Amazon, which operates the world’s largest e-commerce site, has recently pointed out the possibility of violating antitrust laws and is being investigated in countries around the world, saying that it strengthens its monopoly power through monopoly actions. The Wall Street Journal draws attention with a report outlining how Amazon puts down competitors and strengthens market dominance.
This report summarizes the various strategies Amazon has in fierce market competition to drive out its competitors. According to this, CEO Jeff Bezos has been encouraging employees to consider Amazon as a startup even after Amazon became the world’s largest e-commerce, and has used its great monopoly power to exclude competitors.
Amazon is known not only to provide a sales platform but also to develop and sell its own branded products. Recently, there are reports that Amazon has changed its search algorithm to promote the sale of its products, pointing out that Amazon is displaying its branded products more prominently than other products.
In addition, many third-party sellers on Amazon sell products on the Amazon marketplace, but Amazon was helping third-party sales data to develop their products through the marketplace. Bezos also says its policy of not accessing third-party sales data cannot guarantee that it has never violated this policy. In addition, in November, the EU sued Amazon as an antitrust law, claiming that it is gaining undue gains in the retail market using retail sales data submitted to the marketplace.
One example of Amazon kicking out competitors is Diapers.com, which became popular as an online shopping mall for baby products. Amazon took 12 steps to destroy Dypers.com in 2009, and took away customers by offering diapers and other discounts within Amazon. According to Dypers.com’s estimates, the Amazon discount caused a deficit of $7 for every box of diapers sold, but the effect of attracting customers was sufficient. Amazon also said that immediately after the discount was implemented, it contacted the parent company, Quadsi, which operates Dipers.com and proposed an acquisition plan. Quadsi decided that it couldn’t beat Amazon’s price competition, so in 2010 it transferred Dipers.com to Amazon for $500 million.
One Quadsi official said that Amazon’s actions were in violation of the law. But trying to sue Amazon against antitrust law costs tens of millions of dollars and takes a long time, so even if you file a lawsuit, Quadsi says it will go bankrupt before the results come.
Amazon’s competition is not only on e-commerce sites, but in various places that are exposed to Amazon threats. Amazon, for example, is Ravelli, a brand that sells camera tripods. Amazon started selling its own brand of tripods with the same configuration and design as the Ravelli tripod in 2011, with Ravelli in mind. In 2015, Amazon temporarily stopped selling Ravelli tripods for having problems with reliability, and Ravelli sales are now far more depressed than in their prime.
Reportedly, it is asking for manufacturer details in the name of authenticating fake label seller accounts for competitor products sold on Amazon’s marketplace. Based on this information, it is pointed out that Amazon is making its own products by contacting the same manufacturer. In response, Amazon denies that it is not using information about suppliers of third-party sellers in its branded products.
In addition, Allbirds, a shoe manufacturer that uses eco-friendly materials such as wool, claims that Amazon sells similar products. The shoes developed and sold by Amazon are similar in shape to old shoes, but they are not eco-friendly and cost less than half of the old shoes. In response, Amazon said that Amazon shoes did not infringe on all-bird designs, and that it is common sense in the retail industry to provide products that are influenced by trends with good customer response.
While many companies are being hit by Amazon’s strategy, some of them have won competition from Amazon. Amazon, for example, created a team in 2016 to analyze the business of Wayfair, an online site that sells furniture and household items, identified wayfair suppliers, and boosted furniture sales within Amazon. However, Wayfair continued to expand its market share and recorded a surplus in the latest quarterly settlement.
Shopify, which provides an online shopping mall platform, is also strengthening its position as a strong competitor to Amazon. Shopify is a company that provides an online sales platform for sellers rather than delivering products directly to end users. The Shopify model, which pursues the diversity of various vendors, is called the key to overthrowing Amazon, and total sales exceeded $5 billion during Black Friday in 2020, exceeding the Amazon marketplace.
Amazon is also said to have created a secret team, Project Santos, to replicate the Shopify business model. As such, Amazon will continue to fight fiercely with its competitors in the future. Related information can be found here .