Amazon faces $1B lawsuit in UK for 'favouring its own products'
reuters.com
reuters.com
Only they know how many people and companies they've hurt doing this.
As far as I'm concerned the whole company is ethically bankrupt and rotten to the core starting with Bezos and can disappear from the Earth.
I think that's all perfectly healthy competition and I'm glad that the super-market offers cut-rate, easily-substituted products on the shelves that they own.
If that is good, how is what Amazon doing so different as to be bad?
Being too big and powerful. I want to say here that if there were as many Amazons as there are grocery stores, it wouldn't be bad at all. Instead, since Kroger is about to buy Albertson's and consolidation in retail and services continues, grocery store brands should have the same questions to answer as Amazon. Hypothetically, assuming we had governments that were concerned about these issues as anything other than an opening to solicit cash from lobbyists or something to be promised during a campaign.
In the UK, there is choice between: Asda, Tesco, Morrissons, Aldi, Lidl, Sainsbury's, Waitrose, M&S
Who competes with Amazon? (Ebay?)
The fundamental problem with Amazon is as with Standard Oil when they bought the railway companies. Amazon marketplace & Amazon warehouse/delivery/logistics should not be one company.
There is a massive opportunity for a new marketplace to compete with Amazon; because Amazon has very little trust amongst both buyers and sellers alike - but where else is there?
Every online store that ships to your doorstep.
I'm sure the supermarket looks over their sales data to understand which products might be compelling for their shoppers and where the store could introduce a store-branded product with a compelling positioning. I support them doing that as well.
They're not a manufacturer. They're a marketplace. Sure, they have the data to do the manufacturing and undercut their suppliers, but it's not really their wheelhouse. Their suppliers already compete with each other to squeeze margins, so they can't be making all that much money on it. Why not just take their (hefty) cut of each sale and let others worry about the pain-in-the-ass of getting products built.
Sure, Bezos and the company are rotten to the core, and would pawn their own mothers for an extra nickel. But doesn't it reach a point where the overhead of getting that money just dilutes what your company is actually good at, and makes you overall less healthy as a company?
Counterpoint: if your whole business model is just doing contract manufacturing with Chinese manufacturers and make your money exclusively from Amazon, it wasn't a very good business plan to begin with.
If you go to Amazon right now and search "Everyday Sling" you get dozens of white label knockoffs. It's hard to feel that Amazon is targeting products when they have already been genericized by manufacturers.
Walmart has all of the sales data on every single product they sell. And anyone who wants to come to Walmart has to provide their sales data.
Or you have Target that is movely heavily into generics right now. Nearly 1/3 of a Target store is stocked with their own brands.
Retail is harsh and it is not unique to Amazon at all. The only difference is that Amazon has infinitely wide isles, and they host a swap meet outside the doors.
Here we have: Tesco, Asda, Morrisons, Sainsbury's, Aldi, Lidl, Waitrose, M&S.
In the UK nearly all towns have at-least 2 supermarkets, and most towns have another 3 within a 20 minute cycle/drive.
The fundamental problem with Amazon is as with Standard Oil. They have no competition, and they have no separation between their logistics/warehouse business & their marketplace. Thus, they are using their delivery business and warehouse arm (which in itself would not be sustainable) to ward-off competition. Just as when Standard Oil bought the railway companies.
Walmart is far bigger than the grocery stores you have listed. In fact, the grocery store part of it is relatively new. Can you buy tires or tents or bikes at a Lidl?
There are tons of regional grocery stores in the US. Each region has more different regional brands than national brands.
They have sales data from all their competitors on this market- numbers, prices, trends, across many different competing companies in many different sectors. They have priority access to consumer eyes by owning the home page, owning the search results, and owning the customer relationship.
And all of this wouldn't be that big of a problem if Amazon wasn't the absolutely dominant player in the still-growing e-commerce market. Because at that scale, these problems become societal problems that governments have to address.
Then they can claim they're playing fair.
This makes a billion dollar fine less than 0.25% of revenue.
Except Amazon has been doing this for years.
So a cost of doing business on the order of 0.1% at worst.
Or rounding error.
Could be a toggle, a checkbox, a separate searchbox, etc. I do not like having to separate the wheat from chaff myself.
They already have a “seller” filter that lets you choose products sold directly by Amazon, but for reasons I don’t fully understand[1] it’s not shown on the default SERP. You can only get it by drilling down into a specific department.
1. I assume it’s related to the sheer number of sellers that can be present in the first set of results because any one query could include dozens of departments, but this seems like a solvable problem. Maybe it’s just not a revenue priority.
This may have changed (and hopefully somebody will correct me if it has) but as I understand Amazon's Inventory Co-mingling strategy, buying from a given seller (even Amazon) doesn't guarantee you are buying that seller's physical inventory - you could still be shipped fake/defective products in to Amazon's warehouses from third party sellers of that same product.
My hearsay understanding of this is that Apple, among others, forced them to make that change as a condition of their vendor contracts.
For example, the news of the fine can allow Amazon to take a charge against the value of goodwill in its books and thereby reduce profits.
Or increase profits by increasing the value of goodwill.
In any case, the majority of the revenue certainly didn't come from the UK.
In 2021, Amazon's UK profits were £23.2B, or $26.2B - of which $1B is almost 4%. Big difference.
To top that off, you're looking at revenue, instead of profit.
I completely agree that the fines should be substantially higher, but being dishonest is bad.
Amazon operates globally.
The fine is just another cost of doing business for Amazon.
From Amazon’s perspective there’s no significance to the fine’s relationship to UK revenue.
Because the practice generates revenue globally.
To be clear, I don’t have an opinion about the fine or Amazon’s practice because it is not worth having one.
(And of course, the practice has been ongoing and the calculation of revenue hit should be amortized over the years since inception and discounted for the time value of money).
This is false. Amazon has the option to stop doing business in the UK, meaning that they lose the revenue, but are not longer to subject to fines from the UK's court system. Amazon very clearly balances the expected costs of doing business in a particular market with the expected benefits.
Similarly, Amazon's use of the practice globally means that they are subject to fines from every market that they operate in. Which you did not count.
> the practice has been ongoing and the calculation of revenue hit should be amortized over the years since inception and discounted for the time value of money
These fines impact Amazon's decision of whether to continue to do the practice today. If the fines start to eclipse their current revenue, it literally does not matter if they'll still have made more money by doing it in the past - they'll cease the activity. Therefore, taking past revenues into account is irrelevant and dishonest.
There's also the point about profit vs revenue made by someone else.
And finally, even if the fine is "low", they still need to change their business practices (assuming they lose the lawsuit).
> Hunter said in a statement: “Far from being a recommendation based on price or quality, the Buy Box favours products sold by Amazon itself, or by retailers who pay Amazon for handling their logistics. Other sellers, however good their offers might be, are effectively shut out.”
I'm scratching my head and trying to figure out how this is illegal or different than what every other retailer can do. Are store brands not a thing under UK law? Are stores required by law to only promote the lowest price?
As a consumer, I certainly don't want Amazon promoting random third party marketplace items over ones actually fulfilled by Amazon.
It's also hard to feel sorry for the kind of businesses hurt by this. Amazon's generics are for product categories that are woefully generic - they source from the same manufacturers as everyone else. And it's not the manufacturers that are suing, but other middle men who are reselling their own white-labeled junk from China.
I think it’s widely accepted that stronger rules can be applied in the case of monopolies. Amazon marketplace is considered by many to be a monopoly.
Store brands should also be looked at critically, yes. Especially for larger store chains.
I dunno, when I go on bezos.co.uk I expect them to be pushing their own products. I don't have to shop there, and when I do, I know I don't have to.