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Amazon recently got a ton of bad press about its private label brands at the recent House Subcommittee hearing. It was blasted for using sellers’ data to cherry-pick products that it could then directly source (sometimes from the same manufacturers), using its size to brush smaller competitors aside. There were further complaints that it tilts the playing field to force sellers to use Amazon fulfillment, or to tweak the Buy Box in Amazon’s favor.

This is a mishmash of complaints, and the private label arguments are basically ridiculous. Continue reading “Antitrust and private labels at Amazon: wrong solution to the wrong problem”

Jeff Bezos made waves this week that investors should “take a seat” and that Amazon would be ploughing all its profits into the business to address COVID-19. Cue investors fainting, an immediate 5% stock price downturn. But Amazon’s approach is entirely to be expected: in what universe would Amazon NOT invest to meet a new opportunity?

In the first Bezos letter to shareholders in 1997, Bezos said: “We believe that a fundamental measure of our success will be the shareholder value we create over the long term… We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions… We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages.”

And Amazon executed. It effectively spent all of its profits between 2002 and 2018 on investments mostly on its unmatched logistics network, transforming it from this:

To this:

Continue reading “Amazon and the Long Term”