Amazon touts small business success amid third-party seller scrutiny
Amazon on Tuesday released new data touting the success of sellers on its third-party marketplace amid mounting scrutiny from lawmakers of its private-label business practices.
Amazon launched the third-party marketplace in 2000, allowing everyone from small businesses that operate out of their garage to established brands to sell their wares on the site. It has since grown to encompass millions of sellers and now accounts for roughly 60% of Amazon’s overall retail sales.
But in recent months, Lawmakers, antitrust watchdogs and advocacy groups have voiced growing concerns around Amazon’s treatment of third-party sellers and whether the company unfairly favors its own products on its marketplace.
In a report issued Tuesday, Amazon sought to characterize the roughly 2 million small- and medium-sized businesses that sell on its site as “selling partners,” many of which have benefited from the outsized growth of e-commerce during the coronavirus pandemic.
Third-party sellers in the U.S. netted an average of $200,000 in sales in the 12 months ending Aug. 31, up from $170,000 during the same period last year, Amazon said. U.S. sellers sold more than 3.8 billion products over the period, compared to 3.4 billion in the year prior.
The report, which comes ahead of Amazon’s annual seller conference on Wednesday, also highlights the growth of Amazon’s third-party seller services and its rising investments in the marketplace.
Half of Amazon’s roughly 500,000 U.S. sellers used Fulfillment by Amazon, a service that packages and ships orders for sellers from the company’s warehouses. Sellers who used FBA saw a 20% to 25% increase in their sales on average, Amazon said.
As part of broader antitrust scrutiny into Amazon’s business practices, regulators have zeroed in on the company’s logistics business and examined whether the company pressures sellers into using its services in exchange for preferential treatment on the marketplace.
More recently, lawmakers have questioned Amazon over whether it uses third-party seller data to launch private-label goods and boosts those products in search results.
Five members of the House Judiciary Committee sent a letter Sunday to Amazon CEO Andy Jassy urging him to respond to allegations that top executives, including founder and executive chairman Jeff Bezos, mislead or lied to Congress about its private-label business practices.
Last week, Reuters and The Markup published reports that Amazon used internal seller data to copy popular products and rigged search results to favor its own private-label products. Those findings followed earlier reporting from The Wall Street Journal, which found Amazon employees developed workarounds to Amazon’s policies so that they could review individual seller data and launch competing products.
Amazon has denied that the company and its executives misled the committee, saying it has internal policies that prohibit employees from using single sellers’ data to develop its own products.
Dharmesh Mehta, Amazon’s vice president of customer trust and partner support, told CNBC that media reports detailing the company’s use of seller data are inaccurate.
“Every now and then you see speculation around short-term, profit-driven actions and Amazon would not do that,” Mehta said. “It just doesn’t make sense because we’re in this for the long haul with our selling partners.”
In addition to goods from third-party sellers, Amazon also sells its own products under the AmazonBasics branding, along with other brand names. Sellers have complained that Amazon unfairly competes with third-party businesses on its platform, with some alleging Amazon directly knocked off their goods.
They’ve also argued that Amazon hampers third-party sellers businesses through an increasingly automated account suspension and appeals process, which can be lengthy and financially crippling.
Mehta said the majority of third-party sellers are “thriving” on Amazon.
“They have a lot of choices for where to sell their products,” Mehta said. “They can create their own websites, sell through other channels, sell offline and many sellers continue to choose Amazon.”
Still, Mehta acknowledged that Amazon has room to improve its relationship with merchants, whether it be addressing enforcement issues or simplifying the selling process.
“We have to continue working super hard every day to earn sellers’ trust,” he added.
WATCH: Amazon CEO: We experienced 2-3 years of growth in 18 months