Peak Designs Calls Out Amazon for Copying Bag Design. It’s a Symptom of Amazon’s Monopoly.

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Peak Design makes nice bags. Like, really nice bags. These are camera and gear bags that have a lifetime warranty that most users never need to use anyway. They protect your gear and are incredibly durable. When you buy a Peak Design bag, you buy it for life, and you also buy their warranty. If anything does go wrong, Peak Design will make it right. That’s why you can justify the higher cost of their bags, they’re an investment. These bags will last.

On the other hand, this Amazon bag designed to look like a Peak Design bag will not last. It will not come with a warranty. It won’t have the same weatherproofing or protection. Amazon will, however, put it right next to Peak Design’s bags when you search for them by name, offering you something that’s a third of the cost of Peak Design’s bags, at a fraction of the quality. They’ll even make their own knockoff the first result.

Peak Design had enough. They’re not the only company Amazon has done this to. In fact, Amazon has a habit of driving every company who either competes with them or does business with them into the ground. Can’t work with them, can’t work against them. Amazon owns retail.

Peak Design’s Video

Peak Design’s video does a great job at calling out Amazon for a few things. First, their Basics products aren’t produced with sustainable materials or in factories where worker wages and conditions are controlled well. They’re made to be as cheap as possible. Then, they show how Amazon does this. They farm data, finding out what products are popular. They may use other information the seller gives them or they can find out through other means. If they realize they can produce it cheaper and turn a profit, Amazon uses the design without hesitation. Then they sell a cheaper item to customers who want to just pay as little as they can.

Shameless Rip-offs

Allbirds makes shoes that have become quite popular, especially among the tech company employee crowd, so-called “tech bros.” The shoes are made of wool, and are generally running sneakers that can be washed in a washing machine. Allbirds’ shoes are made from ecological materials. Amazon’s rip-offs, however, are not. These are made for the lowest price, and marketed as the “206 Collective” “Galen” shoe. Amazon’s shoes strip the quality, design efforts, and sustainable sourcing to make a much cheaper product, and they promote it on Amazon.

A board game manufacturer says their most popular games have to compete with clones that Amazon sells. These games won’t just copy the rules and design, but every other aspect as well, down to the color scheme. Amazon will feature the knockoffs, suggesting them in results, killing the company that made the design and startup investments on a new product.

Then there are the services Amazon offers. Even outside of Amazon Web Services (AWS), there are a number of services on Amazon. Most of these are for sellers. Amazon’s has a new feature to help sellers set up a digital storefront on Amazon. It’ll cut into the business of Shopify, a Canadian company that… sets up digital storefronts for brick-and-mortar small businesses. Except, unlike Shopify, Amazon’s stores will only live in Amazon, and will give the company greater access to seller data. As it turns out, that data can kill a company.

Monopoly Basics

According to research done by the Wall Street Journal and a U.S. Congressional committee, Amazon uses their position to collect information on their sellers, find areas where they can cut costs, and sells products, undercutting the original sellers.

Amazon’s efforts can go far beyond simply copying a product, like the Peak Design bag. Take Pirate Trading’s Ravelli tripods. Amazon’s data said these were top sellers. Amazon didn’t just copy the core design of the tripod, they copied the parts for the tripods from the manufacturer. By using the same manufacturers, but with large bulk orders as Amazon could take the financial risk a small company could not, Amazon was able to match or undercut Pirate Trading’s prices. But that wasn’t all. Amazon then had the audacity to claim Pirate Trading may be selling inauthentic goods, copying Amazon’s “design.” Pirate Trading repeatedly proved they were the manufacturers of the product, revealing their supply chain to Amazon in the process. In 2015, Amazon suspended Pirate Trading completely.

Dalen Thomas, the owner of Pirate Trading, decided trying to make products in Amazon’s world was too risky. He now invests in real estate.

Stealing Secrets

Amazon claims they don’t look into an individual manufacturer’s processes. Instead, they say they use “aggregate data.” However, in Wall Street Journal’s investigation, they found a trunk organizer made by Fortem. Fortem accounted for 99.95% of all sales in the car-trunk organizer category. Amazon claimed they were using “aggregate data” because 0.05% of their data came from other sellers. Amazon did not elaborate on what information, if any, they actually used from those other sales.

Wayfair has lower volume than Amazon, but their packaging methods and suppliers are a mystery. Amazon has tried to get Wayfair products on their site to get this information, but Wayfair continues to sell on their own site, competing with Amazon, a risky tactic. When Amazon can’t get all the details, they improvise. Amazon traveled to trade shows to try to figure out Wayfair’s secrets to furniture manufacturing and shipping.

Williams-Sonoma has a chair made by their West Elm brand. One of those items is a distinctive “Orb Velvet Dining Chair.” Amazon wasn’t able to copy the product entirely, but did make it seemingly out of cheaper parts from cheaper manufacturing partners to try to undercut West Elm. They sold a nearly identical chair under Amazon’s “Rivet” brand. West Elm filed a patent lawsuit for the chair, and won. But that doesn’t underwrite the sales lost to Amazon’s tactics, both of this chair, and future furniture sales. Amazon paid up, but they’ll still profit.

Shutting Companies Down

If Amazon needs more information on a company’s manufacturing process, they have a tool they can use. Companies “suspected” of selling “inauthentic” products may find Amazon has suspended them. Amazon will then claim they have to prove authenticity by submitting information on their suppliers and manufacturing. Amazon says they allow companies to omit pricing information, but sellers who say they attempted to do this to protect their products found Amazon responded by calling the documents “altered” and requesting full details.

“It’s literally like being held as a prisoner with Amazon. And because of that, there’s no place else companies like us can go to sell our products. Amazon uses that against us.”

– Billy Carmen, Seller of Patio Products on Amazon

Then, it’s a waiting game. Eventually, Amazon will release the Amazon Basics version of your product, pushing your company off the store. They may even claim your product is the imitation, as they did to Pirate Trading, banning your company. When most of your business is on Amazon because that’s where customers expect to find your items, this is a death sentence.

Oversized Muscle

“We have heard so many heartbreaking stories of small businesses who sunk significant time and resources into building a business and selling on Amazon, only to have Amazon poach their best-selling items and drive them out of business.”

– David Cicilline (D-RI), House Judiciary antitrust subcommittee chairperson

Amazon is simply too big to compete with. Think you have a great idea for improving e-commerce? Too bad. You won’t be able to find investors because no one’s stupid enough to throw away money on a venture that’s challenging Amazon. Take Quidsi. In the early 2010’s, Quidsi’s product-focused websites became Amazon’s greatest competitor. Amazon could barely sell diapers due to the extremely fast shipping times and prices of Quidsi’s diapers.com. Quidsi was able to accomplish overnight shipping at low prices and Amazon couldn’t replicate it.

First, Amazon tried to buy Quidsi, but they didn’t bite. Amazon was aggressive, but Quidsi didn’t want to sell, they wanted to compete with Amazon. But Quidsi’s business model still mostly revolved around diapers through diapers.com. They were expanding into other product categories, but never got the chance to flourish.

Amazon started selling their diapers at a loss. A package of Pampers on diapers.com would be $45. Amazon would sell it at a loss for as little as $30 with a subscription. Amazon was losing hundreds of millions of dollars a month. One estimate claimed that Amazon lost as much as $200 million in one month. They could have lost as much as $2.4 billion per year. But Quidsi couldn’t last up against Amazon for that long. The company went under.

Amazon violated antitrust laws by selling below cost. They used the fact that a huge company like Amazon could eat a billion in lost profits over a few months without ruining the company. Quidsi couldn’t survive against a company selling below cost. The startup tried to get more investment money, but once Amazon declared war, Quidsi couldn’t find any funds. They eventually sold to Amazon for just $545 million, less than Amazon would lose with their diaper scam over three months. After shutting diapers.com down, Amazon raised the prices of their diapers. They had no competition anymore, so parents had to pay up.

Antitrust laws are supposed to prevent this kind of behavior, but the U.S. government has largely caved to large companies and no longer enforces antitrust laws. Not only was Amazon allowed to sell under cost to destroy a competitor, they were also then allowed to buy them for far less than the company was worth, integrating the only real challenger Amazon ever had.

Can’t Compete or Collaborate

Amazon couldn’t get a peek into Quidsi’s methods because the company didn’t sell through Amazon. But small startups today need to sell their products on Amazon. As a result, Amazon can easily look into their shipping methods, manufacturers, supply chain, and distribution. Effectively, Amazon can look at how a smaller company operates, order larger volumes, cut deals for cheaper goods, and undercut these companies, often without even selling below their own costs. Not only can you not compete with Amazon, you can’t even work with the company without potentially losing everything.

Break. Up. Big. Tech.

There are two types of people who aren’t behind breaking up big tech. There’s those collecting campaign contributions and caving to lobbyists from large tech companies like Amazon, Facebook, Google, and Apple, and then there are those who simply don’t realize what a problem this has become. Because of these tech behemoths, it’s impossible for a startup to compete with them. We’ve allowed them to swallow up too many companies, break too many antitrust laws, and violate too many design patents. They’ve become invincible monopolies.

Even if you shop on Amazon, you’re likely buying Amazon brand goods under different brand names, like “Rivet” or “206 Collective.” One estimate claims that only 60% of the sales on Amazon actually are going to third parties. Amazon’s biggest seller is Amazon. What began as a marketplace for everything turned into Amazon taking over every market.

Others Too

Google owns so much in tech that it’s impossible to escape their technologies, even on an iPhone, which uses Google’s services for DNS look-ups and website security authentication. Trying to make an Android phone without Google’s input is a difficult task, and one that leaves your phone far less functional than even a basic smartphone.

 

As for Facebook, which also includes Instagram and Whatsapp, it’s easy to see how they’ve come for Snapchat, TikTok, and Periscope, often crushing companies that refused to sell. Now they’re attacking journalists as well. Facebook’s so large it’s able to influence elections. Facebook has radicalized users, and it’s too big to even stop.

Take it from a techie, it’s time to break up big tech. These companies have gotten so large that they can dismantle entire industries and even break apart a democracy. Countries can’t exist when corporations can break their laws and tear them apart.

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Sources:

• Ian Carlos Campbell, The Verge
• Matt Day, Bloomberg
• Grace Dean, Business Insider
• Jason Del Rey, Recode/Vox
• Timothy B. Lee, Ars Technica
• Dana Mattioli, The Wall Street Journal
• Annie Palmer, CNBC