Ecommerce via Amazon, smart strategy or tricky business?
How responsible is Ecommerce through Amazon? How do you know if Amazon isn't after one of your bestsellers and then competing with a clone? The answer is simple. You do not know. What we do know is that the mega platform doesn't care much for the Ecommerce retailers that make the sales machine big. When it comes to growth and profit, Amazon eats its 'own children' if necessary. This is apparent from the 'Amazon papers' that Reuters news agency recently published. Dire practices in India justify the question of whether Ecommerce through Amazon is not at least asking for a critical reconsideration.
The question is topical because since March 2020 Amazon has also been an important factor on the Dutch Ecommerce market. Although the predicted landslide did not materialize, the impact on the Dutch online retail landscape is undeniable. Trusted brands such as bol.com, Coolblue and Wehkamp will not be pushed out of the market, but for smaller webshops it is extremely tempting to do business with Ecommerce via Amazon. After all, you gain access to an amazing sales market and smart marketing, sales and payment features in one fell swoop. Amazon offers consumers optimal fulfillment – convenience, speed and range.
Okay, the landslide didn't stop. Nevertheless, Amazon reports that several thousand Dutch Ecommerce retailers have settled on the platform. Worldwide, there are more than 2.5 million third-party sellers active in the all-dominant marketplace. Together they account for about half of the turnover that went upside down several times during the corona crisis and reached a record of 386.1 billion US dollars at the end of 2020.
Ecommerce via Amazon – an accessible way to increase your sales market
Ecommerce through Amazon is taking advantage of immense reach and great technological ingenuity. It is an obvious way to increase your sales market. If you already have a webshop, but also if you start with nothing but a few products. However, if you sell products that barely distinguish themselves from the common denominator, it will be difficult to gain a competitive position. With unique products, the chance of success is greater.
But if you offer really special items, another danger lurks. As mentioned, external sellers, perhaps including your webshop, determine Amazon's dominant market position for more than 50%. And what about the other 50% of the success story? It comes from our own products, conceived and made in India. And that's where the shoe pinches. Because it is often better to fill in 'stolen' and 'counterfeit' for 'invented' and 'made', according to the Amazon papers published by the Reuters news agency.
Clone successful products and manipulate search results
Peak Design, designer and supplier of smart, functional bags, made a painful discovery last spring. The hip California company saw a decline in interest in one of its bestsellers. It was about the 'Everyday Sling' camera bag. It soon became clear why. Amazon, inspired by the sales success, had an almost identical bag made, put it on its own platform for a third the price, and manipulated the search results. The tech giant even stole the name of the product.
At Peak Design they probably understood that litigating against such a wealthy club was pointless. So they fought the plagiarism case with humor. The designers released a video comparing the original camera bag to the Amazon clone. Everything in a light tone. In response, Amazon quickly changed the name of "its" product, but the fake bag was not removed and continued to rank suspiciously for the search term "camera bag". The name change indicated an outright admission of guilt.
There is a smell to Amazon private labels
More small businesses saw clones of their products the platform to show up. They were powerless. In summary, the problem comes down to this. Amazon sees what are interesting bestsellers, imitates the products in India, puts them in the shop window under a 'private label', and competes with the online entrepreneur who invented the product and operates Ecommerce via Amazon. In short, Amazon is blatantly copying and abusing its power to favor its own products in the search results and recommendations.
While Amazon's plagiarism practice is obvious, it doesn't seem easy to fight. New solutions have to be found for such a relatively new phenomenon in competition law. The European Union conducted research and made the accusation that Amazon systematically misuses sales data to compete unfairly with its own dealers. CEO Jeff Bezos kept being stupid. According to Amazon's PR machine, there is a policy to prevent third-party data from being used for products. However, what kind of policy remained vague.
But now there are the 'Amazon papers'. Internal documents reveal how the Ecommerce giant has been cloning successful products and manipulating search results for years to boost its own manufacturing facilities in India. And the top of the company has always been aware of this. Reuters, the international news service, plowed through the documents. Thousands of emails, strategy notes and business plans result in a disconcerting picture. It stealing product concepts for personal gain, based on customer data, has long been an important revenue model for Amazon's private label team, based in India.
It remains a devilish dilemma, Ecommerce via Amazon
As is typical of social media, Jeff Bezos and his staff stubbornly deny the suspicions. The allegations are not new. They have been singing around since about 2016 and several hearings and legal proceedings have already taken place. Plagiarism, however, is a difficult subject with many shades of gray and Amazon always manages to get out of the way.
But the documents that Reuters got their hands on seem to unequivocally show that Amazon uses its data to copy products and give them a dominant position in search results. It is done systematically and purposefully. Will the well-documented revelations help put a stop to this practice? No idea. Amazon seems supreme. For the time being, the reputation of poor employment practices, tax avoidance and the desire to copy does not seem to deter consumers and Ecommerce entrepreneurs. The question remains open. Does Ecommerce via Amazon show smart online entrepreneurship or is it slowly becoming tricky business?
