Thursday, June 28, 2012

Competing Against the Big Boys


Pillow Pet causes kerfuffle

Just about everyone has sold something on EBay at one time or another. The same can’t be said of Amazon.com even though they have a lot of third party sellers. Small retailers sell a lot of merchandise through Amazon Marketplace each year and are successful. A funny thing about Amazon as compared to EBay, at least EBay doesn’t sell against you.



A recent Wall Street Journal article explains how Amazon is sometimes using its small retailers to test the waters on products. As an example, a small retailer was selling pillow type stuffed animals with sports team logos and doing quite a good business. At least they were until Amazon got into the business and began selling the exact same pillow sports team animals, at a much lower price. Amazon came into direct competition with the small retailer and promptly took away quite a bit of his business. Is this really fair?



Amazon.com has 85 million unique visitors each month, many more visitors than EBay, about 45% more. Amazon is an internet behemoth and many smaller retailers flock to Amazon to cash in on their vast internet viewership. In fact, some retailers boast about how Amazon has increased their sales and business. Amazon also has a fulfillment center that allows smaller businesses to store their stock within Amazon warehouses for shipment. Amazon holds the stock and ships it out for the retailer for a small percentage of the sale.



The real problem comes when Amazon begins selling the same product as one already featured by a third party seller. Amazon doesn’t just sell the same product; they frequently undercut the price and feature their own product over a third party seller. The product will be placed in the “buy box” and unless buyers delve a little deeper, they miss other third party sellers. The retail industry is really tough and while there are no rules that large corporations have to play fair, it’s just rotten to create a place for competition where small retailers can’t win. At least at EBay you only have to compete with other retailers.

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