It took Robert Gomez about 5 months to get his coffee grinder into the top three searches on Amazon.
Robert, the founder of Atlanta startup 4QBrands, is obsessed with perfecting his platform's product information and constantly collecting customer reviews, even paying the platform $40,000 a month for advertising to increase sales. However, Amazon officially launched the ace competitor DRMills, which easily confronted Robert's products and ranked among the top searches of similar products.
According to a survey by TheMarkup, Amazon is constantly pushing its own brands and exclusive products, which will target strong third-party platform sellers on many platforms. If a product is from the platform's own or exclusive product, even if it does not display the label attribute of the paid bid, it is likely to be officially pushed to the first page of the search results.
Can't the official e-commerce platform develop its own brand? The whole picture of the iceberg beneath the surface of the water does not seem to be so.
(Image from the Internet)
When analyzing Amazon's star ratings and reviews, neither can predict which product the platform will put on the front page of search results. At the same time, its search results do not give privileges because a product belongs to an Amazon brand.
However, from the perspective of a third-party seller, this does not seem to be the case.
Robert said that Amazon's official brand has a "tilt advantage", which makes it more difficult for small and medium-sized merchants like him to compete in the open market, and the only people who can bear the price for this are their third-party sellers who have suffered.
TheMarkup's analysis also supports this view. In the case of cereal products, for example, Amazon put its own HappyBelly Cinnamon CrunchCereal at the top of its search results, which has a 4-star rating and 1,010 reviews, even surpassing many other products with more positive reviews, including Cap'nCrunch (5 stars, 14069 reviews), HoneyBunches of Oats (5 stars, 5205 reviews) and HoneyNut Cheerios (5 stars, 11702 reviews).
Meanwhile, Amazon's exclusive Noisz vacuum cleaner also topped the list, with vacuum cleaners such as Bissell, Eureka and Hoover struggling to beat them even with higher ratings and more reviews. American casual sports brand Skechers took the lead in Amazon's exclusive Concept3 sneaker, four places ahead of similar but not exclusive sneakers.
A former Amazon employee told TheMarkup that when a self-branded product is first launched, it is naturally placed at the top of the search ranking. He said Amazon has stopped the practice.
However, the survey found that Amazon's own brands and exclusive products still account for a very large proportion of the search results. And that's not what consumers expect.
In a national survey conducted by YouGov, only 17 percent of U.S. respondents said they thought Amazon would put its own products first. 50% of the group said they want the first non-paid ranking product on Amazon's search results page to be a cost-effective, high-rated, or well-sold product.
By giving its brand a head start, Amazon has created a significant advantage. According to another former Amazon employee, the top 3 entries on the search results page can get 64% of the exposure.
In a brief written statement, Amazon spokeswoman Nell Roona said the company did not have such criticisms and that Amazon-exclusive brands would not publicly disclose such information because they were not sub-brands of the company, and subsequently declined to answer a number of specific questions from TheMarkup.
Those who are favored have no fear – what are the reasons behind the mediation between third-party sellers and official brands?
1
Invisible system label
Most Amazon brands and exclusive products will be placed on the front page in the form of similar advertisements. Most of the time, the listing source identifies them as sponsored, but the tag is not shown to the public. Although there are paid promotion tags in the source code, they are not actually ads. Instead, Amazon labels its products as featuredfrom our brands.
Nell said the information would be clearly labeled to distinguish it from other search results, but a spokesperson did not respond to whether the company complied with the Federal Trade Commission's request to disclose such information.
Last year, MaryEngle, deputy director of advertising at the Federal Trade Commission (FTC), said Amazon's so-called merchandising was actually advertising promotion.
BillBaer, a former assistant attorney general, said consumers certainly expect Amazon's search results rankings to be neutral enough, but today's website behavior is inherently monopolistic, which could violate the FtCAct act of 1914, which strictly prohibits unfair competition or deceptive business practices. It could also violate the Sherman Antitrust Act, which prohibits monopolies from manipulating markets and harming the competitive environment.
He said that if you are a person with the power to dominate the market, there may be potential problems in terms of website access or website content that restricts others from competing.
As a veteran e-commerce platform, Amazon's online platform sales are 5 times more than Wal-Mart's, and the volume is amazing. The "one-thought difference" of the platform side can make consumers face the behavior of "shop bullying", and also make third-party sellers have to face a deteriorating competitive environment. How did the large-scale platform that should have worked hard to optimize the competitive environment come to this?
Congress is drafting a series of antitrust bills against big tech companies, including the EndingPlatform Monopoly Act, which makes it illegal for such platforms to manipulate market competition.
Amazon refers to its own brand and other brands of products that are exclusively licensed on Amazon as "our brand." Categories range from snack chips and vitamins to fashion and furniture.
Public records from the U.S. Patent and Trademark Office and platform data show that Amazon registers more than 150 brands, including 2 Amazon direct brand chains, such as Amazon Basics and AmazonCommercial, and other brands owned by Amazon, such as Kindle and Zappos. At the same time, many dozens of companies with no significant ties to Amazon, including HappyBelly, Daily Research, and SocietyNew York. In addition to this, amazon is estimated to have hundreds of exclusive brand partners with third parties.
By analyzing the search results of 3492 popular products on Amazon in January 2021, it is logical to know which products Amazon will rank on the front page. Officials sold the homepage location to advertisers and added tags indicating that the information was a paid advertising space, which amounted to 60% of the surveyed sample. At the same time, the government gave the remaining 20% of the advertising ranking opportunities to self-operated brands and exclusive cooperative brands, and the last 20% to their competitors (third-party sellers).
The distribution mechanism does not appear to be clearly biased — after all, the official and third-party apportionment ratios are almost identical — but it is not.
Amazon's proprietary brands and exclusive partner products accounted for only 6% of all products in the sample, while third-party competing brands accounted for up to 77% of the total sample products. Each 20% of the paid advertising auction opportunities seem to be evenly shared, but in fact, third-party merchants must fight to the death, in order to obtain exposure comparable to their own brands and exclusive products. In this competitive environment of "more wolves and less meat", in short, Amazon has let its own products taste the sweetness, and almost pushed the cost and risk to other competitors.
With more than 25 percent of search results, Amazon puts its own brand first. In those search results, Amazon places its products ahead of third-party sellers with higher ratings and more reviews.
2
A third-party seller at risk
Sellers say there's no doubt about amazon's choice of search results on sales.
Gabriela Mekler, from Miami, founded Mumi in 2014. "If customers don't see our products in the top 5, our exposure and reach are worrying," she says. ”
Two years after Mumi's king fried product was released, it is still difficult to get exposure on Amazon. She said the pandemic has seen sales drop by more than 68 percent, and the company has lost its hard-won Amazon's Choice certification.
As various official products dominate the list and gain high exposure, small and medium-sized businesses may be forced to face closures.
In July 2020, the National Association of Wholesalers and Distributors (NAW: National Association of Wholesaler-Distributors) filed a letter to Congress on behalf of more than 30,000 merchants complaining about Amazon's "abuse of authority" to provide special treatment for private labels.
But when TheMarkup asked to speak to some of the sellers the group cited anonymously, Blake Adami, the association's vice president in charge of government relations, objected to it. He said in an email, "Our members are still very hesitant because they are reluctant to speak out against Amazon for fear of retaliation." ”
Many sellers whose products rank below Amazon with lower sales or ratings also turned down interview requests from reporters, fearing it would negatively impact their livelihoods.
3
Plagiarism scandal
Some third-party sellers accuse Amazon of plagiarizing their products and turning them into sales under their own brand.
Williams Sonoma sued Amazon for plagiarizing WestElm's furniture and selling it under Amazon's own brand, Revert. Coincidentally, when Amazon brand 206Collective copied Allbirds' wool sneakers, its co-founder Joey Zwillinger wrote an open letter urging Amazon to adopt the same sustainable approach to design, not to be playful and laugh at.
In March, AmazonBasics went back to selling EverydaySling, a camera bag with a similar design and the same name, but priced much lower than PeakDesign. Its founder, Peter Dering, said he wasn't worried about losing sales because PeakDesign was aimed at wholesalers and customers who loved high-end brands. Still, he said Amazon's move was "very offensive."
Amazon spokesman Lo Nell said the company "did not infringe" on the designs of Allbirds or PeakDesign and said it strictly prohibited company employees from using non-public, seller-targeted data for pushing.
4
Brands and rankings that are difficult to judge
In this survey, Amazon officially did not provide a complete list of brands. TheMarkup's reporting team conducted various searches and screenings on the web, reviewed the records of the United States Patent and Trademark Office, and reviewed Amazon's best-seller list, but it was still difficult to exhaust all of Amazon's brands and exclusive products.
In the sample analyzed, about 20% of the products in Amazon's platform "Our Brands" did not have an obvious label in the search results to indicate that they were Amazon brands, such as AmazonBasics, Kindle and WholeFoods. Inconsistent labeling, combined with its sheer number of private labels, makes it impossible for consumers to judge whether Amazon's high ranking of a particular product is because it is worth buying or because Amazon thinks it is profitable.
In a national survey commissioned by TheMarkup in July, 90 percent of U.S. respondents said they didn't know that Amazon's best-selling private labels were owned by the company, with the exception of Amazon Basics. 24 percent of respondents don't recognize Amazon Basics as an Amazon brand, and 50 percent say they don't know Amazon owns other business lines like WholeFoods.
5
The rise of Amazon's own brands
Today, Amazon has become one of the world's leading retailers. It borrowed from its e-commerce competitor eBay's approach to attract individuals and businesses to sell second-hand items — which quickly transformed into a new mainstream model for third-party sellers at Amazon.
As of 2018, third-party sellers accounted for 58% of Amazon's sales, growing from $24.5 billion in 2009 to $386.1 billion in 2018, achieving magnitude growth in North America and creating wealth for small and medium-sized businesses around the world. At the same time, it also makes merchants deeply dependent on Amazon. JungleScout, which provides data analytics for Amazon sellers, noted in a report this year that for 22 percent of third-party sellers, Amazon is their only source of revenue.
Several e-commerce and retail research firms say amazon's private label expansion is accelerating. According to TJIResearch statistics, there were 598 Amazon exclusive brands in 2019. Coresight Research says Amazon's branded products tripled in just two years from 2018 to 2020.
Amazon has attracted businesses and individuals to join through programs such as AmazonAccelerator, and promised products that are exclusively licensed to Amazon to sell, which will increase exposure in exchange for additional fees, and if Amazon later chooses to acquire the brand, it will also set a new selling price for it.
6
Strongly promote the road of self-operated branding
JTMeng, a former brand manager at Amazon, said that over the years, Amazon gave a variety of advantages when its private label products were first launched, but this practice has since stopped. He also said that even if the new product does not meet conventional standards, employees will manually label it as Amazon's Choice.
JT said that instead of starting from scratch in search results and slowly accumulating reviews, sales and star ratings, Amazon officials will let employees use a strategy called searchseeding to search for new products, and clone the search rankings of corresponding competitors, so that Amazon's new products will immediately appear below the competitors in the search results.
Today, sellers trying to compete with amazon brands say they have to pull out some "sincerity" in order to get higher non-paid advertising performance on Amazon. On its Seller Central website, Amazon emphasizes the importance of selling to sellers, noting that "products that sell better tend to be at the top of the search rankings, and the better they sell, the higher they rank.
Many companies are paying for this. The study found that 17% of the products in the search results alone were paid products. This does not include paid advertising products on about 1/3 of search result pages that appear in a special form, and if it is also included, the proportion of ads on search results pages will roughly double.
Amazon is the third largest seller of online ads in the United States, after Google and Facebook. Advertising services grew 52 percent from 2019 to $21.4 billion a year.
How long has Amazon's official tug-of-war with third-party sellers been deadlocked? When will the breakthrough of the situation appear? To learn more about following up on Amazon's platform movements, stay tuned to Hugo Cross Border.