Amazon Prime Is an Economy-Distorting Lie – BIG by Matt Stoller

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Amazon Prime Is an Economy-Distorting Lie – BIG by Matt Stoller

A new antitrust case shows that Prime inflates prices across the board, using the false promise of ‘free shipping’ that is anything but free.

To understand why, we have to start with the idea of free shipping. Free shipping is the God of online retail, so powerful that France actually banned the practice to protect its retail outlets. Free shipping is also the backbone of Prime. Amazon founder Jeff Bezos knew that the number one pain point for online buyers is shipping – one third of shoppers abandon their carts when they see shipping charges. Bezos helped invent Prime for this reason, saying the point of Prime was to use free shipping “to draw a moat around our best customers.” The goal was to get people used to buying from Amazon, knowing they wouldn’t have to worry about shipping charges. Once Amazon had control of a large chunk of online retail customers, it could then begin dictating terms of sellers who needed to reach them.

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“Let’s say a product today is sold for $10 on Amazon with ‘free shipping’. If Amazon is forced to unbundle the FBA fee from the product price then it would cost $6 + $4 shipping. Prime makes no sense in this world unless Amazon again decided to subsidize Prime.” Amazon, as big as it is, doesn’t have $25-30 billion of cash flow to make that happen.

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1 Comment

  1. If you study the prices on Amazon, you can learn that shipping is built into some of the prices.

    Some items are cheaper than the store and some store items are cheaper than Amazon. It just depends.

    I found fake reviews on Amazon. Read the reviews of solar generators on Amazon because some of the ones who made reviews think its a gasoline product.

    I also studied kerosene heater reviews on Amazon. One reviewer said he felt so safe he left his kerosene heaters on when he left the house. The internet correctly suggests you have to inspect the wick every half hour and also worry if the wick caramelizes or the kerosene heater can explode! Then I was asking vendors on Amazon if their product was U.L. listed because its against the law to use a kerosene heater in my state that doesn’t have a laboratory certification. Are the products you buy on Amazon U.L. listed if they are electrical products?

    Disclaimer: I bought metal tire caps from Amazon and the seller says they won’t corrode. Imagine my surprise two years later when the metal tire caps oxidized on my aluminum tire stems and wouldn’t come off costing me $100 in fees from my garage to fix and the mechanic didn’t know if he could get the $300+ TPMS sensors out of the valve stems because of it! This is all because Amazon allows vendors not to describe their products fully and faithfully which is why customers have to ask hundreds of questions.

    Database Reveals Over 200K People Involved in Posting Fake Reviews on Amazon

    https://www.pcmag.com/news/database-reveals-over-200k-people-involved-in-posting-fake-reviews-on-amazon

    Amazon fake review scam discovered, affects nearly 200,000 users: Here’s how it worked

    Amazon review section has been affected with fake reviews and testimonials for products since quite some time. This often leads to more product visilbity in suggestions.

    https://tech.hindustantimes.com/tech/news/amazon-fake-review-scam-discovered-affects-nearly-200-000-users-here-s-how-it-worked-71620616179506.html

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