Posts Tagged ‘Competition’


graphic by J.R. Swanson

FREE ENTERPRISE, n. A system in which a few are born owning billions, most are born owning nothing, and all compete to accumulate wealth and power. If those born with billions succeed, it is due to their personal merits. If those born owning nothing fail, it is due to their personal defects.

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— from The American Heretic’s Dictionary (revised & expanded), the 21st-century successor to Ambrose Bierce’s Devil’s Dictionary. (The link goes to 50 sample definitions and illustrations.)

American Heretic's Dictionary revised and expanded by Chaz Bufe, front cover


When Amazon started, the company’s founder and directors decided to use books as a loss leader, to sell them at prices where they were certain to lose money — a lot of it. Why would they do that? While no one except Jeff Bezos and his minions knows for sure, there are several likely reasons:

  • The ISBN (International Standard Book Number) system. That system gave Amazon immediate access to a numerical listing of almost every book in print (or out of print, since the ISBN was introduced in 1970) — perfect for database-organized online sales.
  • Selling books at or below cost was an easy way to build market share and visibility.
  • That money-losing strategy drove competitors out of business, especially independent bookstores and most of the chains — Borders, B. Dalton, Waldenbooks, etc., and it greatly weakened the only remaining large chain, Barnes & Noble. This drastically increased Amazon’s leverage with publishers. Jeff Bezos famously said that Amazon should “should approach these small publishers the way a cheetah would pursue a sickly gazelle.” And Amazon has done that.
  • Amazon, which was founded in 1994, had deep enough pockets to lose money — a great deal of it — in pursuit of its goal of complete dominance of bookselling and damn near everything else, and in fact did not turn a profit until 2001.

The results of this are well known. In addition to driving myriad independent booksellers — who simply couldn’t compete on price — out of business, Amazon also drove out most of the chains, which bore massive expense through their bricks-and-mortar stores, and so again couldn’t compete on price. The irony is that the chains had driven huge numbers of independents out of business by undercutting them on price, and they in turn were undercut by Amazon.

Amazon still sells books fairly cheaply — though it seems like their massive book discounts of decades past have largely disappeared except on the most popular titles — and, using their ill-gotten reputation as the lowest-price seller, have branched out into selling damn near everything.

Many people apparently still assume that Amazon will provide the lowest price on almost anything they buy. Guess what — they’re wrong.

I occasionally order goods online, mainly musical gear, computer gear, electronic components, and optics. When I do so, I always check prices, and I’ve almost always found lower prices than those on Amazon, usually on eBay. Here are a few examples of items (all brand new) I’ve purchased recently where I could find exact comparisons between Amazon and other sources:

  • NUX OD-3 guitar drive/preamp pedal — $35.99 on Amazon, $20.02 (with free shipping) on eBay.
  • 1/4″ female guitar jack (metal construction) X10 — $4.57 on Amazon, $1.89 (with free shipping) on eBay.
  • 10mm Plossl eyepiece (for telescopes) — $34.00 on Amazon, $6.26 (with free shipping) on eBay.
  • 250K audio taper potentiometer — $1.40 on Amazon, $1.32 (with free shipping) on eBay
  • Acer S200hql monitor — $127.95 on Amazon, $79.99 (with $8.50 shipping) on eBay

There are other online retailers who usually have better prices than Amazon for the things I often buy; a few that come to mind are SurplusShed for optics, Newegg and Fry’s for computer gear, and Musicians Friend and Sweetwater for musical gear. However, while their places normally beat those of Amazon, you can often find whatever you’re looking for on eBay for even less.

So, you think you’re getting the cheapest price by buying from Amazon? Think again.