The push for lower prices could be bad for shoppers
By Katherine Anne Long
The Seattle Times
As antitrust scrutiny of Amazon mounts, the retail behemoth has been pressuring some of its top sellers to drop prices to ensure shoppers cannot find a lower price anywhere else — online or in a brick-and-mortar store.
Since early this year, Amazon has been telling some of the largest third-party sellers on its Marketplace platform they can’t list new products until they match prices offered by Amazon’s retail competitors, like Walmart, Target and Costco, according to copies of emails between seven sellers and Amazon seen by The Seattle Times.
Amazon’s threats may add fuel to arguments that the company’s control over its Marketplace platform violates federal antitrust laws. The tactic could also raise prices for consumers, according to interviews with employees and executives of some of the largest sellers on Amazon’s platform.
The CEO of one seller whose ability to create new listings was suspended earlier this year said he believes Amazon’s pricing policy is anticompetitive, but, fearing retaliation, has not communicated those concerns to Amazon.
“Amazon sellers are more scared of Amazon than the U.S. government,” he said.
In email messages to sellers, Amazon has said that “to protect the customer experience” the seller is “prevented from listing new products.”
The emails go on to say the seller “has failed to consistently maintain our standards for customer experience across ... well-known national brands” by not ensuring its prices were “competitive compared to what could be found in other retailers” 95% of the time.
“Uncompetitive prices mean that customers considering your products could have easily found your products cheaper at another major retailer, and may have chosen to shop elsewhere,” the Amazon representatives went on in form emails sent to sellers. “This creates a negative experience for our customers.”
Amazon believes its policy “helps to produce lower prices for customers overall,” spokesperson Patrick Graham said in a statement.
When calculating competitive pricing, Amazon examines prices for products on other online retailers as well as in physical stores, he said.
The major sellers targeted by the Amazon policy represent 1% of the brands sold on Amazon, Graham said, “but are important to our customers because they are so widely available in other retailers, such as Walmart, Target, and Costco.”
“Sellers have full control over the prices they set on Amazon,” Graham said. But, he continued, if prices for nationally recognized brands are “consistently” higher on Amazon than at other major retailers, “we see that as trying to gouge Amazon customers and we don’t think that’s acceptable.”
But sellers, antitrust attorneys and Amazon’s hometown congresswoman say the policy demonstrates how Amazon is increasingly exerting control over the activities of the businesses on its Marketplace.