Despite a record sales volume, 2021 so far hasn’t been particularly certain for Amazon—and by default, Amazon sellers.
Amazon may not have a monopoly on eCommerce, but there’s a considerable advantage they historically maintain. And third-party sellers contributed to Amazon’s $113.1 Billion in sales during Q2 of 2021 at an alarming rate, reportedly to the tune of 56 percent.
But if Amazon has a considerable marketplace advantage, there’s a growing public concern that their advantage may be too unfair, effectively staunching competition. It’s not an entirely invalid one. Amazon’s share of the US eCommerce is predicted to reach 40.4 percent by the end of 2021—far overshadowing Walmart and eBay, their top two competitors. But that concern has also sparked no fewer than six separate antitrust bills presented before Congress over the past twelve months, of which the Ending Platform Monopolies Act (EPMA) is by far the most significant.
But should sellers really be concerned with antitrust litigation? And will Amazon necessarily be there to defend them?
Amazon’s Stance: A (Mostly) Free Market? It’s worth noting that Amazon would not be the only monolithic entity potentially affected by EPMA, nor is the bill without precedent; most notably, the breakup of AT&T in 1984 as a result of the Sherman Antitrust Act. But the ramifications of EPMA are different, as they could potentially affect the operations of third party sellers on Amazon.
“The bipartisan Ending Platform Monopolies Act requires dominant platforms including Amazon to divest lines of business—such as Fulfillment by Amazon—where the platform’s gatekeeper power allows it to favor its own services,” stated Chris Evans, a spokesman for Pramila Jayapal, sponsor of the bill. “Numerous third-party sellers reported feeling that they had no choice but to pay for Fulfillment by Amazon in order to sell their products.”
Except the phrasing of the bill is vague in how any potential divestment might be implemented, and whether or not sellers would remain able to sell on an Amazon platform or a platform spun off by Amazon. It’s confusing—and more than a little frightening. In response, Amazon has recently set up a website for sellers to keep informed by regular email updates of Amazon’s public policy and developments to the EPMA bill. Yet it does not specifically address precisely how Amazon hopes to address the bill if it comes to pass. Or more importantly, just how sellers will be affected.
Sellers Speak Out: Not So Fast
While EPMA could potentially result in some broad sweeping changes, it’s not designed to penalize sellers. In fact, the opposite. It’s designed to eliminate the competitive gap between Amazon and smaller online platforms. The reality is that third-party sellers have never had to rely on FBA to successfully sell on Amazon. And it’s difficult to imagine Amazon eliminating their third-party market altogether when they constitute the majority of all retail sales.
At the same time, Amazon seems to have deliberately conveyed an alarmist tone in their statements. “...if enacted, these bills would jeopardize Amazon’s ability to operate a marketplace for sellers, potentially resulting in hundreds of thousands of American small and medium-sized businesses losing access to Amazon’s customers and services,” reads a statement on their site. “This would obviously hurt small businesses’ ability to generate the revenue they do today, and hurt hundreds of millions of consumers who appreciate the broad selection and lower prices that our selling partners provide.”
“...much of what Amazon has said about these bills is self-serving,” stated a spokesperson for the Online Merchants Guild. “Amazon may have led you to believe that these bills threaten the viability of the platform’s FBA services thereby jeopardizing the competitiveness of its thriving third-party marketplace businesses as well as the hundreds of thousands of competing, small businesses across the nation. But the legislation doesn’t say that — Amazon does. Amazon is scared of the accountability that they are facing, you don’t have to be.” Is Amazon using scare tactics in order to seek your defense? Perhaps. If so, they shouldn’t. 691,000 new third-party sellers are predicted to join Amazon this year. And Amazon needs them. They’re an increasingly vibrant part of their fabric. To lose them would be to lose a marketplace they helped develop. A marketplace they’ve nurtured. And a marketplace they can no longer afford to live without.
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