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story.lead_photo.caption Merchants using Amazon are penalized if Amazon finds their products selling for lower prices on rival websites. Amazon removes the “buy now” button on the products’ detail pages, which merchants say costs them sales. Inc.'s strategy to compete with its online competitors is prompting merchants selling products on its marketplace to raise their prices on competing websites, a testament to the company's growing influence over the e-commerce market.

Amazon constantly scans rivals' prices. When it discovers a product is cheaper on, say,, Amazon alerts the company selling the item and then makes the product harder to find and buy on its own marketplace -- effectively penalizing the merchant. In many cases, the merchant opts to raise the price on the rival site rather than risk losing sales on Amazon.

Pricing alerts reviewed by Bloomberg show Amazon doesn't explicitly tell sellers to raise prices on other sites, but the goal may be to push them to lower their prices on Amazon. But in interviews, merchants say they're so hemmed in by rising costs levied by Amazon and reliant on sales on its marketplace, that they're more likely to raise their prices elsewhere.

Amazon began sending the price alerts in 2017, and merchants say they have increased in frequency amid an intensifying price war between Amazon and Walmart. Merchants receive the alerts via a web platform they use to manage their Amazon businesses. The alerts show the product, the price on Amazon and the price found elsewhere on the web. They don't name the competing site with a lower price. Merchants must find that themselves.

A typical pricing alert reads: "One or more of your offers is currently ineligible for being a featured offer on the product detail page because those items are priced higher on Amazon than at other retailers."

That means merchants lose the prominent "buy now" button that simplifies shopping on Amazon. With that icon missing, shoppers can still buy the products, but it's a more tedious and unfamiliar process, which can hurt sales. The lost purchases cascade through algorithms determining which products shoppers see, resulting in the items getting buried on the site, according to several merchants.


Antitrust experts say the Amazon policy is likely to attract scrutiny from Congress and the Federal Trade Commission, which recently took over jurisdiction over the Seattle-based company. So far, criticism of Amazon's market power has centered on whether it mines merchants' sales data to launch competing products and then uses its dominance to make the original product harder to find on its marketplace. Harming consumers by prompting merchants to raise prices on other sites more neatly fits the traditional definition of antitrust behavior in the U.S.

"Monopolization charges are always about business conduct that causes harm in a market," said Jennifer Rie, an analyst at Bloomberg Intelligence who specializes in antitrust litigation. "It could end up being considered illegal conduct because people who prefer to shop on Walmart end up having to pay a higher price."

In an emailed statement, an Amazon spokesman said: "Sellers have full control of their own prices both on and off Amazon, and we help them maximize their sales in our store by providing them insights on how to be the featured offer." Walmart declined to comment.

Online merchants typically sell their products on multiple websites, including Amazon, eBay Inc. and Walmart Inc., which also removes products with "highly uncompetitive" prices compared with those on other sites. But merchants often generate most of their revenue on Amazon, which now accounts for almost 40% of online sales in the U.S., according to eMarketer.


Merchants have long complained that Amazon wields outsize influence over their businesses. Besides paying higher fees, many now have to buy advertising to stand out on the increasingly cluttered site. Some report giving Amazon 40% or more of each transaction, up from 20% a few years ago.

Some merchants are keen to increase their sales on Walmart, which charges less to sell products on its marketplace. But sellers say the price alerts are forcing them to maintain allegiance to Amazon and making it harder to diversify their businesses. Walmart routinely fields requests from merchants to raise prices on its marketplace because they worry a lower price on Walmart will jeopardize their sales on Amazon, says a Walmart manager, who requested anonymity to speak freely about an internal matter.

Anders Palmquist, a former Amazon employee and now vice president of the e-commerce consulting firm ARMR, said one of his clients was told that a lawn and garden product sold on Amazon was found at a lower price on another site. Palmquist investigated and discovered the item was selling for less on Walmart, prompting his client to halt the discount. Palmquist said his client is the only one selling the product online, so it wasn't a matter of a competing manufacturer offering the same product for less.

The company's behavior contradicts testimony Amazon associate general counsel Nate Sutton gave last month during a congressional hearing examining the growing power of big tech companies. Sutton said Amazon faces stiff competition from rivals like Walmart and eBay, giving it an incentive to help online merchants succeed on Amazon so they don't defect to other sites.

"We know sellers have other ways to reach customers, so we invest in them, support them and make continuous efforts to improve their experience," Sutton said. "Our incentive is to help the sellers succeed because we rely on them."

Jason Boyce, an Amazon merchant turned consultant, said he instructs clients to offer the same prices on all sites to avoid losing prominence on Amazon even if they can afford to sell for less on other sites.

"Amazon is in control of the price, not the merchant," said Boyce, who runs Avenue 7 Media.

Information for this article was contributed by Matt Day of Bloomberg News.

Business on 08/06/2019

Print Headline: Amazon sellers report price press


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