- Jeff Bezos, CEO of Amazon, joined the leaders of Apple, Facebook and Google on July 29 to testify before the congress about antitrust issues.
- For Bezos, the question of how Amazon competes with its third-party retail business was quite a problem.
- Bezos claimed that Amazon is driving small businesses like its third-party providers. However, some Amazon sellers disagree.
- Amazon did not respond to a request for comment on this story.
- You can find more stories on the Business Insider homepage.
When Jeff Bezos, CEO of Amazon, testified on July 29 with three other technology leaders on antitrust issues, many of those who made a living in the Amazon retail market got involved.
According to Bezos, Amazon has approximately 1.7 million third-party vendors, more than 200,000 of which generated more than $ 100,000 in revenue last year. They account for 60% of Amazon's product sales and together beat the retailer in their own game.
Some of these dealers, as well as those overseeing online seller communities or advising sellers, told Business Insider that they were not happy with how Bezos spoke about sellers during the hearing.
Bezos emphasized that Amazon's dominance in retail is due in part to these third-party providers. In his opening speeches, he also referred to everyday people who benefited from the Amazon market, such as Sherri Yukel, a mother, and Aristan, who now employs 80 people to do their business in Amazon.
He said these small business owners are successful because Amazon focuses on "helping sellers and giving them the best tools we can invent." This claim that Amazon is committed to supporting sellers has steered some retailers in the wrong direction.
The hostility between Amazon and some of its sellers goes back years
Paul Rafelson – a tax lawyer and chairman of the Online Merchants Guild, a trade association – said sellers in his online communities were dissatisfied when Bezos emphasized Amazon's support for small businesses in its market during the hearing. "People were sick in the stomach with his false sincerity," said Rafleson.
Hostility may seem unjustified at first glance. But for years, retailers have pushed back some of the challenges of selling on Amazon.
One of the most controversial points is the lack of communication when Amazon blocks a seller account and Amazon produces what other brands and manufacturers are already selling. Both can cost a business dearly.
Scott Needham, an Amazon dealer with annual sales of $ 50 million and Moderator of the podcast "The Smartest Amazon Seller"is a seller struggling with Amazon's account lockout system. His BuyBoxer company has been suspended twice in recent years; A May suspension cut its sales by about 90% in just one day.
In either case, Amazon only spoke to BuyBoxer a few days later about why it was suspended, what the company cost tens of thousands of dollars in sales.
"There are certain things that I think," How does a trillion dollar company not solve certain pieces of this puzzle? "Said Needham. "There are many legitimate companies on Amazon, just mom and pop companies, tens of thousands who rely on them. They don't invest enough to keep these sellers going."
"There are all these stories about how Amazon basically ruined the seller's life," Rafelson previously told Business Insider. "A strong exposure or misunderstanding can destroy a seller's business."
Legislators explained how Amazon competes with its own retailers
Some retailers pay ex-Amazon executives a lot of money for the secret sauce to move forward in the huge market – but sometimes Amazon itself knocks out the little people.
Sellers have been saying for years that Amazon sometimes duplicates items from their own catalog that perform well on the website. The retailer has access to third party sales data, and some say they do not use this data in good faith. Jeff Peterson told the Wall Street Journal in 2012For example, that his $ 30 soft toy pillows once sold gangbusters on Amazon – until Amazon started selling his own animal pillows for $ 12 each.
Washington State MP Pramila Jayapal, who represents parts of Seattle, Bezos was keen to ask how his employees use third-party sales data. "The problem we're dealing with is very simple," said Jayapal. "You have access to data that goes far beyond the sellers on your platforms that you compete with."
Bezos has not given a clear answer on how this data is used. "What I can tell you is that we are violating the use of seller-specific data to support our private label business," said the CEO. "But I cannot guarantee that the policy has never been violated."
Another way for sellers to compete against Amazon is through the retailer's search function. The goal of many sellers is to get to the first place or the first row when a consumer is looking for "iPhone case", for example. But as Dana Mattiloi from the Wall Street Journal reported last yearAmazon usually claims first place for its own product line.
"I find it very unsettling when you're looking for something, and there will be Amazon brands in the second row," said Needham. "I know sellers who would kill for this place."
He added, "The fact that they give themselves – I don't know how (Bezos) can be up there before the congress and say that everything is the same."
Some say there are even bigger fish to roast
While salespeople were happy that their long-standing issues were reaching the House Justice Subcommittee, they say it is unclear how lawmakers can do much more than make Bezos sweat.
Amazon sales advisor James Thomson, who was previously a senior manager at the mega-retailer, said the questions raised at the hearing could make Amazon an unfair competitor – but not necessarily one that has been unlawful.
Finally, the sellers agree to provide Amazon with their sales information. It may leave a bad taste in a person's mouth, but it's not illegal.
"This is a situation in which there are many people who dislike Amazon or who consider Amazon to be unfair, immoral or not nice," Thomson told Business Insider.
Thomson added, "Is it fair? I'll let someone else decide, but fairness has nothing to do with it. Do we have laws that know how to properly address such large companies? At this point I don't think laws have kept pace adequately. "
This point of view is confirmed by Jason Boyce, who has been selling at Amazon for almost 17 years and is now consulting third-party providers about how they can be successful on the platform. Boyce said Amazon needs to be dissolved, but current U.S. law does not offer a way to do it.
"I'm honestly both disgusted with the behavior of these big companies, and at the same time understand why they're doing the things they do to gain more market share and reduce competition," said Boyce, co-author of the upcoming book. The Amazon Jungle ". Business Insider said, "It's part of their DNA."