By Rob Dunkel
It has been a tumultuous year for Amazon. The eCommerce giant has been in the news often, and for all the wrong reasons. To list all of them would be veritable alphabet soup of criticisms: Anti-competitive practices, Bogus “Amazon’s Choice” badging, Counterfeit products, Defective third-party products, Extreme warehouse working conditions, Fake product reviews…and so on.
The main focus is on Amazon’s anti-competitive practices. In addition to a formal antitrust probe by the DOJ and FTC, lawmakers have been conducting their own antitrust inquiry:
- Is Amazon competing with its’ third-party sellers?
- Is Amazon creating conditions that favor its’ own Fulfillment By Amazon service?
- Has Amazon’s 2018 deal with Apple harmed consumers by way of reduced competition and higher prices?
- Does Amazon leverage sales data to gain an unfair advantage?
While these are valid questions, 3PM Solutions, a data analytics company focused on e-commerce has three other questions that the government officials should be asking.
Are Amazon’s selling restrictions equal across brands?
3PM analyzed over 60,000 of Amazon’s active private label listings on Amazon.com, and the only seller on these listings was Amazon. When 3PM analyzed over 1,000 listings on Amazon.com for Samsonite, a company that now competes with AmazonBasics for luggage, 3PM found over 600 sellers offering Samsonite products. Is this fair?
Furthermore, it’s been well-documented that third-party sellers may sell fake, unsafe, mislabeled, or expired products. For any given brand (except Amazon’s private label brands), this puts their reputation and their relationship with their customers at risk. And, the next time that customer is in the market for the same product, they may turn to an Amazon private label product as an alternative.
Why does Amazon allow third-party sellers to offer Used products as New?
Amazon’s mission statement is to “offer its customers the lowest possible prices.” What if, the lower prices being offered by third-party sellers were not ‘New’ but ‘Used’ products being fraudulently represented as ‘New’ products? 3PM analyzed over 150 million customer reviews of 2 million-plus Amazon third-party sellers, we heard consumers complaining about receiving used products.
Is Amazon ‘complicit’ with allowing misrepresentation of product conditions? If you read Amazon’s product condition guidelines a ‘New’ offer condition is:
Just like it sounds. A brand-new item. Original manufacturer’s warranty, if any, still applies, with warranty details included in the listing comments. Original packaging is present for most New items but certain items like shoes may be re-boxed.
How many offers on Amazon do not carry the manufacturer’s warranty? Even when we notify Amazon, they allow unauthorized sellers to list the product in ‘New ’condition. In short — Amazon gets the benefit of vast amounts of new products that aren’t actually ‘New’, and customers are harmed as a consequence.
For an example of this, look at a company like Williams-Sonoma. If you didn’t know, Williams-Sonoma doesn’t have a relationship with Amazon as either a first-party vendor or third-party seller.
Yet, if you search for Williams-Sonoma on Amazon today, you’ll find thousands of ‘New’ Williams-Sonoma products being offered by third-party sellers. The Manufacturer’s Limited Warranty extends to the original consumer and the duration is a period of one (1) year from the original purchase date. Amazon’s A-to-z Guarantee is not a defense, it’s a 90-day return policy.
Why do brands need to agree to Amazon’s Conditions of Use in order to protect their intellectual property on Amazon?
Amazon has repeatedly celebrated its Brand Registry, Transparency, and Project Zero programs as powerful tools for brands to “protect your intellectual property and create an accurate and trusted experience for customers on Amazon.” The stated benefits of Brand Registry, for example, include more control over Amazon product pages that use their brand name, text- and image-based search capabilities and automated protections, and dedicated on-call support and investigation teams.
There are a couple of problems buried in the fine print.
First, these programs are only available to intellectual property holders that are selling on Amazon, as either a first-party vendor or third-party seller. If you’re a brand that doesn’t sell on Amazon, yet has products available from third-party resellers — good luck protecting your intellectual property. Amazon even says that sellers in brand registry receive priority.
Second, if you’re willing to create an Amazon account so that you or your brand protection agency can avail yourself of these tools, you have to agree to Amazon’s Conditions of Use, which limits Amazon’s liability (but not yours) and force you into binding arbitration in the event of a dispute.
Amazon does have a publicly available form for intellectual property rights owners and their agents to notify Amazon of alleged intellectual property infringements. Unsurprisingly, that form also requires acceptance of Amazon’s Conditions of Use.
But perhaps more problematic is that the workflow of these tools are tedious with inconsistent results. For a technology company, it’s odd that we need to fax or mail our DMCA takedown requests on behalf of our brand clients (yes, FAX!), but Amazon offers no other option for a brand that doesn’t sell on Amazon and won’t agree to Amazon’s Conditions of Use. Is this an anti-competitive way for Amazon to force its brand hold-outs to come to the table? Sure seems like it.