Back in May 2020, I wrote about why small businesses should strongly consider not selling their products on Amazon.
Amazon has simplified a lot of the logistics for a small business. In exchange for simplifying shipping and sales, Amazon siphons off data. While this may seem like a fair exchange, it appears that Amazon is using this to undermine their own sellers.
Amazon Under Fire
In 2019, Amazon testified before Congress about its use of customer data in creating and selling products. In that testimony, Amazon executives denied using any customer data.
(This questioning was a part of the 16-month antitrust investigation into “big data” from companies like Amazon, Google’s parent company Alphabet, Apple, and Facebook (now Meta)).
In my May 2020 article, I pointed to a Wall Street Journal report that claimed Amazon was using sales data from 3rd-party sellers to find products that it could manufacture and sell using their 400+ private or exclusive in-house brands. Reuters and The Markup also wrote similar reports showing Amazon’s abuse of 3rd-party data.
Amazon denied these allegations, of course, but it looks like not everyone is convinced by Amazon’s denials. A letter from the House Judiciary Committee to the Department of Justice sent on March 9, 2022, states that “Amazon lied through a senior executive’s sworn testimony”, and asks the DoJ to investigate the company for obstruction of Congress.
If You’re A Seller
While I don’t know what will become of this investigation if you’re selling a physical product online, it’s important to remember:
- You’re competing with Amazon (on some level).
- If you’re sell a physical product on Amazon, you’re giving Amazon data on how to undercut your business. Even if also sell on your website, more people will probably buy from Amazon if given the choice.
- While you should have your website to sell your product (it’s easier now than ever), you don’t need one (but you kind of do). You can sell online through eBay or even Facebook/Instagram. While they may not be better businesses, they don’t (yet) compete directly with product manufacturers.
