Is Amazon’s move to prioritise its own product dangerous?
Reports have emerged confirming that Amazon is making moves to push its own products into the most coveted places on listing results.
The most lucrative place for products to appear on Amazon is the top left hand corner of the first page, which has long been a site of significant competition for Sellers.
For years brands have been able to secure those places by bidding with Amazon, with the successful ones having a sponsored tag above their description.
But recently a host of products have seen that place taken by private-label Amazon products, without bidding, under the heading “featured from our brands”. Among the examples have been mattresses, light bulbs, copy paper and children’s pyjamas.
That has, understandably, created a backlash from Sellers who have previously paid for those slots or whose listings have now been bumped down to the second page as a result of Amazon’s interventions.
Is Amazon now sacrificing short-term ad revenues to build up the sales of its own private brands?
“That’s certainly the way it appears,” Thompson and Holt managing partner Craig Gedey says.
“From one point of view you could say well this is Amazon’s platform, and of course they can use it to further their own product sales.
“But in many ways this flies against their whole ethos that it’s the customer that comes first. Why are Amazon’s brand necessarily the best option for consumers? They don’t have to be cheaper, better quality or have the best ratings, but they are leap-frogging products that could have spent years building up their status.
“What is Amazon’s justification for saying ‘Our product should be up there in front of everybody else’s?’
Are Amazon exploiting their customers?
“Legal experts are already being quoted as saying they think this is an exploitation of the surge in online buying during the worldwide coronavirus pandemic, with their share prices rising around 30 percent this year. Some have even claimed that it could be legally challenged under US law as ‘exclusionary conduct’.
“Whether that eventuates remains to be seen but on a purely competitive level this move looks a dangerous one for Amazon at best. They have described it as ‘merchandising placement’ rather than advertising, and claim that no real estate places are reserved for Amazon brands, that they could be placed anywhere.
“But analysts have highlighted the fact that several of these products would not justify a place on the first page of listings under Amazon’s own algorithm’s criteria, and have much lower sales than their paid-for competitors. That could confuse consumers into thinking they are more popular than they actually are.
“In addition to that, there have been claims that Amazon then increases the price of products once they do before successful. Again, is this in any way beneficial to the consumer?
“It is estimated Amazon currently has 45 private-label brands with a total of 243,000 products available, which in reality amounts to one percent of overall sales. But that number will no doubt grow if this latest move proves successful.
“Sellers have rightly come forward on several online platforms to claim that the cards are now being dealt entirely in Amazon’s favour, and it would be hard to argue if you were selling a product that comes up against one of their private-label brands.
“By giving itself the top placement, Amazon is effectively guaranteeing the success of its brands. Should this practise be expanded it is undoubtedly going to change the marketplace for thousands of Amazon Sellers, and not for the better.
“It’s not just the product that would have been listed first, it’s the one that was previously at the bottom of the first page. Getting knocked down one place onto the second page has huge implications for those Sellers.
“Amazon will also leave itself open to criticism that they are pushing products that they have large stocks of, although they have publicly insisted that won’t be a strategy. But it will lead to questions and doubts on several fronts, and that can’t be good for anybody.”
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