Amazon Appears to Have an Innovative Approach to Price Fixing

Photo: Getty

If the extent to which Amazon influences the market with oftentimes aggressive tactics wasn’t already clear, a report that it’s dictating the prices of its sellers on rival marketplaces certainly helps drive the point home.

Citing interviews with merchants of the e-commerce giant, as well as internal sent alerts to those individuals, Bloomberg reported Monday that Amazon is effectively penalizing its sellers if it finds that their products are being offered for a lower on rival websites. If it finds competitive pricing elsewhere, Amazon alerts a merchant with price comparisons between the two marketplaces and informs them that their product has essentially been demoted by Amazon’s system and will be more difficult to find or purchase on its site, according to the report.

Advertisement

Bloomberg said the practice began in 2017, but added that alerts have been more frequent as Amazon works to maintain its dominance in the e-commerce space.

The way that Amazon works to undermine sales for merchants of competitively priced products is to remove the “Buy Now” button that appears to the right of products on its platform, Bloomberg reported. While the product can still technically be purchased, it makes the product more difficult for shoppers and can hurt a seller’s bottom line. It also means that sellers are being forced to adjust their prices on rival marketplaces, which can be a blow to any attempts to offset the huge chunk of change that Amazon takes for itself just to list merchant products on its site.

Amazon works hard to keep prices low for both customers and sellers. We have very competitive fees for sellers and we make significant investments on their behalf to continually improve our store and empower their businesses,” a spokesperson told Gizmodo in a statement by email.In our store, we feature the offer that predicts the best shopping experience for the customer based on a number of factors including price and delivery speed. Sellers have full control of their own prices both on and off Amazon, and we help them maximize their sales in our store by providing them insights on how to be the featured offer.”

Of course, Amazon controlled just under half of the e-commerce market as of last year, and it only gets bigger every day—meaning online sellers have few places to go to find a customer. And with online markets hollowing out the brick and mortar space, online sellers don’t really have a choice to not be online. This kind of practice might keep prices down for consumers and users glued to Amazon dot com, but it does not create healthy competition or a sustainable marketplace for sellers.

Advertisement

Amazon is currently staring down multiple antitrust probes into its business practices. The European Commission announced last month that it was opening an investigation into whether Amazon engaged in “anticompetitive conduct,” and the Justice Department recently announced its own antitrust probe of tech giants that will include an investigation of Amazon.

The company is also being targeted by rival online marketplace eBay in a freshly filed lawsuit, which alleges that Amazon managers engaged in “conspiracy” to illegally solicit sellers on the platform to Amazon using tactics that violated eBay’s terms of service. It’s the second lawsuit against Amazon from eBay over the alleged practice of seller poaching, though the first is now in arbitration.

Advertisement

“Based on new details brought to us, it is clear that Amazon’s illegal scheme to target eBay sellers is more coordinated, systemic and pervasive than originally thought,” a spokesperson for eBay told Gizmodo in a statement by email last week. “There are laws to protect against anti-competitive and illegal tactics, and we have every intention of holding the company and specific ringleaders accountable.”

Updated with comment from Amazon.

Advertisement

Share This Story

About the author