Amazon watchers say the company has accelerated its efforts to sell its own products or products it markets exclusively. That’s worrying regulators around the world
SunTrust Robinson Humphrey analysts Youssef Squali and Naved Khan estimated in June that private label product sales would generate $7.5 billion for Amazon in 2018, a significant increase from their estimate for 2017.
By selling more products of its own, Amazon is becoming a competitor to the outside manufacturers it hosts on its platform — and that’s worrying regulators around the world.
Why it matters: Governments have rarely tried to rein in Amazon’s ambitions, allowing it to avoid most of the recent scrutiny directed at other large tech platforms. But the increased focus on Amazon’s house-brand offerings suggests it may now be Amazon’s turn.
Driving the news: Amazon built a robust business as a participant in its own marketplace when it saw growth stall in stateside e-commerce, which is why holiday shoppers might have seen Amazon-owned brands like Happy Belly for food or Solimo for household goods when they browsed the site last year.
It created more “private label” products, from its AmazonBasics line to brands for fashion and furniture, that are in-house versions of things others sell on the site.
It struck deals with outside manufacturers to sell their products exclusively.
Critics say Amazon uses its sales data to find fruitful areas where it can produce generic versions of already-popular products.
Then, its critics argue, Amazon favors its own brands when customers search for a certain item.
They admit that brick-and-mortar businesses have done the same thing for decades, but argue that Amazon’s dominance over online retail makes it more of a problem when the company moves so aggressively into house brands.
By the numbers: Amazon currently has 135 private-label brands, and it has deals to sell another 332 brands exclusively around the world, according to a database maintained by TJI Research.
The big picture: Regulators in major overseas markets for Amazon have already taken aim at its efforts.
E-commerce rules going into effect next month in India appear to forbid a marketplace like Amazon — or Walmart-owned Flipkart — from selling products it has a stake in and to ban exclusivity deals. Analysts have questioned whether there may be a way around the prohibition.
European competition commissioner Margrethe Vestager launched a preliminary look at Amazon’s practice of using its data to build its private-label business last year, although a spokesperson said in an email that the EU has not yet begun a formal probe.
Germany’s antitrust regulator is probing how Amazon treats third-party merchants who use its marketplace. It says its investigation differs from the EU inquiry, but that the two “proceedings supplement one another.”
In Washington, Democratic Sen. Elizabeth Warren — who’s running for the White House — has expressed concerns about Amazon’s growing role as a seller on its own platform.
“You got to pick one business or the other, baby,” Warren said in September. “You want to be a competitor, be a competitor, that’s great. You want to be …read more
Source:: Businessinsider – Tech