Amazon makes it quite difficult for competitors to promote their products on the e-commerce platform, according to a story in The Wall Street Journal. Per the report, sellers on the online superstore can pay to promote their products and have them listed at the top of search results. But in cases where a product directly competes with an Amazon-made alternative, companies are routinely blocked from advertising.
Take Roku, for instance. The popular gadget allows people to stream entertainment directly to their televisions, but is a direct competitor of Amazon Fire TV, a product that provides the same service. According to the WSJ story, Roku has been barred from buying Amazon ads tied to the product. Furthermore, when shoppers search for Roku, the product is not always the first result to show up. Instead, shoppers may receive an ad for Amazon Fire TV.
The policy sheds light on the conflict at the heart of Amazon’s monolithic model. While it is a massive vendor of products from over a million businesses, it is also a manufacturer of its own products. As a result, the platform must balance promoting the goods of its clients against making a profit on its own in-house options.
The situation is made even more complex when you consider just how ironclad Amazon’s hold over online shopping is. In the United States, Amazon accounts for 38% of online commerce. Additionally, about half of all online shopping searches begin on Amazon.com, which means that even in cases where shoppers buy their items elsewhere, they begin by looking at prices and reviews on the internet’s biggest shopping mall.
Now add in the fact that the majority of Amazon shoppers only purchase items off the first page of search results. In other words, if you’re trying to sell something on the site, and it doesn’t make it to that first page of search results, it will likely remain unsold. In short, online vendors rely on Amazon to help sell their products, but Amazon limits their ability to sell if they compete with the website’s own in-house alternatives.
In response to a request by WSJ, Amazon did not directly comment as to whether it intentionally buries competitor products. But it defended its practice of promoting its own products, pointing to similar behavior from competitors.
“News flash: retailers promote their own products and often don’t sell products of competitors,” Amazon spokesman Drew Herdener wrote in a snarky response. “Walmart refuses to sell [Amazon brands] Kindle, Fire TV, and Echo. Shocker. In the Journal’s next story they will uncover gambling in Las Vegas.”
In spite of the glib answer, the truth is that many traditional sellers have house brands, but they sit on shelves right next to competitors. If the accusation is correct, Amazon hides its competitors.
Still, the recent story is hardly the first inquiry into anti-competitive practices at the e-commerce behemoth. The Federal Trade Commission, the U.S. Justice Department, the European Union, and Canadian regulators are all currently investigating Amazon’s monopolistic tendencies.