If you are not allowed to set the price…make it yourself

For years, Amazon naysayers have warned that the e-commerce giant’s ambition would drive it to compete ever more directly with the merchants who sell goods on Amazon’s popular online marketplace. On Wednesday, the company is introducing its own line of diapers and baby wipes, which will only raise these fears.

Called Amazon Elements, the line of diapers and baby wipes will only be available to customers who belong to the Amazon Prime membership program, adding another item to the growing list of membership perks. By working directly with a manufacturer, Amazon will be able to price the brand aggressively, with a 40-count package of diapers starting at $7.99. That works out to about 19 cents a diaper, compared to competitor prices that mostly range from 24 cents to 34 cents.

I would think Amazon is an especially likely competitor in areas where brute force goes a long way, it is economies of scale rather than expertise which lower costs, and a direct marketing pipeline to the buyer is important.  Oddly — or perhaps not — books do not seem to fit those characteristics.  But do diapers?

There is more here, via Samir Varma.


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