The Rumour about Amazon

I was chatting with a successful serial entrepreneur a few weeks ago about business. The person enjoys setting up businesses and running them till they a) fail or b) succeed and get sold on. He advises a lot of people on what to do when their business flops.

He had been talking to an industry contact who’d had a successful retail business and was complaining about the behaviour of Amazon. The implication was: goods that he had sold through Amazon Pro (I understood that he was effectively the sole retailer and was making a good trade) were now being sold directly by Amazon at a somewhat lower price. His complaint was that he felt that he had done Amazon’s market research for them, they had access to all of the statistics on his sales, he’d taken the risk on holding stock which head been fulfilled directly by Amazon’s advertised fulfilment service. As a result of paying for an e-commerce service, he’d effectively been undermined by the service provider who’d taken the business from underneath him. His stock ranked lower than their own on the site and in Google’s natural search.

All of this is naturally urban (digital) myth and hearsay – but looking through the circumstances there seems to be no reason why it might not have happened. If it’s true, then it’s a disappointing use of an organisation’s strong marketing position against much smaller players in the Internet Retail game. And if it is true, the warning comes – if you want to use a large organisation’s power to support your venture, you’d better be sure  they aren’t going to steal your idea.

Dropbox is a business built on Amazon’s infrastructure. Is the same thing likely to happen to them now they have proved demand for cloud storage and the competition for that industry hots up?

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