No CommentsAmazon was once again under the microscope in a U.S. House of Representatives’ antitrust subcommittee hearing on Wednesday, July 29.
This issue on the table was whether Amazon unfairly used the data it collects from third-party sellers to drive its own strategy and create competing products.
The claim against Amazon relates to several components:
- What is the data collected from third-party sellers?
- Has Amazon used it?
- What constitutes unfair use?
The data
The House subcommittee was specifically probing whether or how Amazon used data about the sales performance of certain products and categories in order to spot competitive opportunities.
Theoretically, Amazon would use sales data insights to seize an opportunity to sell its own private label products to fill that demand gap.
Amazon has publicly stated that it collects and stores sales from all products that are sold on the site. This data informs Amazon’s business strategy, user experience, and market trends, and is likely used for countless other decisions, both large and small.
Like any other retail business, Amazon and its third-party sellers need to follow and understand market trends in order to understand what its customers are searching for and ultimately, purchasing. Information is needed for forecasting inventory, new product development, and staying ahead of changing market dynamics.
The data that wasn’t spoken about
Amazon displays dozens of different consumer demand signals right on its public-facing website. It releases the top 100 products in each category and every product’s Best Sellers Rank. These are visible to all Amazon consumers and sellers.
In addition, Amazon provides a number of demand signals, like keyword ranking, autosuggestions, maximum product inventory and various pieces of metadata. Analytics providers like Jungle Scout use these signals to accurately predict all of the same data points that Amazon would have access to, even individual product sales.
Thus, Amazon is not alone in understanding product sales trends, as the House subcommittee implied. Third-party sellers have been widely using these insights for years.
So, has Amazon used the data?
Whether Amazon uses seller-specific data or not is unclear and highly debated. Amazon CEO Jeff Bezos stated in his testimony that Amazon has a policy that prohibits employees from using seller-specific sales data for their own private label products, though he “can’t guarantee that the policy has never been violated.”
But, is it unfair for Amazon to use the data?
Jungle Scout alone has more than 400,000 customers. If you include all of the other Amazon analytics providers, there are more than 500,000 people who have access to high-quality Amazon analytics, just like the kind being debated in court.
In Amazon’s 2020 SMB Report, the company said it works with “more than 2 million independent sellers, authors, content creators, developers, delivery businesses and IT solution providers” in the U.S. Jungle Scout predicts around 750,000 of those are active 3P sellers.
That would mean 2 out of 3 sellers have access to essentially the exact same information that Amazon has. And for the other third? Just search “amazon sales analytics” and you’ll find plenty of providers. Or, Jungle Scout is even giving the information out for free.
Conclusion
It may never be clear whether or not Amazon employees use internal data to guide their decisions to create new products. But, is Amazon being anti-competitive if they are using internal data? No.
Considering the whole world has access to the same data, Amazon’s internal information doesn’t give them any kind of unfair advantage.
Image taken by Graeme Jennings/AFP via Getty Images.
