Amazon appears to use data of the third-party vendors on its platform to develop its own competing products, although the company denies this claim. Meanwhile, Jeff Bezos has decided to take management back into his own hands during this corona crisis.
Vendor data supposedly off-limits
Contrary to Amazon’s claims, its employees do use the data from third-party sellers on the platform to develop products for its own private label brands. They rely on sales data, which are – in theory – only visible for the merchants themselves, to (re)produce competing products and launch them under their own private labels. At least that is what (former) employees report to the Wall Street Journal.
In July, Amazon general advisor Nate Sutton nonetheless told the United States Congress that the online retailer does not use individual seller data to compete directly with sellers. He also said procedures and restrictions were put in place to prevent Amazon’s private label developers from accessing the data of specific sellers. Aggregated data from multiple vendors may be used, but not data from a single merchant, the e-commerce giant claimed.
The goal: 10 % of revenue
Still, Amazon employees allegedly had access to documents and data from a third party’s “best-seller”, a car trunk organiser developed by a duo from New York. The information viewed by developers included the number of total sales, the amount paid by the seller to Amazon for marketing and shipping the product, and the amount received by Amazon for each sale. Amazon’s private label department then launched its own version of the product a little later.
Amazon denies that it had engaged in this practice, but did initiate an internal investigation. According to former officials, the online retailer aims to generate more than 10 % of its retail turnover from its private label brands by 2022. In addition, they have been tasked with creating multi-billion dollar businesses for their product categories.
Jeff Bezos takes over day-to-day management
In the meantime, to deal with the coronavirus crisis, founder Jeff Bezos personally took over the day-to-day management of his company. For years, the founder has focused almost exclusively on long-term projects, but now Bezos is back, devoting his “time and thoughts” to “Covid-19 and how Amazon can help in the midst of the crisis“, he says in a letter to shareholders.
Among other things, the executive is said to have been personally involved in the decision to focus only on urgent and essential items, and to have helped determine which product lines fall into that category and which do not. He also approved the postponement of Prime Day.
