The Amazon Reach: Too Good to be True?

Tell us you didn’t enter e-Commerce for the independence it offers. Most, if not all, online sellers appreciate the ability to skip bureaucracy and head right into making your own decisions. And that’s a legit reason, but increasingly the virtual marketplace is mirroring the brick-and-mortar reality of competing with the millions of others who pursued your same dream. The result is becoming a mixed bag with an increasingly weak sense of control.

,Amazon is accused of artificially high price-setting, which is no small problem – for them, and for vendors.
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Tempting as it seems, having products show up in a quick search on Amazon’s site appears as an unbelievable opportunity. With exposure as an ever-growing challenge, sales platforms such as Amazon have catered to online merchants and offered a venue with unprecedented visibility. Selling on Amazon seems like a dream come true, until the dark side of the Seattle-based behemoth emerges.

Now here’s that dark side. Amazon controls your pricing. Yes, that’s correct. If you want to change what you charge for your products, Amazon can punish you by reducing exposure through search functions. Worse, they can compel sellers to raise pricing on identical products if they also sell on competing sites such as Walmart.

An antitrust analyst has made a compelling case for federal review, and the Federal Trade Commission is paying attention. They have signaled an interest in investigation.

The State of Washington already obtained a legal victory that partially prohibits the non-competitive feature, but the platform is finding ways around that. It disposed of the “Sold by Amazon” program name, but in name only will not end other variations of the practice. Amazon paid a $2.25 million fine in January 2022, but in relative terms, that is a pittance.

California has also zeroed in on Amazon for its monopolistic policies, filing a federal antitrust suit in September 2022 challenging merchant agreements. The company has not publicly responded to California’s lawsuit, and it will be interesting to see if this one puts teeth into the Washington action.

The problem unfolds in a way that sellers have virtually no control. Obviously, it’s a boon to have access to the expansive reach of the largest e-commerce site in the world. But if the offset is to be locked into pricing policies or face relative invisibility, you have lost the benefits of using Amazon. The Catch-22 is a persistent issue facing both smaller and mid-sized retailers who are struggling to find market share.

Surely there is a way to find middle ground. Will high-profile platforms ease up on small sellers and institute a more fair way to accommodate them? Stay tuned. And look for independent marketing strategies in the meantime.