Great example showing what's wrong with a parasitic business model

3 replies
A parasitic business model is where you make money off someone else's platform - such as eBay, Amazon, Udemy, Facebook, etc.

Apparently Amazon is changing its rules to penalize vendors who use media mail to send merchandise.

This means that many people will no longer be able to turn a profit selling books on Amazon.

From the article:

An East Coast seller, who asked that we not use his name for fear of retribution from Amazon, said he's been selling books on the site for 13 years, generating over $1 million in gross revenue, and this is the first time he's been forced to alter his delivery time. He expects his shipping costs to increase by 25 percent to 50 percent
Hopefully this guy realized all along that Amazon had a perfect right to change the rules on him at any time, making his business model unsustainable!

Marcia Yudkin
#amazon #business #business model #great #model #parasitic #showing #wrong
  • Profile picture of the author Frank Donovan
    I wouldn't describe it as a parasitic business model, given that the "host" company actively encouraged the engagement - at least in the early days. These partnerships may never have been equal, but clearly they could be (and have been) of benefit to both parties. That East Coast seller is unlikely to have generated over $1 million in revenue without Amazon's ready-made network and market trust.

    Nevertheless, with increasing reach, influence and market dominance, a business like Amazon is obviously going to squeeze extra points where it can. The lesson for smaller businesses who seek to take advantage of existing platforms is to spread the risk wherever possible - and accept that the power balance in the relationship could at any time become impossible to live with.
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  • Profile picture of the author Benjamin Ehinger
    All because we want our books and our products faster. Media mail is slow and sellers should have known this was going to happen sooner or later.
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  • Profile picture of the author Monetize
    Amazon wants to ensure that all orders are shipped and delivered timely. If the seller
    states that the book/CD will ship by priority mail customers won't mind paying extra.
    I know I wouldn't.
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