Amazon vs The Tripod company & many more startups – How to fight Goliath?

Q : Who is the scariest competitor on earth for young startups?

A : The World’s largest retailer. Amazon – The Startup Crusher?

The story:

2010’s : Pirate Trading LLC was selling more than $3.5 million a year of its Ravelli-brand camera tripods, one of its bestselling product on Amazon at its peak – says owner Dalen Thomas. (0.001% of Amazon’s total sales).

2011 : Amazon began launching its own versions of six of Pirate Trading’s top-selling tripods under its AmazonBasics label.

Amazon priced its clone tripods below what the competitor even paid its manufacturer to make the tripods.

2015: Amazon suspended Pirate Trading camera tripod models that competed with the AmazonBasics versions repeatedly, Mr. Thomas said, alleging his tripods had authenticity issues.

Happened with a few other startups selling on the platform, like :
1.) Amazon crushing ‘June’s smart ovens’ with ‘Alexa connected smart ovens’ costing HALF of – June Ovens in which it was an investor as well!

2.) Allbirds Inc., maker of popular shoes using natural & recycled materials.

“You can’t help but look at a trillion-dollar company putting their muscle and their pockets and their machinations of their algorithms and reviewers and private-label machine all behind something that you’ve put your career against,” said Allbirds Co-CEO Joey Zwillinger. “You have this giant machine creating all these headwinds for us.”

3.) Wayfair furniture is another among startups that got crushed with reverse-engineered Amazon product launches of their offering versions. Quidsi, the parent of Diapers.com and Soap.com, became a target in 2010, which eventually got shut down by 2017 as a result of Amazon’s tactics.

Why unfair?.. dada why?

“This is Bizness. I did bizzness” – Amazon xD

Nah..
Amazon with a war chest of billions of over 2 decades can afford to sell at losses and at low prices to crush the competition. Smaller startup players cannot. A loss on tripods, ovens, shoes, furniture products can be compensated with bundling with Prime Subscriptions, music, AWS (which half of the internet runs on), Amazon Fresh, and many others.

These hype products might just be CAC for Amazon for its suite of offerings but, ‘entire life & career’s work for startup entrepreneurs’. For over 2 decades, Amazon has kept its profit margins under 10% despite of being valued at over a trillion dollars (the same margin is 40%-50% for fellow Trillion $ company Apple). Despite huge rising free cashflows and >300x growth in sales in the last 10 years to almost $400 Billion in 2020.

Where’s all the money going?

R&D, Marketing, Innovation, Growth, Expansion and ofcourse crushing competition left, right and centre, big or small, smash them all.

“It is always day one at Amazon, Day two is stasis, followed by irrelevance, followed by excruciating, painful decline, followed by death.” Mr. Bezos.

Adding to this, if Amazon turns their attention to compete with you, okay, you can start counting day one of your final remaining days before extinction.

Sources: Wall Street Journal, news reports, company financials.