Amazon is simply following the late 1990s migratory formula employed by Walmart.
Start by selling US-made, average quality goods to Walmart's target market: middle- to low-income families. Then migrate to lower cost, lesser quality products, which will attract additional customers while losing few existing ones. Then acquire the manufacturers of those lower cost products and sell those brands to the virtual exclusion of other brands. Then outsource the manufacture of those lower cost products to offshore companies and shut down the US companies. This strategy gutted much of small business America.
And that is precisely what Amazon has been doing.
Today, you might be able to find average to above-average quality products on Amazon's website, but they are co-mingled with cheap Amazon-branded junk and rarely listed as the "first in line" presented choice.
As CFO of a $300 million (revenue) consumer products company in the 1990s, I watched as Walmart executed that strategy on competitors who operated in my company's product category. Companies wanted to sell to Walmart to take advantage of Walmart's national distribution channel. Soon enough, however, Walmart began to exact pricing pressure on those companies - like a boa constrictor slowly strangling its prey. The companies - now hooked on Walmart's substantial sales volume - were powerless to resist Walmart's pressure. Game over.
I always warn my friends that doing business with Walmart is like becoming addicted to heroin...initially gratifying but ultimately deadly.
