THE AMAZON ANALYTICS INSIDER October 2023
TL;DR
The FTC and 17 states filed an antitrust lawsuit against Amazon, alleging that the company has unlawfully exploited its monopoly power to harm consumers, sellers, and competitors by manipulating the Buy box, favoring its own products, flooding search results with irrelevant ads, and restricting fulfillment options.
Amazon responded to the lawsuit, stating that the FTC has a “fundamental misunderstanding of retail”.
Amazon reached out to sellers stating that they “ would remain focused on putting their customers and sellers first”; sellers made a complete mockery of this email.
Should Amazon be found guilty in the trial, potential outcomes could be more sales, and lower operation costs for sellers, but also higher customer prices and additional setup costs from new fulfillment programs.
Multiple sellers are dissatisfied with the performance of AI-generated review summaries as they tend to misrepresent products. Sellers are hoping that customers will just ignore them.
FTC ANTITRUST LAWSUIT: ALLEGATIONS, RESPONSES & OUTCOMES
On September 28 the Federal Trade Commission and 17 states filed an antitrust lawsuit against Amazon. They alleged that Amazon has illegally abused its monopoly power to harm consumers, sellers, and competitors.
Amazon has been accused of manipulating the Buy box; such that it forces sellers to offer the lowest price available for products. This has created an artificial price floor that affects their marketplace, as well as other large ecommerce platforms - including sellers own personal websites.
Amazon has also been accused of favoring its own products and programs in flooding search page results with irrelevant sponsored product ads and Amazon branded products, and making it extremely difficult to use fulfillment methods, other than FBA
Upon the announcement of the lawsuit, sellers received an email from Amazon services - which was supposed to reassure them that Amazon would remain focused on putting their customers and sellers first. Sellers made a complete mockery of this email in the forums, and were extremely happy to hear of the lawsuit.
Amazon also shared their response to the lawsuit, stating that the FTC has a “fundamental misunderstanding of retail”.
“The FTC’s complaint alleges that our pricing practices, our Fulfillment by Amazon offering, and Amazon Prime are anticompetitive. In so doing, the lawsuit reveals the Commission’s fundamental misunderstanding of retail. The FTC has it backwards and if they were successful in this lawsuit, the result would be anticompetitive and anti-consumer because we’d have to stop many of the things we do to offer and highlight low prices—a perverse result that would be directly opposed to the goals of antitrust law.”
The main allegation of this case is that the Amazon Buy box has created an artificial price floor, that affects multiple other selling platforms.
Should Amazon be found guilty, sellers will most likely gain the ability to set their own prices across different platforms -- however this could lead to higher customer prices, and lower sales.
The second main Allegation is that Amazon floods search page results with irrelevant sponsored product ads and with Amazon branded products, rather than items that are naturally the best fit. Should Amazon be found guilty here, algorithm changes will most likely take place - resulting in more organic traffic to seller listings, and hopefully more sales.
Lastly, Amazon has been accused of being monopolistic in the way that it approaches order fulfillment. Amazon's requirement that sellers use FBA to qualify for Prime shipping eliminates potential competition for other fulfillment services such as FBM, and it forces sellers to pay excessively high storage and fulfillment fees. Should Amazon be found guilty of this, Sellers could have lowered operation costs due to the leveled playing field for other fulfillment services -- however sellers could also accrue additional setup costs to make this transition
INACCURATE AI-GENERATED REVIEW SUMMARIES
Source: 1
A few months ago Amazon Debuted their new AI-generated review summaries, which highlighted pros and cons of different products.
Unfortunately sellers seem to be very unhappy with this feature, due to inaccuracies in the way the AI screens and interprets different reviews. Multiple sellers have stated that the summaries have misrepresented their product and are hoping that customers will just ignore them.
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