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FTC says Amazon used these tactics to weaken competition

In a long-awaited lawsuit, the Federal Trade Commission and 17 states sued amazon On Tuesday, the company was accused of using illegal tactics to control online shopping, thereby stifling competition, and increasing prices for consumers and costs for sellers.

Amazon Said It will fight the lawsuit, which it says is a misunderstanding of how the retail industry operates and how its policies benefit consumers and sellers.

The FTC focused on two main ways in which it said Amazon was breaking the law:

The FTC said Amazon controls its competitors’ prices and effectively raises them for consumers. It says Amazon has discouraged third-party sellers from offering discounts on other websites by controlling a major portion of the online real estate on its site, known as the “buy box.” Is the area. This area on the product page prompts users to “Add to Cart” or “Buy Now” and is a major driver of sales.

Amazon wants to offer competitive pricing, so it scours the web to make sure products aren’t available at a lower price elsewhere.

“If customers trust that they will only see competitive prices in our stores, they come back again and again,” says Varun Soni, who leads Amazon’s seller pricing team. Explained At a conference last year. He said a price “is considered uncompetitive even if it is only one percent higher than reputable retailers outside of Amazon.”

If a product is offered at a lower price on another site, Amazon removes the Buy Box buttons for that seller on its site and replaces them with less attractive designs.

“As Amazon believes internally, removing a seller from the Buy Box ‘reduces’ that seller’s sales,” the complaint says.

The FTC said that selling on Amazon is so important to sellers that they eliminate discounts on other sites to recapture the Buy on Amazon box. This increases prices for consumers and makes it harder for other sites to compete on price, the Commission said.

Amazon said it did not want to promote bad deals to its customers, and if it had to change its policies, “we would have to change many of the things we do to offer and highlight low prices.” Must be stopped.”

The FTC also said Amazon forces sellers to use its vast fulfillment and delivery services, raising prices for customers and stifling competition if they want to succeed.

Using Amazon’s fulfillment services is a prerequisite for a product to be eligible for fast and free delivery to customers who subscribe to Amazon’s Prime membership program, the Commission said.

Those product listings get a “Prime” check-mark logo, and they’re easier to find on Amazon’s site. “The Prime designation makes sellers’ products more discoverable – and therefore more likely to be purchased,” the FTC said.

One An estimated 170 million Americans The lawsuit states that they have Prime memberships, making fulfillment by Amazon services necessary.

The FTC said some sellers prefer to have a single fulfillment network for all their online orders, on and off Amazon, and running different sets of operations can be costly and make it harder to sell elsewhere. It also says Amazon deprives other warehousing and fulfillment providers of achieving sufficient scale to compete.

Amazon said its logistics services were optional, and cost on average 30 percent less than standard services offered by other providers. It adds that sellers may choose not to use them, and many are successful by using other providers.

Pricing policies and fulfillment requirements reinforce each other, the FTC said, preventing sellers from offering products at lower prices elsewhere.

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