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“I created Amazon 26 years ago with a long-term mission to become a company based on customers on Earth “, Jeff Bezos he declared Last summer in front of the anti-domestic competition committee. “Not all businesses take the customer’s perspective first, but we do, and that’s our biggest strength.”
Bezos ’obsession with customer satisfaction is at the heart of Amazon’s self-mythology. All the moves that the company makes, in this regard, are designed with one goal in mind: to make the customer happy. If Amazon has become the king of economic trade, it’s not because of unfair practices or sharp elbows; it’s because customers love it so much.
The antitrust lawsuit what was filed against Amazon on Tuesday directly calls that narrative into question. The lawsuit, brought up by Washington DC’s attorney general Karl Racin, is based on Amazon’s use of a “favorite nation” clause in Amazon’s contracts with third-country retailers, which account for the bulk of Amazon’s sales volume. The most advantageous countries clause requires sellers not to offer their products on any other website at a lower price, even their own. According to the lawsuit, this harms consumers by artificially inflating prices across the internet, while at the same time preventing other e-commerce sites from competing against Amazon. “I filed a lawsuit against the monopoly to end Amazon’s ability to control prices in the online retail market,” Racin said in a press conference announcing the case.
For a long time, Amazon made it clear what DC was accusing it of; “price parity supplies” explicitly required third-party vendors to offer lower prices at other sites. He stopped in Europe in 2013 after competition from the UK and Germany began investigating him. In the U.S., however, supplies lasted longer, until Senator Richard Blumenthal wrote a letter to antitrust agencies in 2018 suggesting that Amazon was violating antitrust law. A few months later, in early 2019, Amazon dropped its price parity.
But it wasn’t the end of the story. The DC lawsuit alleges that Amazon replaced a new policy who uses a different language to achieve the same result as the old rule. Amazon’s “Marketplace Pricing Policy” may inform third-party vendors that they may be penalized or suspended for a variety of offenses, including “setting a price on a product or service that is much higher than the final price offered on Amazon or outside.” This rule can protect consumers when used to prevent it removal of prices for scarce products, such as pandemic initial masks. But it can also be used inflate the prices of items that sellers would like to offer cheaper. It’s a key phrase Outside of Amazon. In other words, Amazon reserves the right to cut resellers if they list products cheaper on another website under the old price parity provision. According to final report presented by the House Anti-Competition Commission last year, based on the testimonies of third-party vendors, the new policy “has the same effect of preventing sellers from offering consumers prices at other retail sites.”
The main form that this pricing discipline takes, according to sellers who have spoken out against Amazon in public or in anonymous testimonials, is to manipulate access to the Buy Box with the “Add to Cart” and “Buy Now” buttons at the top. Right to list Amazon products. When you go to buy something, there are often a lot of sellers trying to make a sale. Only the “Buy Box to Win” can be earned by clicking on one of these buttons. Since most customers don’t scroll down to see what other sellers are offering a product, winning a Buy Box is key for anyone trying to make a living selling on Amazon. James Thomson, a former Amazon employee and partner at Buy Box Experts, a brand consultant for Amazon resellers, he told me In 2019, “If you can’t win the Buy Box, for all intents and purposes, you won’t win the sale.”
Jason Boyce, who long ago became another Amazon sales consultant, explained to me how this works. He and his partners appeared pleased with the latest third-party vendor contract with Amazon to sell sports products on the site when it did not include a price parity supply. “We thought,‘ This is great! We can offer discounts at Walmart, Sears and anywhere else, ‘”he said. But then something strange happened. “We went to the list and the ‘Add to Cart’ button was gone, the ‘Buy Now’ button was gone. Instead, there was a gray box that said ‘See all shopping options. “Adding more clicks to Amazon is an eternity; they’re happy right away.” In addition, the cost of advertising for his company fell, and he realized that Amazon does not show ads for Buy Box products. “So what did we do? We went back and the prices went up everywhere else, and within 24 hours everything was back. Traffic has improved, clicks have improved and sales have returned. “
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