Amazon Juggernaut Sets Its Sights On Its Next Victim: The Middleman

  • The growth of Amazon has the potential to disrupt “middlemen,” particularly in the industrial space.
  • Amazon Business now has 300,000 registered corporate buyers and recently surpassed $1 billion in sales.
  • Stocks like W.W. Grainger and Fastenal could come under pressure from Amazon, analysts say.

Before it was Amazon killing the retailers. Last week it was Amazon disrupting appliances. Now there’s a broader concern: Amazon has the potential to disrupt the middleman in general, particularly those that work in the $7 trillion business-to-business (B2B) space.

Here’s the issue: If you don’t make the object you are selling, or don’t have some sort of intellectual property, or solve a pain point for a customer, then you’re just a middleman, and you are increasingly more vulnerable. The concern is that these middlemen will start losing volume because sales in general are going to the internet and because it’s increasingly difficult to get pricing.

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FTC Probing Allegations Of Amazon’s Deceptive Discounting

As part of its review of Amazon’s agreement to buy Whole Foods, the Federal Trade Commission is looking into allegations that Amazon misleads customers about its pricing discounts, according to a source close to the probe.

The FTC is probing a complaint brought by the advocacy group Consumer Watchdog, which looked at some 1,000 products on Amazon’s website in June and found that Amazon put reference prices, or list prices, on about 46 percent of them.

An analysis found that in 61 percent of products with reference prices, Amazon’s reference prices were higher than it had sold the same product in the previous 90 days, Consumer Watchdog said in a letter to the FTC dated July 6.

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Should America’s Tech Giants Be Broken Up?

Apple, Amazon, Google, and Facebook may be contributing to the U.S. economy’s most persistent ailments.

As a former tour manager for Bob Dylan and The Band, Jonathan Taplin isn’t your typical academic. Lately, though, he’s been busy writing somber tomes about market shares, monopolies, and online platforms. His conclusion: Amazon.com, Facebook, and Google have become too big and too powerful and, if not stopped, may need to be broken up.

Crazy? Maybe not. Taplin, 70, author of Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy, knows digital media, having run the Annenberg Innovation Lab at the University of Southern California. Ten years before YouTube, he founded one of the first video-on-demand streaming services. He also knows media M&A as a former Merrill Lynch investment banker in the 1980s. He says Google is as close to a monopoly as the Bell telephone system was in 1956.

He has a point, judging by market-research figures. Alphabet Inc.’s Google gets about 77 percent of U.S. search advertising revenue. Google and Facebook Inc. together control about 56 percent of the mobile ad market. Amazon takes about 70 percent of all e-book sales and 30 percent of all U.S. e-commerce. Taplin pegs Facebook’s share of mobile social media traffic, including the company’s WhatsApp, Messenger, and Instagram units, at 75 percent.

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Why ‘Net Neutrality’ Is Nothing More Than Corporate Power Grab

Giving the federal government control of the Internet wouldn’t bring greater freedom—it would enable bureaucrats and lobbyists to run the show.

Recently, you may have heard the scary news that the Trump administration is trying to destroy the internet. Last week, tech companies like Twitter and Facebook had a “week of action” to promote “Network Neutrality,” an initiative of the Federal Communications Commission (FCC), which the new Trump-appointed commissioner Ajit Pai is threatening to roll back.

However, like many things these days, this supposed threat is fake news. The name “net neutrality” may sound appealing, commonsensical, or even modern—but the truth is that the FCC has been pushing this initiative for the past decade, despite several Constitutional challenges. When you strip down the internet jargon and flashy activist promotions, net neutrality is nothing more than a New Deal-era power grab. It’s outdated, unfair, and ultimately puts the government in charge of policing web content.

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“Retail Is The Titanic”: This Is The Biggest Threat From The Coming Amazon Monopoly

In the latest in-depth overview of the troubles facing the US retail sector, which also serves as a recap of several previous articles posted on Zero Hedge, the FT’s Robin Wigglesworth asks “Will the death of US retail be the next big short“, something covered here back in March in “Why Some Think This Is The Next “Big Short” and subsequently in “The Retail Bubble Has Now Burst”: A Record 8,640 Stores Are Closing In 2017.”

That said, there are several notable incremental data points, including dramatic soundbites by what appear to be new shorts in the space such as Stephen Kethcum of Sound Point…

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Amazon Weighs Sharing Alexa Conversations With Developers

Watch what you say to your Amazon Echo. Amazon may give developers transcripts of your conversations with your Amazon Alexa personal assistant so they can build smarter, more responsive software, according to a new report.

Alexa is the smart assistant software running on Amazon Echo and a few other devices, which can take pizza orders, summon a ride service, or check the weather via voice requests.

Such information sharing would be useful for developers who want to provide more valuable services to customers who want more accurate responses. But such data sharing may also creep out others who already worry about the privacy of their interactions with smart home devices and how that data is used by their technology providers.

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Is Amazon An Enemy Of Democracy?

It is always interesting to see what kind of reactions a big merger announcement brings out, and Amazon’s bid for Whole Foods is no exception. The prospect of better, faster and cheaper last mile delivery or pickup points for groceries will excite the long-time Amazon subscriber. These exact same points will trouble a competitor in the business. An analyst has the chance to emit opinions about how Amazon overpaid for a failing business. An investor is left only to read the market’s reaction and try to understand what it signals: Amazon’s stock prices rose; grocer stock prices took a plunge.

It didn’t take long for doomsday-saying trustbusters to rear their heads as well. As usual, they warn that Amazon’s dominant position in online retail is dangerous. With this advantage, Amazon can monopolize online grocery shopping or even offline retail. It is peculiar, but it appears that incumbent competing grocers have no similar advantage to meet consumer needs.

Last year, grocery market giant Walmart bought a promising e-commerce competitor of Amazon. No mention is made of this in the antitrust campaign against Amazon-Whole Foods. And never mind that although Amazon is big in e-commerce, this market is only a fraction of total retail. Or the fact that Whole Foods itself is not a market giant by any standard. The bottom line is that “Amazon is crushing competition” and “monopolizing commerce in the United States,” according to Barry Lynn, director of New America Foundation’s Open Markets program. He frames the issue as Jeff Bezos versus Americans and democracy. The Amazon scenario is strikingly reminiscent of Microsoft’s internet browser case.

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