Jeff Bezos's Testimony to Congress and Why It Is Good For Third-Party Amazon Sellers
In his opening testimony, he states:
"20 Years ago we made the decision to invite other sellers to sell on our store, to share the same valuable real estate we spent billions to build, market, and maintain. We believe that combining the strengths of Amazon's store with the vast selection of products offered by third-parties would be a better experience for customers and that the growing pie of revenue and profits would be big enough for all. We were betting it was not a zero-sum game, fortunately, we were right. There are now 1.7 million small and medium-sized businesses selling on Amazon."
The videoconference was held in front of a bipartisan group of 15 U.S. House members.
Their main concern about Amazon is the online retail giant's power over its smaller merchants.
The house members have been investigating all four of the tech companies over the past year to decide if the country's antitrust laws are modern enough to restrict the companies from abusing their power.
Amazon's market share in the U.S. E-commerce industry has increased to about 40%. No other online retailer is remotely close to that percentage, which forces other e-commerce stores to sell on Amazon's marketplace.
The Wall Street Journal published an article stating that Amazon uses data from small merchants to decide which private-label products to develop under their brands, such as Amazon Basics.
The committee is concerned that Amazon is doing this to make sure no merchant on their platform can compete with them.
Bezos's testimony did not help Amazon, but it is good for Third-Party Sellers.
Bezos argued that no other retailer has a policy regarding the issue, but realistically no other retailer has a marketplace close to the size of Amazons's.
Congress is also concerned that Amazon is using its power to force merchants into paying for services such as Fulfillment by Amazon (FBA).
Remember, in order to win the buy box and earn sales, a seller needs to be using Fulfillment by Amazon. However, sellers should not mind these fees because Amazon is taking care of storage, shipping, and customer service.
FBA fees were approximately 19% five years ago. Today, they are about 30%.
Congress is concerned that Amazon is essentially forcing sellers into using FBA and will continue to increase its fees for such services.
Why is his testimony good for Third-Party Amazon Seller?
Congress may enforce new antitrust legislation on Amazon's business practices to strip the company of its power to influence the competition and essentially give more power to third-party sellers.
After all, 60% of Amazon's retail sales come from third-party businesses.
In Jeff Bezos's testimony, he could not ensure that his company was not using independent sellers' data to gain an unfair competitive advantage in the marketplace.
He also did not provide an update on Amazon's internal investigation regarding the potential anti-competitive business practices.
It opened up the eyes of 1.7 million Amazon sellers to the fact that Amazon holds too much power on its e-commerce marketplace.
The purpose of the investigation is to take power away from Amazon, so there is no unfair advantage against smaller merchants.
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