Amazon is one of the many platforms around where buyers and sellers meet for the exchange of goods for money. Amazon has been around for over 20 years and they continue to make billions of dollars in sales each year. However, it has come to the surface that the company engages in unfair trade practices. This leads to an increase in the number of lawyers who sue Amazon.
What unfair trade practice is Amazon involved in?
Amazon sellers’ lawyers can’t help the fact that the retail company plays the role of both an umpire and a competitor on its platform. Amazon identifies fast selling products on its platform by collating information on third-party sellers, the source for the successful products and then offer these products for sale.
This is in spite of the chunk of revenue from both the sellers and the buyers through leverage. The rivalry can result in running the affected brands out of business. Amazon allows them to sell products at cheaper prices because they can eliminate warehouse and shipping prices from its own cost. So Amazon either competes with them, buy them out or milk them out of business.
What are people’s thoughts on this matter?
Professor Lawrence J. White, a professor of economics at New York University is of the opinion that this platform is very important regardless of the malpractices. The professor sees the platform as a meeting place for two or more entities so that the exchange can take place.
Elizabeth Warren says that Amazon should be made to choose between the role of umpire or competitor on its platform. They should stick to one role. She feels that the retail giant has an unfair advantage over other sellers that they compete with on their platform due to inside information.
The history of the American Monopsonists
J.P Morgan, an industrialist was able to maintain control over the America steel industry because of his monopoly on the use of the railway networks after he purchased the business from Andrew Carnegie. Another good example is the Brooklyn Bridge which was the first bridge built in Manhattan. The government was able to collect a toll for crossing the bridge because it was faster and much safer than crossing with a ferry.
Amazon also operates at such a level now. They have the power to dictate the terms of businesses to both buyers and sellers. We can anticipate that the administrators’ next step would exercise dominance over all other brands. This power would earn Amazon more profit in the long run.
Third-party sellers who noticed this unfair practice sought the help of Amazon sellers lawyer and Amazon consultants for legal advice. But the dominance of the company over its sellers has watered down the power of an Amazon attorney.
The disparity in how Amazon treats Sellers
Reports from specialists, who handle Amazon seller account suspension and render other Amazon legal services, has shown the height of the unjust relationship between Amazon and its retailers. The way the company relates with sellers on their platform depends on the type of product sold and the number of sales generated. The admin is harder on those in direct competition with the firm. Amazon runs a market survey when a seller approaches it for product listing on its website. The information from the survey is used to determine the profitability of the product. This makes it easy to speculate that Amazon is using this information to its advantage. Amazon sometimes takes advantage of a seller’s product which is found to be highly profitable due to large demand or sometimes lack of competition. Amazon invests in sourcing for the product directly. If the plan doesn’t come off, the firm forces the brand to sell to them such that they become the primary retailers. These practices negate the Amazon seller advocacy that is preached. The retail platform has recently begun a $10,000 buyout program. Small businesses are asked to sign the buyout deal. When this is done, Amazon promises to support the brand in terms of promotion and marketing.
How does Amazon operate when other outlets sell the same products?
Another unfair treatment Amazon Mets on its retailers are reducing their profit margin by certain practices. Amazon deals with competitors of selected brands by selling the product below market price. This increases the sales volume of the products and eliminates competition. The brand will become reliant on Amazon’s sale, giving Amazon control over the brand. Amazon will argue that the pricing of the products is to bring about better sales and to attract customers. Amazon seller lawyers say that the objective is to gain dominance in the market at the expense of other vendors.
Amazon fair pricing Policy
This policy was created by the company for better control of the marketplace. The policy monitors the prices of products in the Amazon marketplace. Amazon consultants that harm customer’s trust will face Amazon seller’s account suspension. Customer’s trust in this context is Amazon consultant not charging shipping fees on prime sales else risk Amazon sellers account suspension.
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