This is the latest installment of the Amazon Briefing, a weekly Modern Retail+ column about the ever-changing Amazon ecosystem. More from the series →
This is the latest installment of the Amazon Briefing, a weekly Modern Retail column about the ever-changing Amazon ecosystem. To receive it in your inbox every week, sign up here.
Amazon merchants based in the EU have reason to cheer this holiday season, as a series of new concessions aimed at securing their data were passed into law by the European antitrust regulator.
This week, the European Commission and Amazon struck a deal that will allow sellers to operate on the marketplace under more fair and equitable conditions. The deal is part of a settlement that puts an end to two antitrust investigations that could have cost the e-commerce giant a significant sum of money.
As part of the new agreement, Amazon will no longer use non-public data from independent sellers in the EU to influence its own product decisions. Amazon will also need to give its European sellers equal access to the Buy Box and other important real estate on its website. Additionally, sellers will be able to enroll in Amazon’s Prime program without having to sign up for the company’s logistics and delivery services.
Sellers and agency heads based in the region said this is a big step forward in giving sellers more power to operate on the marketplace. But, they also cautioned that they need to see the fine print to ensure Amazon has not added other hoops for sellers to jump through.
“Amazon rules will be designed for fairness, not for the good of the company, ” said Stef van Boekel, who works with brands to help them have a European Amazon presence. “That is a good step forward ensuring the marketplace stays sustainable for the companies that invest to sell via Amazon,” added van Boekel who runs the European Amazon operator Marketplace Distri based out of Netherlands.
For Lesley Hensell, who works with home goods vendors selling cleaning products and cleaning tools and leather product manufacturers in the EU region, the most exciting part is, “Amazon promising to not use seller data to develop its own products or to market its own products.”
Amazon, she said, “shouldn’t be mucking around in third-party seller data. There are too many horror stories out there about someone who develops a great product and then Amazon shows up at their supplier and sources the same product and competes with them. So this helps to mitigate that risk.”
Amazon has also committed to not tinkering with the Buy Box — a button on product pages that essentially indicates the preferred seller to buy from — rankings and treat all sellers equally. Sellers often win the Buy Box by offering the lowest price. Amazon uses an algorithm for the Buy Box that also takes into account other factors like sales volume and inventory levels. But with this new change, Amazon is essentially saying it won’t favor its own products when deciding which product listing to give the Buy Box to.
“If they [Amazon] aren’t allowed to favor themselves over sellers with the exact same offer, that’s another huge win. That can be so disruptive to a seller’s business,” said Hensell.
Hensell pointed that if a third-party vendor was actually selling the exact same product as one of Amazon’s private label brands in the past, they risked being stuck inventory with forever if Amazon continuously undercut the vendor. “How can [the vendor] compete when [Amazon is] undercutting them on price and your fulfillment is the same as their fulfillment, and you don’t get the Buy Box?” she said.
Amazon will also display a second Buy Box offer if there is a significant difference on account of either price or delivery. “This secondary Buy Box is very exciting. I would love it if we had it here in the U.S., because there are times where I care less about delivery time than I do about price. And there are times when I care less about price than I do about delivery time,” said Hensell.
Amazon accelerator Pattern, which works with EU based Amazon sellers like Holland & Barret, Fortnum & Mason, Thorne, Yogi Tea and Kong, also lauded the second Buy Box. “Offering a second Buy Box could be good for offering more choice for customers and a more level playing field for third party sellers, but it’s unclear how that can be achieved while maintaining a simple customer experience,” said Nicola Hollow, general manager of Europe at Pattern in an emailed response.
In another big change, Amazon will allow Prime sellers to freely choose any carrier for their logistics and delivery services — rather than forcing them to use FBA — and allow merchants to negotiate terms directly with them. But one seller cautioned that Amazon might be oversimplifying this clause.
“When Amazon says you can choose your own carrier and you can ship Prime there’s going to be some hoops to jump through. Because that doesn’t mean you’re going to meet their requirements,” Hensell said, citing the hypothetical example of Amazon not granting Prime eligibility to a seller whose 3PL takes six days to ship out a product.
However, despite these concessions, sellers still have gripes with Amazon. In particular, they pointed to Amazon’s lackluster seller support infrastructure, as well as its frequent fee hikes that they say make harder to operate on the marketplace.
“In general, we are looking for better [backend seller] support since it is terrible,” said van Boekel. Hensell added that she expects the quality of seller support offered to drop further, because of the ongoing cost-cutting review and headcount reduction taking place at Amazon.
Van Boekel said he would also like to see Amazon, “create a basic breakdown of the parameters that affect the Buy Box and at what degree,” suggested van Boekel.
Still, Hensell said sellers should be “extremely pleased and excited about these changes to protect their data, and to give them more opportunities to be in the Buy Box.” Beyond that, making too many changes to what has made Amazon special could hurt the buyer experience, she added.
Amazon news to know
- Amazon has “written the rules of modern retail. After a disappointing year, it may not be able to keep winning at its own game,” writes Bloomberg Columnist Leticia Miranda in an opinion piece.
- German union hints of pre-Christmas strikes at Amazon to protest over pay hikes, Reuters reports.
- Amazon warehouse workers describe the “notoriously exhausting and demanding” working conditions during holiday season, Wired reports.