Leaked internal documents from Amazon show that the company’s leadership developed strategies to copy competitor products and sell them at cheap prices as their own. The documents appeared for the first time on Reuters but have since made headlines online.
According to the report, Amazon and its staff worked hard to siphon out data from third-party sellers in India to create its knock-off products. India is one of Amazon's biggest potential growth markets.
There have always been accusations from third-party sellers on Amazon that the e-commerce giant has worked hard to undercut them. The company has faced lawsuits and antitrust hearings as a result of this. But the company has pushed back against this accusation, saying that its biggest role is to create a safe marketplace where people can buy and sell products.
During an appearance in front of Congress in July 2020, Amazon founder Jeff Bezos made it clear that Amazon does not favor its products over third-party sellers. But it is not hard to see why the e-commerce company would want to hold an edge over other sellers. Private label marketing is a huge part of the retail business.
This is where retailers use their vast network of stores to sell their products. Companies like Walmart, Costco, and Target have all used this technique. In fact, private label selling accounts for a huge percentage of their revenue. It wouldn't be a surprise if Amazon tried to gain the edge over the competition to boost revenues on its private label products.
The leaked documents show that the e-commerce giant has no problem with this. The Reuters report indicates that key leaders of Amazon in India were all aware of these plans and personally endorsed them. Amazon is yet to respond to this report but there is no doubt that this is an explosive revelation.
Third-party sellers who talked to Reuters noted that they are not surprised by the report. According to them, Amazon has consistently “destroyed the level playing field.” Another seller noted that he used to earn around $1,500 a month selling Logitech mouse pads but since Amazon started selling similar knock-offs, his sales have gone down by nearly 60%.
But it’s not just the sellers who see Amazon's private-label business as a threat. Lina Khan, the new chair of the US Federal Trade Commission, has previously described the company’s private-label business as anti-competitive.
She argued that in most cases, Amazon would normally sell products that have a proven record of success on the platform. This means that the company, despite its enormous revenue, does not bear the risks associated with bringing new products to market.
Instead, it waits until said products are fully tested before jumping in to undercut the competition. The leaked documents will bring into focus Amazon antitrust practices, especially now that there is increasing pressure in Washington to break down big tech companies.
