Search
Close this search box.
Schedule Consultation

Supply Chain Brain: Will Congress Curb Amazon’s Power Over Sellers?

What's In This Article

shaking hands

“It’s often said that if there’s one thing that can bring Republicans and Democrats together, it’s a common enemy,” says Jason Boyce, founder, and chief executive officer of Avenue7Media, a service supporting independent sellers on Amazon.com. “Right now, the common enemy is Big Tech.”

When it comes to Amazon, Google, Apple, and Facebook, “there’s no question that all … of these companies have gained enormous, outsized power that’s suppressing competition, especially on the Amazon platform,” Boyce argues.

He believes that Amazon’s dominance is, if anything, understated. As a public company, Amazon only reports to the U.S. Securities and Exchange Commission the revenues from its cut of third-party sales — say, $15 out of a $100 item. But the actual retail value of goods sold on the Amazon platform is far greater than that — in all, a reported $610 billion between June of 2020 and June of 2021. By contrast, retail giant Walmart posted sales during that period of around $566 billion.

The gap is even wider when comparing the two merchandisers’ e-commerce activities. In 2021, Amazon captured around 40.4% of the market for goods sold online in the U.S. (Boyce believes the actual number is as high as 55%.) Walmart was a distant second with just 7.1%.

“Amazon is bigger than the next 10 [online] retailers combined,” Boyce says. “It’s a no-brainer case that Amazon is a monopoly.”

Boyce believes Amazon’s behavior does indeed harm consumers. “Amazon is actually inflating prices on the entire internet of products,” he charges, citing a 2017 Yale Law Journal article by an antitrust lawyer (and now Federal Trade Commission chair) Lina M. Khan. “Companies may exploit their market power in a host of competition-distorting ways that do not directly lead to short-term price and output effects,” Khan wrote at the time.

With its cloud services, a marketplace for third-party sellers, and Fulfillment by Amazon offers, Amazon is less of a retailer and more a B2B company these days, Boyce argues. “With 8 million sellers worldwide, [including] 1.2 million in the U.S. with an active listing, that is a huge customer base,” he says, claiming that Amazon has progressively imposed higher fees on those customers that jeopardize their profitability.

Boyce further alleges that Amazon de-emphasizes listings for third-party sellers who offer their products on other platforms for less than on Amazon, a practice known as buy box suppression. And it frequently offers its own version of third-party products under a variety of house brands at a lower price, he charges. (That practice was, of course, pioneered by big-box retailers such as Walmart and Target.)

Read more

Share This Post

Follow Us

Don't Miss Important Amazon Updates & Tips

Name

Book a Discovery Call
& Get A Free Audit

Name(Required)
This field is for validation purposes and should be left unchanged.

Recent Articles & Podcasts

Search For Topic

100 Steps To Launch, Grow, and Protect Your Brand on Amazon.

Download The Amazon Seller Checklist

Enter your email address below to download your checklist now.  

Name(Required)
This field is for validation purposes and should be left unchanged.