Why Amazon’s offer to change the way it uses seller data is a big deal

y carrier for their logistics and delivery services. It also said it would not use Prime data on the performance of third-party carriers to refine its own logistics services. 

If accepted, the proposed changes would end the European Commission’s three-year-long antitrust investigation against Amazon. The Commission is currently asking for feedback on the changes, which would apply to all Amazon marketplaces in the European Economic Area, except for Italy, for five years.

But despite the fact that brands have been complaining about these practices for years, millions of sellers are clearly still willing to list their products on Amazon. So, how big of a deal are the changes really?

We asked Merline McGregor, general manager of Pattern Australia, a global e-commerce accelerator, about the long-running controversy over Amazon’s use of seller data, and what impact the changes could have on brands.

What to know about Amazon’s use of seller data

While complaints about Amazon’s use of internal data to identify popular products, create its own private-label versions and undercut third-party sellers have drawn the attention of global regulators, McGregor noted that this practice has a long history in retail. 

“Even before Amazon entered the market, more traditional multichannel retailers including department and multi-brand stores used both their own customer and brand data to their advantage,” she told Inside Retail

“These operators traditionally use data on brand searches on their platform, and sales data from both online and in-store to inform their own NPD [new product development] schedule. Many brand aggregators manufacture their own brands and place these alongside the brands they buy through a more traditional wholesale or concessional relationship.”

One key difference is the existence of the Buy Box, which reportedly drives 83 per cent of sales on Amazon. But McGregor said that any incidents of Amazon giving its own products preferential treatment in the Buy Box have been “few and far between from what I’ve seen first-hand in the Australian market”. 

Why millions of sellers still use Amazon

There have been multiple reports over the years of third-party sellers losing their business to Amazon, so why are so many brands still willing to list their products on the platform? The most recent estimate suggests there are 2.6 million active third-party sellers on Amazon.

“For most brands the benefits definitely outweigh the risks,” McGregor said. “Additionally, there are so many ways to take advantage of the platform and negate the risk that comes with entering into a relationship with any third party – whether it’s Amazon, or another retail aggregator or wholesaler.”

Pattern’s latest consumer research found that 65 per cent of online shoppers who made a purchase on Amazon bought from a brand they had never shopped with before, which speaks to the potential for brands to be discovered on the platform. 

“In 2022, our marketplace brands grew 280 per cent, well above the retail e-commerce average, due to the platform growing at a rapid rate,” she said. 

How the proposed changes could impact brands

McGregor believes the proposed changes are important, and if made, would provide added transparency and encourage more brands to sell on Amazon. 

“Amazon has already reportedly drastically reduced the number of items it will sell under its own brands due to disappointing sales results, and no doubt regulatory pressure may also be playing a part,” she said. 

“This leaves third-party sellers and brands with even more confidence to sell on the platform in years to come.”

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