How can Amazon pricing be so competitive if the cut is so large for third-party vendors?

1. Because you don't know how much vendors actually pay for the products

2. Because some products might be sold at breakeven price to attract and retain customers

3. Because some products might be loss leaders to attract and retain customers

a) Amazon pricing in general isn't competitive. I regularly use geizhals.at, a price comparison website, and Amazon rarely is the cheapest option.

b) I don't know if parent poster was talking about FBA (fulfillment by amazon) sales or not. If they are, then Amazons cut includes shipping and storage costs, which for low value items are often more than the stuff costs itself.

> How can Amazon pricing be so competitive

It's not anymore; the reason they continue to be so popular is locked-in mindshare (just like you think of going to Google to search the web) and because of the fast shipping and easy return policy (esp through Prime).

"third-party vendors" on Amazon includes a galaxy of drop shippers that do little more than create product pages and let Amazon and the actual manufacturer sort out everything else between them, such as logistics, delivery, returns, etc.

It's a myth that Amazon's prices are competitive. One vendor I know sells his product through Shopify at a steep discount compared to Amazon and yet most of his revenue comes from Amazon. Amazon benefits from multiple things including their brand image as a competitively priced store, consumer trust, brand awareness, Amazon Prime members who get shipping "free", massive user data, etc.

Because these third-party vendors are, most of the time, selling third-party China manufactured stuff at 1/10 of the price they are selling it to you. The problem is that China can't communicate well enough. At least not for niche products.