Member Exclusive   //   January 25, 2024

Amazon Briefing: How new U.K. buy box practices could impact the seller ecosystem

This is the latest installment of the Amazon Briefing, a weekly Modern Retail+ column about the ever-changing Amazon ecosystem. More from the series →

A new rule from Amazon in the U.K. hints that the e-commerce giant may be willing to make big concessions to avoid governmental scrutiny.

Amazon told brands and sellers that “Eligibility for Prime and the Prime badge will not be a criterion when determining the Featured Offer.” In essence, Amazon is telling brands that they don’t need to rely on Amazon’s fulfillment services to be deemed one of the top choices for products on its marketplace. But, as with all things Amazon, there are caveats.

It’s unclear what the impact of this new rule could be until it’s fully implemented. And there’s disagreement from the Amazon community about whether or not the product selection will change. But the rule could go beyond the U.K. borders, especially as other oversight agencies in both the EU and the U.S. continue to try and rein in Amazon’s e-commerce dominance.

As the European publication Ecommerce News first reported, Amazon told the U.K.’s Competition and Markets Authority (CMA) that it would begin implementing these changes following a multi-year investigation.

The watchdog began looking into Amazon’s practices in July 2022, specifically investigating “the way that non-public third-party seller data may be used within Amazon’s retail business, how Amazon sets criteria selecting which product offer is placed within the ‘Buy Box’ and which sellers can list products under Amazon’s ‘Prime label’ on its Marketplace in the UK.” In November of last year, the two came to an agreement, which included Amazon guaranteeing that “all product offers are treated equally when Amazon decides which will be featured in the ‘Buy Box’.”

This latest move is a part of this agreement. In a message to sellers, Amazon wrote, “Eligibility for Prime and the Prime badge won’t be criterion when determining the Feature Offer. Prime will continue to offer free and fast delivery, which are factors that customers value and therefore are relevant in determining the Feature Offer.” The changes will be enacted in May 2024.

To many insiders, the fact that Amazon said that Prime was no longer a determining factor for the buy box but it still required what it considers free and fast delivery, was the most telling part of the message.

“It’s almost like they’re saying everything is changing but everything is staying the same,” said Chris Turton, managing director at Ecommerce Intelligence. That is, while Amazon is saying that brands don’t necessarily need to have the Prime badge, they are still expected to conform to the standards it sets to receive it.

“The challenge is that Amazon will still define the fast and free delivery as its own options,” Turton said. And while brands could try to use other couriers, it’s very difficult to find additional services that provide the same level of service most days of the week.

However, larger players may be the ones who see the real benefits of this change. According to Eddie Latham, founder of the U.K.-based agency Velocity, there are a number of brands that likely are able to provide so-called free and fast delivery but have opted to not receive the Prime badge. For example, a big retailer that already has preferential rates with multiple carriers and relies predominately on its own channels very likely has items listed on Amazon’s marketplace but would prefer to not ship out products to an Amazon warehouse. Before, they would have been unable to receive the buy box, but now, “they can compete with selling on Amazon just with price,” said Latham.

One of Latham’s clients, for example, manufactures laptops. Most of its sales are B-to-B or direct — what Latham described as a “high value, low margin product.” As such, this company opts not to use Amazon’s fulfillment for fear that expensive products will sit unsold in the warehouses. “For those sorts of people, [this update] is huge,” Latham said.

But Andrew Banks, CEO of the agency Venture Forge, thinks those examples are few and far between. “Very few have that buying power, operational scale and efficiency to beat out Prime,” he said. Even the largest brands and retailers in the U.K. likely spend more on fast delivery compared to the network Amazon is built up. “I don’t think [this change is] going to be massively influential,” he said.

Another big question is whether this move will have a domino effect elsewhere. The U.K. certainly isn’t the only governing body looking into Amazon’s competitive practices. The EU, for example, launched an antitrust investigation in 2020, which led to a deal between the two in 2022 that included giving brands a second buy box to offer customers different competing offers in addition to the singular one it historically has prescribed. And the FTC levied a lawsuit against Amazon last year, stating that “Amazon’s ongoing pattern of illegal conduct blocks competition, allowing it to wield monopoly power to inflate prices, degrade quality, and stifle innovation for consumers and businesses.”

Paulina Turner, co-founder of the European Amazon agency Boomd, does think this could lead to more scrutiny from other countries. “Amazon has had investigations into their dominance over the market,” she said, pointing specifically to Italy’s antitrust watchdog recently launching investigations into different arms of the company. “We’ll have to see what happens with the EU,” she said.

Similarly, Turner did see the possibility of U.S. brands that utilize micro-deliveries to push for a change too. “There are sellers who are very efficient with deliveries in their own local areas,” she said. Now, those brands are unable to get the buy box unless they are wholly on Prime and relying on Amazon’s fulfillment in some capacity. But if they could use their own fulfillment network in certain regions and still have the buy box, “it could open up the space,” Turner said.

Venture Forge’s Banks, meanwhile, does think there will be more antitrust inquiries, but isn’t sure Prime will be the main focus. “In the broader antitrust question, Amazon will face more type of this investigation — but not specifically with Prime,” he said. “This is the tip of the iceberg.”

For now, it’s unclear how big of a change this will bring. “Generally I think it’s positive news,” said Turner, “but it’s very early [to know] what exactly will happen.”

Amazon news to know

  • Layoffs have once again hit Amazon — this time in its Buy With Prime division.
  • France has fined Amazon around $35 million over its worker tracking practices at its warehouses.
  • Amazon is trying to disrupt the car dealer industry. Dealers aren’t sure if it will be able to accomplish its lofty ambitions.

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