on what any item can list for; I suggest 99c.  Don't allow anyone to list anything for less than $1.  There are dollar stores that don't sell for less and they do very well.  What I don't understand is this:  Why would you encourage someone to sell for less when it cuts into YOUR profit.  You make more money as an etailer getting 10% of $10 vs. $1.

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This user has validated their user name. by: Rexford

Sun Mar 11 08:02:45 2018

I don't get caught up in these price wars.  I list items below retail, but at a price that I will still make a good profit.  If the item sells, fine.  If not, I will wait. Sometimes it takes a while to get the sale at price that I offer, but items most always sell, eventually.

This likely wouldn't work for items that marketplaces are already flooded with, but I avoid selling those items.

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This user has validated their user name. by: RKTOYS

Sun Mar 11 09:32:38 2018

Amazon was always an afterthought for me.  $1 plus 15% plus 50c of an already anemic flat shipping voucher (to lure you into FBA) made it very difficult.  Your merchandise has to have "fallen off a truck" to have a chance.  As it was, just one venue-sanctioned theft wiped out most of the profit I'd made there in the preceding couple of years.

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by: papergoy This user has validated their user name.

Sun Mar 11 12:46:49 2018

I disagree on one aspect- 85% on Amazon actually isn't a terrible rating (mine is 98% so don't think I'm making excuses).  So few people use the feedback system that all it takes is one negative experience (or neutral) to throw the numbers off in a hurry (and believe it or not, sometimes buyers can make mistakes- my favorite was many years ago I sold an ashtray on eBay that I noted "chipped on side" and had a picture.  I got a negative that the ashtray was chipped.  Um, yes, as noted in the picture and description... but of course the negative stood).  So I give a lot more leeway on Amazon than I do on eBay as far as a lower rating.

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This user has validated their user name. by: thehosst

Mon Mar 12 09:24:30 2018

Is it just me, of I see that some of the BIGGEST eBay sellers who "dropship" from Amazon, are actually secret Amazon accounts that dump merchandise that is overflowing the Amazon warehouses? I just tested and purchased a couple of Heavy, very cheap (less than 2 dollars) items, with free shipping, and came in from Amazon. Postage alone would be more than 4 dollars with any shipping service, let alone commission, item price and handling/listing cost. Between this practice and India sellers banning items, which they have no problem to list and sell, eBay is getting impossible as a marketplace.  

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by: epuise This user has validated their user name.

Mon Mar 12 10:28:27 2018

I like selling books... even on eBay... cheap shipping, low FVF because of that... no breakage.

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by: Noneya This user has validated their user name.

Mon Mar 12 11:19:11 2018

Amazon, like Ebay, does not spend the time to find the used goods (books), does not pay for storage, does not pay for research, does not pay for listing time, does not pay for packing materials, does not pay to purchase the item initially, yet they're dictating terms that make it nearly impossible for sellers of quality hand picked items to make enough of a profit to sell only quality goods because frankly the majority of used items on offer are simply mediocre. The market is glutted with garbage in an effort to maximize profit. I bought a signed first edition that was in pretty great shape except the seller failed to mention it had spent 10 years being slow roasted over 1000 burning cigars, somehow this was my fault for not asking if it stank so badly that it was unreadable, untouchable and basically should have been thrown into a burn pile. Racing to the bottom in price means quality suffers. Amazon is getting a reputation for bad quality goods in their race towards offering the cheapest things possible.  

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by: FH991586 This user has validated their user name.

Mon Mar 12 16:36:58 2018

I would never buy a book listed as Ex-Library, so if it's a trick to sell a very good copy for less, it's not a good one.

And nothing is done about the ridiculous high prices you see sometimes on items that are really not worth it, which are also always offered by the same sellers (Calibris, for example)..  There was always something fishy about the book market on Amazon''

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by: lectiodivinabooks This user has validated their user name.

Tue Mar 13 20:11:06 2018

The other lovely thing for small sellers who are not selling enough books ( for many of the reasons above) to justify the 39.99, only receive a 1.59 for shipping. for books. Do the math even one pound of media mail is $2.66. If you sell any inexpensive books, Amazon makes more than you do.   Lets say you sell a book for 5.99. Out of that comes 15% plus 1.00 and you pay 2.66 for shipping.  Your profit (not counting packaging and printing costs) is $3.03. amazon makes $4.30
I have been a seller for 18 years. When I first started I made 2000 a month and shipping credit more than covered shipping costs even for heavy books. I am currently selling my inventory .I no longer buy anything on Amazon and once I get rid of my books I will be shut of them (Until Bezos takes over the world) By the way research shows that  many many successful CEO's are sociopaths  in a clinical sense  - no conscience , no empathy, others are objecst to be used for the purposes and gains of NUMBER 1.

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by: Whatever This user has validated their user name.

Wed Mar 14 11:06:40 2018

I want to tell you a story about me selling books - I long ago gave up selling books online - no one can sustain a business selling books thru any other venue except your own independant site.  I took all my books to the antique mall - they suffered along.  Finally I put any book for sale for $2.  They still took up space. Finally removed them all and sent them to charity.  I was recently back in there and there is a new dealer who sells rock specimens and books.  Not rock books - just books.  Talking to the store owner she let me know that to her shock this new dealer was selling books - not $2 books but $50 books. $35 books $40 books ect.  She also told me that her business was on the upswing and told me her customers told her that they were sick of online buying and simply wanted to see what they are buying these days.  Found that all pretty interesting.

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by: G-and-A This user has validated their user name.

Wed Mar 14 12:15:21 2018

I also have given up buying used books on Amazon.  Have switched to Biblio.com, where you at least get reduced shipping for multiple-order purchases.  Also will never buy where the only description says "MAY be ex-lb, etc."  I don't mind scrolling through more than one page in order to find a book with an actual description of the actual book.  

Perminate Link for Amazon Leads in the Race to the Bottom   Amazon Leads in the Race to the Bottom

by: mcposty This user has validated their user name.

Fri Mar 16 11:46:30 2018

amazon are idiots...which is why they bleed shipping money and soon it will destroy them



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