Amazon says sellers are doing great on its marketplace, as regulators turn up the heat.
Amazon’s new data is proof that the company’s third-party marketplace has been a hit with sellers. The launch of this feature was met by lawmakers’ scrutiny over its private label business practices, but it seems like they should back off because there are many success stories on both sides.
When Amazon first launched, it was primarily an online bookseller. But over the years their third-party marketplace has grown into one of the company’s most profitable ventures with millions upon millions sold through this section and now accounting 60% on overall retail sales.
There are many concerns about Amazon’s treatment of third-party sellers and whether they unfairly favor their own products on the marketplace. Lawmakers, antitrust watchdogs , advocacy groups have expressed these growing worries in recent months
Some say it’s time for regulators to get involved because this might lead us down an unhealthy path where companies can dominate certain industries by violating competition laws; others feel like more research needs doing before jumping onto conclusions.
The report issued Tuesday by Amazon sought to characterize these 2 million small- and medium sized businesses as “selling partners,” many of which have benefited from the outsized growth in eCommerce during coronavirus pandemic.
The number of third-party sellers on Amazon has been growing steadily over the past year, and they’re taking home an average $200k+. That’s not including international numbers where users can make even more profit.
As Amazon continues its upward trajectory, it has become more important than ever for sellers to have a strong presence on the ecommerce platform. The report highlighted some key findings about third-party services and investments in marketplace platforms that will be crucial as we approach this year’s Annual Seller Conference next Wednesday.
Sellers on Amazon are raking in the cash as they use FBA, an service that packs and ships orders for them from its warehouses. Sellers who used this learned 20% to 25 percent more than others did before using it.
The European Union’s competition authority has been investigating Amazon’s logistics business for possible anti-competitive practices. They’re looking at whether the company pressures sellers into using its services in exchange for privileged access on marketplace, depriving customers and other businesses from accessing them easily via competitors’ platforms.
Whether Amazon uses third-party seller data to launch private label goods and boosts those products in search results has been a topic of recent debate.
The House Judiciary Committee has sent a letter to Amazon CEO Andy Jassy, concerning his company’s private-label business practices. The five members claim that executives including founder and Executive Chairman Jeff Bezos misled or lied about these techniques in front of Congress last year when answering questions on Netflix licenses among other things during hearings for ” Internet Tax Freedom Act”.
In addition they urge Mrahuels tone down remarks which could jeopardize future contracts with federal agencies if he doesn’t stop being so abrasive toward politicians.
Reuters and The Markup published reports this week that Amazon used internal seller data to copy popular products, rigging search results so they favor their own private label offerings. These findings follow earlier reporting from Wall Street Journal which found employees developed workarounds for accessing individual competitor’s profiles in order find out how certain competitors were able get ahead on market share by selling more of whatever it was users wanted at any given moment.”
The Amazon executive denied that the company misleadingly used single seller data to create its own products, saying they have internal policies which prohibit employees from doing so. In an interview with CNBC Mehta stated media reports detailing this practice are inaccurate.
“Every now and then you see speculation around short-term, profit-driven actions and Amazon would not do that,” Mehta said. “It just doesn’t make sense because we’re in this for the long haul with our selling partners.”
Third-party sellers and brands have complained that Amazon unfairly competes with them on its platform, allegations which the company disputes. Some say they’ve seen direct knockoffs of their products appearing asBasics or other internal labels without consent from either party involved in transaction – this was also not an issue before recent updates where all Marketplace business operations were sleeper cells sleeping away until morning except when one particular product caught fire because customers noticed there’s really nothing “basics” about beingeatures.
Mehta said the majority of third-party sellers are “thriving” on Amazon, but they’ve also faced challenges like account suspension and appeals process that can be lengthy or financially crippling.
“They have a lot of choices for where to sell their products,” Mehta said. “They can create their own websites, sell through other channels, sell offline and many sellers continue to choose Amazon.”
Amazon still has some work to do in the area of merchant relations. The company needs better customer service and more transparency when it comes down to how they handle disputes or process payments from sellers for goods sold on their marketplace site, but there are signs that these issues might be improving lately . “We have to continue working super hard every day to earn sellers’ trust,” he added.
About the Author:
Nick Uresin is the Founder and CEO of ArgoMetrix, a New York based software and consulting company established in 2013. Nick is an Entrepreneur, Electronics, Communications and Computer Science Engineer, who has a passion for problem solving with technology. Nick built an online retail company with annual revenues of over $10 million. He developed his vision to organize the knowledge and technology he developed to become a large Amazon Seller and provide it as a service to manufacturers and sellers of consumer products. Let's get social! Follow us and get ArgoMetrix's latest updates on Twitter, Facebook or LinkedIn.