Why Amazon Is Not A Marketplace

Amazon.com violates the most rudimentary rules of marketplaces and is merely a superstore. The antithesis of a free-market marketplace.

If you’ve read my previous blog on marketplace rules, you would agree. Amazon.com is a Super Store which, by expanding the relationship with other premium suppliers mimics the appearance of a marketplace. And because Jeff Bezos associates Amazon.com with a marketplace frequently, I stand to correct him:

Marketplace rules.
Rule #1: Failed. Amazon limits the supplier participation to its premium strategy.
Rule #2: Failed. Limited suppliers mean limited transactions are available
Rule #3: Failed. Amazon regulates the process of how a transaction takes place, conforming to Amazon pricing models
Rule #4: Failed. Once you order from a different supplier than Amazon, all bets are off with regards to transparency, shipping, returns, etc
Rule #5: Failed. There is no way for new buyers to see who bought what at what price and equally for sellers who sold what.
Rule #6: Failed. User opinions are irrelevant if they are not borne out of a transaction.
Rule #7: Perhaps not relevant here.
Rule #8: Failed. Amazon is “competing” in the “marketplace” with its suppliers

Amazon will have a much harder time to sustain growth and meet Wall Street expectations, as a lot of growth through premium suppliers will become non-organic (or sell through revenues). Amazon has plenty of opportunities to migrate to a real marketplace without losing its footing, but it better hurry.

In the meantime, Jeff, please call Amazon what it is: Jeff’s premium selection.

 

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