One of the remedies proposed, tying product reviews to the manufacturer instead of the storefront is a very difficult thing to implement.
Manufacturers are in a fundamental conflict with Amazon precisely because they desire to fully control the retail channels and set their own promotions, online discounts etc. and capture most of the surplus themselves while still segmenting the market and, for example, selling at different prices through certain local distributors.
Amazon has the exact opposite incentives, they want distributors of the same brand to compete amongst themselves so they can offer the lowest global prices, and that it's Amazon and its users that capture most of the surplus.
This is the root of the forgery problem Amazon can't solve, manufacturers aren't willing to vouch for their products when sold in secondary channels they do not fully control. So this means they will not collaborate on the "global rating" scheme either.
> This is the root of the forgery problem Amazon can't solve
Has chosen not to solve. They could trivially improve the situation by ending the practice of commingled inventory so a seller could be held accountable for counterfeit or stolen items but that would cost more so they don’t.
How do they handle it when you get your inventory sent back? I.e. you send them 100 pieces of X and after three months you tell them to send them back to you. Do they just take 100 pieces of X out of their general inventory, or do they know which ones were yours? Because otherwise it seems like an obvious scam where you could send in trash and get real items back.
I don’t know but based on the number of people I know who’ve gotten clearly counterfeit or repackaged items from official storefronts on Amazon, I would assume they just take 100 units out of that bin.
I'm recently seeing some ads on TV, that make me avoid ads by any means. There simply weirdness and harmfulness to eyes mixed and served. I think this is being done to attract viewer attention, which became 99% of the goal, rather than being informative or signaling. Sometimes there is hardly any indication what the actual product is, and how it is relevant to whatever weirdness that took up most of the ad time. Things like putting a mouth on the forehead of people, fast flickering scenes, and I can't even dare to speak about other weirdness. Oh god, the ad designers are a desperate bunch for attention. I'm really fearful of touching TV remote. And if these ads really liked by people, then I'm fearful of the future of the world in the hands of these people.
The cited research that buyers use price as an indicator of quality was from 1985. Does that hold true these days?
My gut suspects not?
Perhaps in the early and mid 80s you could still buy quality products, but now is seems 99% of things are just mass-produced where ever it is cheapest. People are conditioned on Amazon to find the same product from a jumble-of-letter manufacturer who is selling the exact same thing at the lowest price. I do not trust that if I buy a "known brand" for a product that it is going to be any different from a similar same no-name thing that is 20-30% of the price (...and very possibly built in the same factory). If it's all low quality crap (which a lot of the time it is) then you may as well get the cheapest one
Sadly you need to rely on things like YouTube videos to actually get any kind of idea on if the item is trash or not, and even then there is the risk of paid-reviews so you need to take multiple sources into account, who they are, trust levels etc. it's sad. Either that or - and I know this is madness - go to a physical store and inspect the goods before you buy it.
I would argue that the article is correct that quality is often secondary to speed of delivery and cheapness though. Amazon has totally won there.
Anchoring still exists and is something people use, price for sure impacts how people view things, if you make 3 price points for your product, say... $20/mth, $200mth and $25000/mth, you can often push people into the middle package more easily, it's called the Goldilocks effect. Pricing and positioning well is a lot of work simply because people for sure still use price as a strange yardstick, and as someone who figures out how to price things and position them for a living, it can be very...frustrating.
A $374 vacuum ranks at #4 while a $1049 vacuum ranks at #8. That is a HUGE price gap for items that are supposed to be of similar quality. The reason for the gap is irrelevant to this discussion too, because we are talking about the relation between price and quality.
And people try to blame the consumer for both sides of the issue.
People shrug and say it is the consumer who demands cheaper products and that is why they are of such low quality (despite what you say, which is that price and quality are much less connected than what people selling you things want you to believe), but then when those same consumers initiate returns, people cry foul like the consumer is somehow maliciously buying shit quality products and returning them to spite honest companies who just want to do right by their customers.
Notice anything in that "Why returns are a big problem" section? A neat rhetorical trick which attempts to get inattentive readers to believe that the bulk of all returns are just people trying on clothes and returning the ones they don't like. Now, if it really were the bulk of all returns, they would have surely mentioned this, because it would buttress their point.
They did not, because they can not, because, I have a suspicion that the $890 billion worth of returns is primarily due to reverse/negative demand for shit products. I suspect those return numbers creeping up year over year are consumers getting annoyed with retailers for not curating products in a way that considers quality and longevity.
As the featured article mentions, Amazon does mark products as frequently returned, but I am not sure it really helps that much.
> Sadly you need to rely on things like YouTube videos to actually get any kind of idea on if the item is trash or not, and even then there is the risk of paid-reviews so you need to take multiple sources into account, who they are, trust levels etc. it's sad. Either that or - and I know this is madness - go to a physical store and inspect the goods before you buy it.
And even then, they miss important details, because most reviews only talk about the product in terms of the out-of-box experience. But how good is the product after two years? After four? Even the vacuum review I linked does not really comment on longevity.
> I would argue that the article is correct that quality is often secondary to speed of delivery and cheapness though. Amazon has totally won there.
I think it is starting to change where people are getting really tired of shit quality and that is going to continue to be reflected in the returns data. Returns do not make customers whole - they do not get a refund for the time they had to spend researching, procuring, and ultimately returning the product. I imagine companies are going to be in for a rude awakening when they have to reverse course and not only increase quality but also decrease the price because no one wants to spend hard-earned money on expensive junk during a recession.
If I buy a $100 projector vs a $1,000 one, or a $20 curling iron vs a $200 one, the order of magnitude difference does make for a better product, I find.
I don't think it's the price giving information there though. I can find many projectors being sold in the 1000 range that do not compare to the best in the 100 range.
Yes I agree that there are better products for more money, it's just that I have to filter by something else because I can't trust that the price corresponds to performance for any given listing.
Maybe. But what about the Audi vs. Volkswagen? A Ninja blender vs. a KitchenAid? A memory card from SanDisk vs. a no-name brand? A shirt from Fred Perry vs. H&M? And these were brands you probably know. What about the products in niches, where you don’t have experience, or products are sufficiently similar? Do you always know whether a product is more expensive because of the brand, or because it’s objectively better?
because car brands belong to very few auto makers, a lot of cars with different names use the same chassis across brands, the same engine, and probably the same electronics as well. so you end up with most of the difference being esthetics these days, at least for cars within roughly the same price range.
FYI Consumer Reports' "Best Buy" ratings used to reliably indicate very good quality and low price. The seem to have changed it to "Recommended" and enshittified it.
Regarding the Oatly ad at the top (Another ad for our oat drink providing no reason at all why you should try it), this ad does have a signal. It's a humblebrag. It's saying, our product is so well known, and the reasons for using it so obvious, that we don't need to say anything. It's cementing Oatly brand in the minds of anyone who already thinks that they should be switching to non-dairy milk for any reason (health, environment, etc).
I once read an article that said basically that some ads were targeted at people who had already bought the product, to prevent regret for paying a premium price. The example given was TV commercials for BMW cars but I can see that applying with the oat milk drink.
Tryhard cringe for us, but likely very funny and edgy to, say, 5-10 year olds. It wouldn’t surprise me if there wasn’t an attempt to center Oatly for coming generations as an investment.
Millennial advertising doesn’t adhere to 20th century advertising norms.
Gen-X is getting older and needs fiber and to lose weight, so they respond to “oats”.
Millennials and Gen-Z want healthy-looking drinks that are trendy and fun, because they’ll never be able to pay off their college loans and grew up during a time where politics were divided and assume we may all die from global warming and WW3 so they just want to be healthy and happy.
This ad is trying to say, “We’re not going to say this is healthy, or will make you feel free, or is a fast meal substitute. It’s just oat milk.”
I drink oatmilk because normal milk gives me diarrhea, and oatmilk is better for the environment than almond milk. Why does that make me a douchebag, in your eyes?
I wish someone did an analysis of their marketing. I really hope it was a huge flop because it’s just awful.
I despise their horrible advertising and marketing copy in general and I sometimes just have to tell myself, “it’s just oat milk no need to boycott it because some edgy marketing consultant forces you to read their nonsense”.
As a consumer, my reaction to all this is simply to stop looking and stop buying. Unless it's something urgent, I put it on a list and wait. Many times the need goes away. Better than dealing with all this crap.
Normally in e-commerce, it's based on email or phone number. In physical retail, they use all sorts of tactics, from loyalty cards to facial recognition (where legal, which it shouldn't be).
Not true. There is limited ad space which all advertisers compete for. No matter which model, CPC or CPA, the advertiser who pays most gets the ad placement.
Its similar to SEO. Nobody says "Oh my god, advertising via SEO is free, what a blessing!". It's still a competition. It's still a zero sum game.
He's not saying advertisers don't compete. He's saying it changes from advertising being a massive risk as well as a cost, to just a cost. So the auction is won by the company with the biggest instantaneous profit margin on a SKU, instead of the one with the biggest war chest that can afford to risk on that massive prime time slot. This change in incentive favours shitty products.
This has little to do with equilibrium analysis, it is just the market for lemons story but for the ad space. You need to investigate the buyers and what they believe about brand quality.
That explains the success of platforms like Temu: every search generates many identical products that are all dirt cheap, which makes my search much easier. I find myself buying a lot faster because there is not a lot of variety and relatively little trickery/ads
Are we talking about the same Temu that pops up a spinning roulette wheel telling you have 100% off and to install the app to get the offer? (Catch is... it isn't 100% off and it's BS)
One of the remedies proposed, tying product reviews to the manufacturer instead of the storefront is a very difficult thing to implement.
Manufacturers are in a fundamental conflict with Amazon precisely because they desire to fully control the retail channels and set their own promotions, online discounts etc. and capture most of the surplus themselves while still segmenting the market and, for example, selling at different prices through certain local distributors.
Amazon has the exact opposite incentives, they want distributors of the same brand to compete amongst themselves so they can offer the lowest global prices, and that it's Amazon and its users that capture most of the surplus.
This is the root of the forgery problem Amazon can't solve, manufacturers aren't willing to vouch for their products when sold in secondary channels they do not fully control. So this means they will not collaborate on the "global rating" scheme either.
> This is the root of the forgery problem Amazon can't solve
Has chosen not to solve. They could trivially improve the situation by ending the practice of commingled inventory so a seller could be held accountable for counterfeit or stolen items but that would cost more so they don’t.
How do they handle it when you get your inventory sent back? I.e. you send them 100 pieces of X and after three months you tell them to send them back to you. Do they just take 100 pieces of X out of their general inventory, or do they know which ones were yours? Because otherwise it seems like an obvious scam where you could send in trash and get real items back.
I don’t know but based on the number of people I know who’ve gotten clearly counterfeit or repackaged items from official storefronts on Amazon, I would assume they just take 100 units out of that bin.
I'm recently seeing some ads on TV, that make me avoid ads by any means. There simply weirdness and harmfulness to eyes mixed and served. I think this is being done to attract viewer attention, which became 99% of the goal, rather than being informative or signaling. Sometimes there is hardly any indication what the actual product is, and how it is relevant to whatever weirdness that took up most of the ad time. Things like putting a mouth on the forehead of people, fast flickering scenes, and I can't even dare to speak about other weirdness. Oh god, the ad designers are a desperate bunch for attention. I'm really fearful of touching TV remote. And if these ads really liked by people, then I'm fearful of the future of the world in the hands of these people.
The cited research that buyers use price as an indicator of quality was from 1985. Does that hold true these days?
My gut suspects not?
Perhaps in the early and mid 80s you could still buy quality products, but now is seems 99% of things are just mass-produced where ever it is cheapest. People are conditioned on Amazon to find the same product from a jumble-of-letter manufacturer who is selling the exact same thing at the lowest price. I do not trust that if I buy a "known brand" for a product that it is going to be any different from a similar same no-name thing that is 20-30% of the price (...and very possibly built in the same factory). If it's all low quality crap (which a lot of the time it is) then you may as well get the cheapest one
Sadly you need to rely on things like YouTube videos to actually get any kind of idea on if the item is trash or not, and even then there is the risk of paid-reviews so you need to take multiple sources into account, who they are, trust levels etc. it's sad. Either that or - and I know this is madness - go to a physical store and inspect the goods before you buy it.
I would argue that the article is correct that quality is often secondary to speed of delivery and cheapness though. Amazon has totally won there.
Anchoring still exists and is something people use, price for sure impacts how people view things, if you make 3 price points for your product, say... $20/mth, $200mth and $25000/mth, you can often push people into the middle package more easily, it's called the Goldilocks effect. Pricing and positioning well is a lot of work simply because people for sure still use price as a strange yardstick, and as someone who figures out how to price things and position them for a living, it can be very...frustrating.
> The cited research that buyers use price as an indicator of quality was from 1985. Does that hold true these days?
> My gut suspects not?
You are correct that price is no longer an indicator of quality.
Look at this stick vacuum review, for example: https://vacuumwars.com/vacuum-wars-best-cordless-vacuums/#1
A $374 vacuum ranks at #4 while a $1049 vacuum ranks at #8. That is a HUGE price gap for items that are supposed to be of similar quality. The reason for the gap is irrelevant to this discussion too, because we are talking about the relation between price and quality.
And people try to blame the consumer for both sides of the issue.
People shrug and say it is the consumer who demands cheaper products and that is why they are of such low quality (despite what you say, which is that price and quality are much less connected than what people selling you things want you to believe), but then when those same consumers initiate returns, people cry foul like the consumer is somehow maliciously buying shit quality products and returning them to spite honest companies who just want to do right by their customers.
Look at how this article is written: https://www.nbcnews.com/news/us-news/retail-returns-890-bill...
Notice anything in that "Why returns are a big problem" section? A neat rhetorical trick which attempts to get inattentive readers to believe that the bulk of all returns are just people trying on clothes and returning the ones they don't like. Now, if it really were the bulk of all returns, they would have surely mentioned this, because it would buttress their point.
They did not, because they can not, because, I have a suspicion that the $890 billion worth of returns is primarily due to reverse/negative demand for shit products. I suspect those return numbers creeping up year over year are consumers getting annoyed with retailers for not curating products in a way that considers quality and longevity.
As the featured article mentions, Amazon does mark products as frequently returned, but I am not sure it really helps that much.
> Sadly you need to rely on things like YouTube videos to actually get any kind of idea on if the item is trash or not, and even then there is the risk of paid-reviews so you need to take multiple sources into account, who they are, trust levels etc. it's sad. Either that or - and I know this is madness - go to a physical store and inspect the goods before you buy it.
And even then, they miss important details, because most reviews only talk about the product in terms of the out-of-box experience. But how good is the product after two years? After four? Even the vacuum review I linked does not really comment on longevity.
> I would argue that the article is correct that quality is often secondary to speed of delivery and cheapness though. Amazon has totally won there.
I think it is starting to change where people are getting really tired of shit quality and that is going to continue to be reflected in the returns data. Returns do not make customers whole - they do not get a refund for the time they had to spend researching, procuring, and ultimately returning the product. I imagine companies are going to be in for a rude awakening when they have to reverse course and not only increase quality but also decrease the price because no one wants to spend hard-earned money on expensive junk during a recession.
If I buy a $100 projector vs a $1,000 one, or a $20 curling iron vs a $200 one, the order of magnitude difference does make for a better product, I find.
I don't think it's the price giving information there though. I can find many projectors being sold in the 1000 range that do not compare to the best in the 100 range.
Yes I agree that there are better products for more money, it's just that I have to filter by something else because I can't trust that the price corresponds to performance for any given listing.
Maybe. But what about the Audi vs. Volkswagen? A Ninja blender vs. a KitchenAid? A memory card from SanDisk vs. a no-name brand? A shirt from Fred Perry vs. H&M? And these were brands you probably know. What about the products in niches, where you don’t have experience, or products are sufficiently similar? Do you always know whether a product is more expensive because of the brand, or because it’s objectively better?
because car brands belong to very few auto makers, a lot of cars with different names use the same chassis across brands, the same engine, and probably the same electronics as well. so you end up with most of the difference being esthetics these days, at least for cars within roughly the same price range.
FYI Consumer Reports' "Best Buy" ratings used to reliably indicate very good quality and low price. The seem to have changed it to "Recommended" and enshittified it.
Regarding the Oatly ad at the top (Another ad for our oat drink providing no reason at all why you should try it), this ad does have a signal. It's a humblebrag. It's saying, our product is so well known, and the reasons for using it so obvious, that we don't need to say anything. It's cementing Oatly brand in the minds of anyone who already thinks that they should be switching to non-dairy milk for any reason (health, environment, etc).
It's I think what we used to call "brand advertising".
Just like random "coca-cola" billboards at the side of a road or a sports stadium
I once read an article that said basically that some ads were targeted at people who had already bought the product, to prevent regret for paying a premium price. The example given was TV commercials for BMW cars but I can see that applying with the oat milk drink.
Also that it is the drink of nonconformists and creatives. Many of their other ads cross way over into tryhard cringe for how "random" they are.
Tryhard cringe for us, but likely very funny and edgy to, say, 5-10 year olds. It wouldn’t surprise me if there wasn’t an attempt to center Oatly for coming generations as an investment.
It's funny and edgy for adult segments as well, unfortunately. Advertising works.
The ad is basically saying "You consumers don't know how to use your brains and will buy our brand just because we showed a picture of it". Terrible.
Gen-X doesn’t want to be manipulated.
Millennial advertising doesn’t adhere to 20th century advertising norms.
Gen-X is getting older and needs fiber and to lose weight, so they respond to “oats”.
Millennials and Gen-Z want healthy-looking drinks that are trendy and fun, because they’ll never be able to pay off their college loans and grew up during a time where politics were divided and assume we may all die from global warming and WW3 so they just want to be healthy and happy.
This ad is trying to say, “We’re not going to say this is healthy, or will make you feel free, or is a fast meal substitute. It’s just oat milk.”
That pretty much appeals to all of them.
To me it looks like a parody of advertising in general which rarely provides reasons.
Nope. It builds on prior exposure to Oatly marketing in other channels, which they famously are good at.
The market for oat milk consumers mostly consists of people that had actively made a choice about drinking oat milk already.
Not really, it’s more of a brag about how oatly has fully solidified itself as _the_ choice for so many, basically like Nutella
Couldn't it be more simple? It's milk made by douchebags for douchebags.
I drink oatmilk because normal milk gives me diarrhea, and oatmilk is better for the environment than almond milk. Why does that make me a douchebag, in your eyes?
Also I try every other brand of oatmilk I can find and oatly tastes the best by far.
I wish someone did an analysis of their marketing. I really hope it was a huge flop because it’s just awful.
I despise their horrible advertising and marketing copy in general and I sometimes just have to tell myself, “it’s just oat milk no need to boycott it because some edgy marketing consultant forces you to read their nonsense”.
It's in your head. Someone did something right.
agree..
As a consumer, my reaction to all this is simply to stop looking and stop buying. Unless it's something urgent, I put it on a list and wait. Many times the need goes away. Better than dealing with all this crap.
Those formulas have to be comedy but it seems like it’s trying to be serious.
agree. they seem hasty but didn't notice anything obviously wrong but may be i missed something ...
appears the math was updated
Yes. Comedy is suboptimally optimal
Since the article doesn’t mention it, CPA stands for cost per action.
Cost Per Acquisition (of a new customer).
How do they know if the customer is new or not?
tracking via cookies (that expire after X days) or some kind of identifier in the CRM
Normally in e-commerce, it's based on email or phone number. In physical retail, they use all sorts of tactics, from loyalty cards to facial recognition (where legal, which it shouldn't be).
Its similar to SEO. Nobody says "Oh my god, advertising via SEO is free, what a blessing!". It's still a competition. It's still a zero sum game.
He's not saying advertisers don't compete. He's saying it changes from advertising being a massive risk as well as a cost, to just a cost. So the auction is won by the company with the biggest instantaneous profit margin on a SKU, instead of the one with the biggest war chest that can afford to risk on that massive prime time slot. This change in incentive favours shitty products.
This has little to do with equilibrium analysis, it is just the market for lemons story but for the ad space. You need to investigate the buyers and what they believe about brand quality.
How can consumers respond to get useful information and enable themselves to make better decisions when exchanging their resources for goods?
- use other information channels like review media (fashion sites)?
- trust secondary sites like brand retailers (IE. John Lewis in the UK?)
????
That explains the success of platforms like Temu: every search generates many identical products that are all dirt cheap, which makes my search much easier. I find myself buying a lot faster because there is not a lot of variety and relatively little trickery/ads
Are we talking about the same Temu that pops up a spinning roulette wheel telling you have 100% off and to install the app to get the offer? (Catch is... it isn't 100% off and it's BS)
Yup no idea, Temu is peak gamified shopping. The parent could just be fully on board with being conned though.
Oof