27 April Kathmandu, 2020
The Wall Street Journal reported that Amazon, an e-commerce platform, has been using its sellers’ data to launch its competitive product. The article informed that Amazon.com Inc. employees had used data of independent sellers on their platform. She was purposed to create competing products.
Amazon
Amazon is one of the leading e-commerce companies in the online market. The company currently accounts for about a third of all US Internet retail sales. While the company now produces its product, it was not the same case earlier.
Amazon was built up with all the hundreds and thousands of smaller vendors who signed up to sell their products on the platform. This accounts for more than half of the company’s retail sales. And the new practice opposed the company’s stated policies that it doesn’t use information collected from third-party sellers for launching their product.
Regarding the report on Amazon
The Journal reported the news after speaking with more than 20 former employees of the company’s private-label business. The Journal also reviewed internal company documents to confirm the reports. The records showed Amazon executives requesting and accessing data from the vendors of the platform.
How have they used data for their benefit?
The collected information was used to determine the pricing of the product. Also, to determine which feature to replicate or whether or not involved in the product category. By looking at the popularity of the product in the market, they estimated profits that can be made with the decision and launched their competitive product.
Example of data usage for launching competing product
Amazon employees conducted a thorough report on a popular car-trunk organizer on their platform. They estimated the amount that Amazon gets paid for marketing and shipping and also the amount made per sale of the organizer. Amazon employees accessed documents relating to that vendor’s total sales before launching a competing product in the same category.
What Amazon says about the report
Amazon had previously testified to Congress regarding their access to sales data from sellers. An Amazon representative denied the assertions made in the Journal report but informed that the company took the allegations very seriously. And has launched an internal investigation regarding the statement.
Source: Amazon
Amazon told me that, like other retailers, they look at sales and store data to provide customers with the best possible experience. They added that they are against using non-public, seller-specific data to determine which private labeled product to launch in the market.
Conclusion
Many big companies developed with the support of individuals or local businesses have been many times found using their supporters. They used them to get prepared and then leave them behind in the business sectors. The news of Amazon using their seller’s data is not new in the market sector. As mentioned, they have already been alleged to use sellers’ data to build up their product.
Amazon has been under the spotlight for its anti-competitive practices for some time. The Federal Trade Commission hasn’t yet opened a formal investigation into the company on the matter. Still, they have interviewed sellers on the platform about how much of their sales come from Amazon. This somewhat helps to monitor the actions of the big companies like Amazon.
