Amazon Undercutting Marketplace Sellers


#1

We have recently seen a dramatic fall in our sales going from turning over above £2000 a day on Amazon to a couple of hundred pounds so this is very significant to our business.

We have spotted that Amazon are selling products that we sell and are doing so at a greatly reduced price that nobody can compete with (plus they get the buy box nearly all the time) . We know for a fact that they have bought directly in huge quantities from the manufacturers in USA which is throttling the supply chain as distributors are out of stock. It is clear to see from what the UK distributor has ordered from the manufacturer and having not received has ended up being sold by Amazon. I see that they have put pressure on the manufacturer to take priority diverting stock to themselves with total disregard for UK businesses.

Of the shops in my industry that are still runnng through this crisis many have reported a huge drop in sales and lack of stock of this particular brand. These are peoples’ livlihoods.

I do feel that Amazon uses businesses that rely on this platform to create a “go to place” for products, then Amazon identifies those products that are most popular and sells them at a price that nobody can compete with because of fees and postage.

I would be interested to know who thinks that (although not illegal) Amazon’s practice is unethical and purposefully damaging to UK small and medium businesses.


#2

In what way “unethical”?
Wouldn’t you offer a lower price to attract market share if you were able to do so and turn a healthy profit, regardless of the effect that doing so might have on your B&M neighbour?


#3

Although is nothing “unethical” about it in terms market competitiveness but I’ve noticed that as well. Considering that many top sellers run out of stock and inventory limitations, Amazon has an advantage over and acts upon.


#4

Nothing unethical about it. In simple (and blunt) terms, if you can’t compete you sell something else or sell on a different platform. This question raises its head every now and again on this forum and the answer is always the same. Regardless of who it was, if somebody was selling goods at cheaper prices than you could compete at, you would complain, would you not? If I could buy what you are selling cheaper than you then it would be me in the firing line, yes? Yes!

It is called ‘competition’. It is what all sellers do, in all types of market places, in every continent of the world. If I can buy cheaper than you then I can sell cheaper than you. If Tesco can buy cheaper than me then I’ve got no chance and have to sell something different or try a different market place. Amazon is a massive company with massive buying power. They can buy in an instant what you would take a lifetime to buy. That’s how they can sell things cheaper. These products you mention are clearly no longer suitable for you to sell, given the competition.

I said I would be blunt, but these things can’t be sugar coated.


#5

The unethical part is surely that Amazon use our sales data for their own purchasing decisions… probably.


#6

Isn’t it anti-competition because they use your sales data and can unfairly decrease their risk?

also YES it is unethical.


#7

Whilst I myself have experienced exactly this with Amazon, I don’t really blame Amazon for it… the minute I signed up to a sellers account I gave permission to Amazon to use my sales data however they choose. As much as it annoys me there’s no point complaining now.


#8

Isn’t Amazon under investigation in the EU for thiis very thing? However this doesn’t necessarily mean that this is what has happened here as Amazon are pretty good at sourcing new products and are cutthroat at negotiating favourable prices. I know some manufacturers who won’t sell directly to Amazon for this very reason as they’d practicaly be selling at cost.


#9

Pricing violations should work both ways and apply to Amazon themselves. All my products are at RRP in the UK and Amazon are massively undercutting and i do mean massively to the point they are almost giving it away as I know they get from the same supplier as me and i know their discounts. That isnt them making money, its them doing whatever they can to hurt other sellers on here, plain and simple. Lets put it this way, if i was to put everything on sale for £1 tonight to do the same to them i will guarantee i have emails galore within 24 hours for pricing violations and my listing suddenly being suspended. In fact i still have 2 listing suspended for daring to be cheaper than them and despite appeals they will not let me sell them as i am considerably more expensive despite being cheaper on both? I particularly love the “sell something else” line as well when as a business, you have built yourself around a particular market and product range. Competition is no problem whatsoever but the biggest player on the block doing what they would never allow another seller on here to do isn’t. yes I know…if i dont like it…


#10

If i am not allowed to buy a substantial amount of stock from the UK distributor with a loan i was going to take out- which is the only way i can just so i can compete, but i am told by the UK distributor that would be unfair on competition, but Amazon can bully the manufacturers in Amaerica into taking all the stock leaving sellers in the UK without stock and selling it it so cheap we would make a loss taking Amazon’s fees into account. i believe this is unethical. Yes i get it that its business, but Amazon make a situation where it is impossible to compete with them.


#11

I get that its competition, its the fact that they are using their buying power to crush their competition- the thing is i cannot buy it cheaper to compete as I MUST buy from theUK distributor. they use their power to bypass the rules tahat we must follow and undercut everyone. my point is that you would not be able to buy cheaper than me as you would be bound by the same buying restrictions I am, but Amazon are exempt. we already sell on several platforms and sell many other lines. some of which are also being bought by Amazon and sold practically at cost.


#12

The point is, if we were to offer lower price than Amazon, we would make a loss and thats not good business is it?

its also very difficult to sell at all if Amazon have bought all the stock starvive the UK distributor


#13

That is how business works. It’s not a gentleman’s club…it’s a competitive market place. If you could sell what we sell and get it cheaper than us, are you suggesting that you wouldn’t beat us on the price but would simply match our price, or sell for more, just to be nice? Business doesn’t work on niceties, it works on profit. Profit is not a dirty word, only a dirty method if you make it illegally. Amazon are not doing anything illegal. It is simply business, so I repeat: if you can’t compete then you have to try something else.


#14

Aren’t Amazon shooting themselves in the foot though?

If they are selling it to the point where it’s obvious they are making next to no profit, wouldn’t they have been better off leaving you alone and collecting their profit through your fees?

Or do you think they’re playing the long game… waiting until you throw in the towel, at which point they can inflate their prices?


#15

History does suggest Amazon’s strategy is the long game, as in if u look closely they take out the competition ( 3rd party sellers) dominate the market and then use that to make real profit in future… Its a demolish and conquer strategy, it strikes me amazon are like fighting a battle or war to win in the long term not only now but in the future!

I think the only conclusion is to buy shares in Amazon as they are likely to make more money in the future when they charge better prices for their products…


#16

Capitalism (when it) works as a system is because it’s legally regulated, for example property ownership, intellectual property, and fair competition. At the moment Amazon escapes a lot of regulation which is applied to most other industries. Regulation of and separation of too much vertical integration has long been a touch stone of competition policy. Amazon’s third party marketplace and their own selling business should be legally separated and walls established between the two

Amazon has grown so mighty that applying the winner takes all ethos and saying that losers should just move on is simplistic and no longer appropriate

It has become very apparent that running a third party website and at the same time participating in the same marketplace gives advantages to Amazon which IMO are unethical and in the long run injurious to fair competition. Your analogy to Tesco is wrong because Tesco can’t use it’s competitors to test products, and de facto have access to almost all their commercial information. I agree with the OP that although legal it’s not ethical to on the one hand to encourage third party sellers to build up product categories or even whole businesses, and then overnight destroy that effort by using their superior buying power and willingness to sell at virtually no profit on specific lines to destroy competitors.

Please note that this opinion has nothing whatsoever to do with my own business. You will remember previous exchanges Like you I am always looking for, and mostly succeeding, in finding ways of making my own living on here.


#17

That is only your opinion. I disagree. Tesco had access to commercial data from every supplier they use and every customer long before Amazon even existed (Clubcard, in the case of customers). It’s all still irrelevant. Whether or not saying losers (your word, not mine) should move on is “simplistic or no longer appropriate” cuts no ice. That is the situation. You take it or you leave it. You compete or you don’t. If the law allows you to do it (which it does) then why, if you were in Amazon’s shoes, would you not do it?

I repeat what I said to the OP, to you. If you could sell the same products as me, cheaper than me, would you sell them at the same price or higher just to be nice? No you would not. You would beat my price, put me out of business, then you could sell at a higher price. That is how business works, it is how it has always worked and it is how it always will work. It is survivial of the strongest, whether that is palatable or not, unfortunately.


#18

But did they also have the data from Sainsbury’s, Asda, Aldi etc etc?
Tesco doesn’t control access to the market in the way Amazon (virtually) does.
If Tesco were able to terminate, say, Asda’s ‘selling privileges’ at will it would be a more appropriate comparison.


#19

Its all hypothetical. The point is, no matter how much people want to complain, that’s the way the business of Amazon works. Compete with them or sell something else / elsewhere. There are no other options. The other place is no different. There are lots of other sellers who will undercut you on various products until you’re gone. The only difference there is the lack of controls over who sells. Any Tom, Dick and Harriet can sell there whereas here, there are more restrictions. It is what it is. We all just get on with it. Not like there’s going to be a strike or even any collective approach.


#20

Maybe it is not ethical, but it is immoral and Amazon will forever hide behind the banner of capitalism to defend their actions.

It is well established that Amazon use sellers to determine items that sell well then seek those items to undercut, regardless of the consequences to those small businesses and their families.

I think it is reprehensible (and, no, this has not happened to me so I am not someone with an agenda, just a heart) but it will not change. Alas, for all of our combined whinging (and I have done my fair share) we all willingly play the game. I hedge my bets by buying Amazon stock: at least I can capitalise on their corporate greed.