His Amazon website sells just about everything, but lately there have been a few rough patches on the road to total world domination. His attempt to squeeze Hachette for more discounts to increase his own profits has resulted in an unexpected backlash with calls to boycott amid a whiff of censorship. No one likes a basher of authors, and because authors are being hurt in Amazon's struggles with Hachette, Amazon has lost a little of its lustre.
So you're not buying from Amazon, are you? Well, not to worry. When you go elsewhere for your needs, the storekeeper just might be funneling your payment through Amazon. Jeff Bezos will get his cut no matter what you do.
|Taking on the market outside of Amazon's walls|
So Square charges the vendor 2.75% of the purchase price as a fee? Switch to Amazon and it's down to 1.75%...until the first of January 2016 when the cost goes up to 2.5%. Still less than Square, and a savvy merchant will see that fraction of a percent as real money going into a real pocket. That sort of pricing could eliminate Square, which would have to meet the decreased price or face defeat. Once the competition is crushed, Mr. Bezos can set the fee at just about any level he likes.When Amazon is the only game in town, you pay to play or you don't play at all, and with your clients dependent on convenience, you have to play.
Some might call it predatory pricing and note that it is illegal in the United States, but the wheels of federal justice move slowly and Square could be long gone before anyone in Washington DC notices.
Paypal is larger than Square, however, and Paypal also has a point-of-sale payment device. Their device is free of charge, and their fee is a fraction less than Square's, at 2.7%. Still higher than what Amazon will be offering, however, and again it will be a case of lowering the price to compete or face defeat. With bigger pockets, Paypal could match Amazon's discount for a much longer time than Square, and it would also have the money to fund advertising campaigns that just might feature people having nothing but problems with their Amazon point-of-sale transactions.
Are you all in to the Amazon boycott?
When you buy anything anywhere, you'll have to ask how the vendor is processing your payment. There may not be anywhere for you to make a purchase that doesn't put some money into Jeff Bezos' pocket.