Is Amazon Being a Scrooge to Smaller Companies?

December 24, 2020

Just have a look at that face.  Now, does that look like the face of a bully?  Well, the answer seems to be hell yeah.

According to the WSJ, Amazon continues to act like it’s the scruffy underdog in terms of its business tactics and desire to be the customer’s best friend as it wrestles market share away from rivals as well as partners.  Jeff Bezos instills in his executive team a survival ethos as if Amazon was still a startup. 

And it seems to work…well.  But the problem is that it’s kind of like the lion pretending to be afraid of the little mouse.  At some point, aggressive competition could be viewed as unfair business practices.

Here are some examples from the WSJ article of the bullying and aggressive tactics employed by Amazon:

Pirate Trading.   Ok let’s stop right here for a second.  With a name like that, you really shouldn’t cry wolf.  But we digress.  Dalen Thomas was selling camera tripods on Amazon back in 2011 when Amazon decided to: copy the design, slap an AmazonBasics label on it, undercut the price and for good measure suspend selling Pirate’s tripods on Amazon.  Boom, you’re toast.

Allbirds.  Next target, maker of the popular shoes that are your foot and the environment’s best friend since they use natural and recycled materials.  Last year, Amazon knocked them off with a shoe called Galen that looks just like Allbirds’ bestselling model.  But no environmentally friendly materials used and selling for less than half the price.

  • Allbirds CEO Joey Zwillinger’s response per the article: “You can’t help but look at a trillion-dollar company putting their muscle and their pockets and their machinations of their algorithms and reviewers and private-label machine all behind something that you’ve put your career against.”
  • Amazon spokesman corporate speak: “Offering products inspired by the trends to which customers are responding is a common practice across the retail industry.”

Wayfair.  Amazon wanted to bum rush furniture retailer Wayfair so they set up the “Wayfair Parity Team” whose mission was to analyze how Wayfair did business including which suppliers it used as well as its sales and delivery processes.  Amazon then duplicated 90% of its products and sold them on Amazon.  But the ploy didn’t work this time.  Wayfair managed to survive the onslaught, although their net loss widened for a time.  Wayfair posted its second quarterly profit in the most recent quarter.

Shopify.  This year’s mark is Shopify, hailing from our neighbor to the North, that helps small merchants create online shops. This time Amazon’s internal hit squad is called “Project Santos” with the now familiar mission of replicating Shopify’s business model.

And the list of companies goes on and on.

The Amazon ethos
“It is always day one,” Bezos is credited with saying often. Day two is “stasis, followed by irrelevance, followed by excruciating, painful decline, followed by death.” 

Fun fact:  Jeff Bezos’s original name for Amazon was Relentless.  In fact, still redirects to  Try it, it’s cool.

The Justice Department, the Federal Trade Commission and Europe’s antitrust regulators are all investigating such behavior of the Big Tech companies including Amazon, but they don’t move or behave anywhere near as quickly and efficiently as Amazon when it sights its prey.

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