I try to not comment on things outside of my immediate area of knowledge or specialization.
But this one caught my eye and I thought it would be interesting to share with you guys.

So the news in a nutshell is Amazon applying discounts to products that third-party vendors are selling on its platform.

For example. Company "A" is selling its smartphone for $1000.
That is the price of the product on their online store and brick-and-mortar stores and other platforms like for example Amazon.

It is obvious $1000 is pretty steep. But company A does not want to devalue its brand and wants its customers feel special when they part with their hard-earned money.

Along comes Amazon and decides that it wants to compete with everybody for the lowest possible price for this particular phone.

So Amazon applies a 10% discount to the phone in our example.
Customer gets the product cheaper and Amazon pays the difference, so that the 3-rd party seller gets the full price for its product.

Everyone should be happy ... EXCEPT!

Many vendors do not want to provide discounts.
Or when they do they want to control when and how the discount happens.

What those vendors are saying is that this Amazon's tactic devalues their brand and draws customers away from their stores in favor of amazon.

Once people get used to the fact that "Phone A costs $900", they will not be willing to shell out $1000 ever again. That price will seem like unjustified increase in price and an attempt to gouge the customers.
Besides when people learn that "everything is cheaper at Amazon" nobody will go to the producer's own stores any more!

I think this story tells a lot about dangers of relying (or even using at all) selling platforms like Amazon.

Not only this applies to Amazon, but also things like Google Play, iTunes and many others.
Nothing is stopping them to one day decide to adjust your pricing policy.

I am glad I did not jump into Amazon's App store idea and I kind of questioned my involvement with iTunes and Google Play.

This is the reason (and the fact that I pay 30% of my revenue to said stores) I will try to keep the new FSWizard calculator a web app that can be used on any device without the need for any store.

I can handle the hosting and selling on my own.

Here is one of the news story on the subject.

Tags:amazon competition iTunes Play