Date: February 20, 2019
They Said It!
Amazon “Is Chewing Up The Small-Business World”
Amazon is stamping out competition with small businesses by creating an uneven, “winner-take-all” playing field that favors Amazon products.
“But increasingly, Amazon makes its own private-label products that compete with the offerings of independent merchants on its platform. A recent paper by economists Feng Zhu and Qihong Liu observed Amazon’s behavior over time, and found that it tends to introduce proprietary products in niches that smaller merchants did the work of discovering by finding out what consumers like. Amazon then piggybacks on their efforts.”
“Customers look for products using Amazon’s internal search function. Independent sellers can try to take sales from rivals by buying placements in the search results for a rival’s brand-name product — for example, when a customer searches for Purina dog food, she might see a promoted result for Kibbles ‘n Bits. But Amazon doesn’t allow other sellers to compete with its private-label products this way — if you search for an Amazon product, you’re going to see an Amazon product first and nothing else. But if you search for the other company’s product, you might see an Amazon product promoted at the top of the list. Amazon now is experimenting with a feature that automatically includes Amazon products in every search. And search isn’t the only advantage a platform has in the digital age; Amazon also collects potentially crucial sales and marketing data that it can choose not to share with third-party merchants.” (Bloomberg, “Amazon’s Winner-Take-All Approach to Small Business,” Noah Smith, 2.19.20)
To read the full article, click here.
ABOUT THE FREE & FAIR MARKETS INITIATIVE
The Free & Fair Markets Initiative (FFMI) is a non-profit coalition of businesses, consumer advocacy groups, workers and community activists committed to scrutinizing and highlighting emerging market trends that are stifling competition and innovation, influencing federal and local government spending, putting consumer data in harm’s way and limiting consumer choice. For a list of members, please visit https://freeandfairmarketsinitiative.org/about-us/members/. For more information on the Free & Fair Markets Initiative, please visit https://freeandfairmarketsinitiative.org.