Amazon remains an attractive platform for sellers aiming to start their business. However, Amazon’s dual role as a retailer and marketplace often put a question mark on their business activities.
This February saw the Austrian Federal Competition Authority (BWB) launching an antitrust probe over Amazon’s alleged abuse of their dominance to discriminate against sellers. Complaints say that Amazon discriminates against other merchants in an attempt to boost their own products on the marketplace. Reported abuses include terminating merchants’ accounts, forcing them to disclose sale prices, sellers losing their product ranking as well as adding Amazon adding incorrect delivery details to seller accounts.
While the investigation is still in process and the verdict is not known, what are Amazon seller concerns with the marketplace?
Competition with Amazon
According to a new report The State of the Amazon Marketplace 2019, the leading concern for 44% of Amazon sellers is direct competition with the marketplace.
Sellers fear Amazon in both the competitive product and private label arenas. By frequently investing in both exclusive-to-Amazon and private label brands, buying brands wholesale, and competing to win the Buy Box over sellers, Amazon is maximising their presence across various product types.
This increased marketplace presence raises a concern with sellers, as direct competition with Amazon can result in loss of the Buy Box, significant sales declines, and forced liquidation, among other business impacts.
Other top concerns from respondents include negative seller feedback or customer reviews, “other sellers selling the same items that I’m selling,” and “Amazon taking away my seller privileges.”
‘Amazon doesn’t care about my business’
“Amazon doesn’t care about my business,” is how an Amazon merchant describes Amazon-sellers relationship. The survey respondent continues: “They charge me extensively and sometimes hidden fees, and I constantly have to adjust my listings to comply with new policies.”
The report says that Amazon sellers’ options split on this matter, with the majority taking Amazon’s side. Some 55% of the polled Amazon sellers disagree with the above statement, with 45% sellers say they think that Amazon does in fact care.
Amazon’s push of brands to 3P
In the first quarter of 2019, Amazon performed a string of actions that revealed their new focus on strategic, high-volume vendors that they want to maintain vendor-exclusive relationships with, and revealed others will be phased out to the third-party (3P) marketplace.
- Amazon stopped placing their usual bulk POs with some first-party
- In tandem, some brands reported that Amazon suspended their Direct Fulfillment accounts, receiving notification that no new orders will be sent until reinstatement.
- Amazon then resumed issuing POs to vendors — with no certainty for how long — but brands are now required to enrol in Amazon’s Brand Registry in order to have access to automatic PO
fulfilment from Amazon or they will be shifted to the 3P marketplace.
When sellers the survey asked how they feel about Amazon’s initiative to shift brands to the third-party 3P channel, over two-fifths (43%) claimed they are “indifferent” to the exercise. However, the rest are concerned that this will “increase competition” (17%). This follows by sellers saying that they’re hopeful that Amazon will add more analytics to Seller Central (15%), “afraid that Amazon will start closing down 3P resellers” (11%), with the same (11%) percentage are not concerned of competition because “most brands are inexperienced in 3P,” with 4% of 3P sellers “feel fearful that their store will be policied” more often.
These findings highlight Amazon sellers’ concerns regarding the marketplace’s activities. The onus is on Amazon to listen and learn to sellers’ feedback. Otherwise, in a case of further declining conditions on Amazon, they risk losing merchants to the competition. What are your concerns or frustrations with Amazon – can you relate to the findings – or do you find this insight simply defamatory for Amazon?