Amazon has economy of scale, it can make deals for more units and therefore drive down the cost. It also has negotiating and brand power to coerce suppliers to give a better price much like Wal-mart. Amazon competing with its own retailers is a stupid idea and will cause many of them to pull away. Say you offer 1,000 products. Do you really want Amazon knowing which ones are popular?
Just like everything else is now the case with Amazon. You can't build your own business on someone else's platform.
Hell if they start stealing data from AWS from their competitors I would run like hell away from their services.
What you are going to do about it is run away from Amazon. That's what.
Sure, you can run away from Amazon. But then you lose the marketing, fulfillment, and shipping channels offered by Amazon that you cannot possibly achieve yourself. Many customers will only purchase from Amazon, not some janky online store where they need to enter their credit card number. So you lose those. And you could contract with custom fulfillment centers and achieve two day shipping, but you're not going to be able to offer the shipping for free (prime), and the fulfillment will cost you more than Amazon unless you're moving huge volume.
If you offer 1,000 products, as you say, then you're in the wrong business. Did you develop every one of those products? I highly doubt it. So you are just a store selling thousands of products from different manufacturers. In that sense, you are a competitor to Amazon. How can you possible beat them? You've already lost.
The article is not referring to selling thousands of products, it's referring to developing and selling one single, specialized product, and then getting it "stolen" by Amazon. In this case, you are not originally competing with Amazon, but rather using their platform to sell your product. Once they clone your product, then you are competing with Amazon. At that point, if you have not established defensibility, you deserve to be undercut by Amazon.
There are many ways to establish defensibility: patents (Amazon cannot clone your product without paying a license fee); branding (customers will only buy your product, not some cheap clone); custom development (Amazon cannot clone your product without hiring specialized experts). If you are selling some cheap run-of-the-mill product from China, and all you have for defensibility is branding, then you are going to lose to Amazon. But if you have invested years of experience and engineering talent into a custom product protected by strong patents, and branded it well enough that customers know the product is only good if it comes from you, then you will beat Amazon and you can sell to their customers without worrying about getting cloned.
Why should consumers pay a tax to keep SMBs alive? If Amazon can offer the same product for cheaper than anyone else, what right does a SMB have to charge consumers more for it?
hmmm, talking about "rights" might not be the way to look at this. talking about systemic effects might be a better way. consumers aren't just consumers after all, they're also usually employees. What are the effects, both positive and negative of having such a large company be able to dominate supply chains so much that they can often bring equivalent quality products to market for cheaper. It's a complicated question, not as easy as the moralizing on either side. Amazon and WalMart bad! Amazon and WalMart good!
SMBs need to add value on either ___location and convenience, or service. It's something that has been long studied by management experts (see Porter's Competitive Advantage):
Do you really think Amazon's proprietary data is that essential?
Even if this product were not sold on Amazon it would be easy to see that pursuing it would be profitable. It's high margin and obviously popular. It's hard to keep those facts secret for long. The fact that the project was originally sold through Amazon is really just a red herring. Companies have been entering competition with high-margin incumbents for centuries.
This is just capitalism at its finest: the world does not owe you a business model, and you cannot expect to capture excess profits on stable product lines for long. Either scale or innovate (preferably both).
Just like everything else is now the case with Amazon. You can't build your own business on someone else's platform.
Hell if they start stealing data from AWS from their competitors I would run like hell away from their services.
What you are going to do about it is run away from Amazon. That's what.