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Wednesday, Jan 20, 2021

WSJ: Amazon Uses Data from Sellers to Launch Competing Products

WSJ: Amazon Uses Data from Sellers to Launch Competing Products

If you’re a business selling your products through Amazon, the e-commerce giant may use data on your products and sales to develop its own, competing products, according to a new report in the Wall Street Journal.

Amazon, which according to analysts accounted for a dominant 37.7 percent of the American e-commerce market in 2019, has long denied the allegation that it uses data from its third-party sellers to make its own products. But the new report from the WSJ suggests these claims are false.

Via the WSJ:

The online retailing giant has long asserted, including to Congress, that when it makes and sells its own products, it doesn’t use information it collects from the site’s individual third-party sellers—data those sellers view as proprietary.

Yet interviews with more than 20 former employees of Amazon’s private-label business and documents reviewed by The Wall Street Journal reveal that employees did just that. Such information can help Amazon decide how to price an item, which features to copy or whether to enter a product segment based on its earning potential, according to people familiar with the practice, including a current employee and some former employees who participated in it.

In one instance, Amazon employees accessed documents and data about a bestselling car-trunk organizer sold by a third-party vendor. The information included total sales, how much the vendor paid Amazon for marketing and shipping, and how much Amazon made on each sale. Amazon’s private-label arm later introduced its own car-trunk organizers.

According to the WSJ, former Amazon executives said they were tasked with making sure Amazon products accounted for at least 10 percent of sales on the website by 2022. Approximately 58 percent of sales on Amazon are still accounted for by third-party sellers.

Amazon told the WSJ that it does look at “sales and store data” to provide customers with the “best possible experience,” but that the use of “nonpublic, seller-specific data to determine which private label products to launch” is strictly prohibited.

The American Economic Liberties Project stated in a press release that Bezos and other top Amazon executives should face perjury charges. “In addition, the DOJ should investigate what role Jeff Bezos, Jay Carney, and other senior executives played in developing that response, and what they know about the practice. Bezos needs to testify under oath and explain why his corporation’s agents are lying to Congress.”


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