Is Amazon using its market power to manipulate prices on other platforms? Research by ARD magazine plusminus suggests this. We'll explain to you what's behind it.
Amazon has become one of the largest players in online retail in recent years. In 2023 alone, the shipping giant generated global sales of around $575 billion.
But is it always the right thing to do? According to research by ARD magazine plusminus Amazon could abuse its market power to make profits through anti-competitive practices.
Is Amazon abusing its market power?
If retailers sell their products on Amazon, around 56 percent of the proceeds end up with the shipping giant. In recent years the fees have continued to increase.
According to a former manager of the company, this approach has a system. She explains the ever-increasing costs and fees to ARD magazine: “Amazon has no interest in giving the customer a good price. They only have an interest in taking business away from their competitors.”
The shipping giant's only concern is “that Amazon has more market share.” This creates a “monopolistic vortex”, which also has an impact on external sellers on the platform, as the research shows. This means the company has “leverage to bring manufacturers to their knees,” as the former manager reports.
Online retailers are forced to charge higher prices
The ARD magazine reports on the German leather goods manufacturer “Gusti Leder”, which also offers its products on Amazon. But the ever-increasing fees are detrimental to business.
For example, the US group allows the company's competitors to use the brand name “Gusti Leder” for their advertising. “That means we now have to pay money so that when you look for Gusti Leder, you also find Gusti Leder,” explains owner Christian Pietsch plusminus.
Pietsch has also observed that lower prices for his products on other platforms have a negative impact on his presence with the US group. Because then he loses the so-called Buy Box for his products. In this Buy Box, Amazon customers can directly see the price and buy the products.
According to the ex-Amazon manager, the Buy Box is a sanctions tool. Retailers and manufacturers should not even consider selling their products on other platforms.
For Christian Pietsch and his company “Gusti Leder”, promotions with special offers from other providers are very risky: “The customer cannot buy the product at the price that I could have theoretically sold it.”
The company's actions have not gone unnoticed in the USA either. As early as September 2023, Amazon received a lawsuit there accusing the company of illegal practices.
Large companies also suffer from Amazon's practices
For its research, the ARD business editorial team was able to view the company's secret documents, which prove that even larger companies are “controlled by Amazon using questionable methods.”
The documents paint a bleak picture of the anti-competitive methods the company is willing to use to put even brand manufacturers under pressure.
A document entitled “MRA” contains a detailed list of sanctions available for negotiations with manufacturers. According to the former Amazon manager, this is Amazon's “highest escalation level”.
With this plan, the US company wants to prevent manufacturers from offering other platforms better conditions. “This plan is a means of applying pressure to bring manufacturers to their knees,” says the ex-manager.
The company itself is facing the allegations plusminus bounce off of itself. In a statement it says: “Amazon selling partners set their own product prices in our store. We want customers to find products at competitive prices whenever they shop on Amazon.”
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Source: https://www.basicthinking.de/blog/2024/11/25/amazon-preise/
