Amazon is Putting First Its Own Products Solimo, AmazonFirst!

Renee Dudley (ProPublica) 08 June 2020

Economy & Nation

Brands have long been able to bid for the premier slot at the top left of Amazon’s listings, but during the pandemic the online retailer has begun using this position for its private-label items, raising antitrust concerns.

Until recently, when Amazon customers typed “melatonin” into the site’s search bar, a variety of sleep supplements would appear in the most coveted real estate on the listings results—top left on the first page.

One of consultant Jason Boyce’s clients, a seller of natural supplements, often sought to outbid competitors for the best spots by promising Amazon about $6 each time someone clicked on the product. While the brand never attained the top left slot, it regularly landed in the top row. But in late March, Boyce noticed that Amazon’s own brand, Solimo, had taken over the top left, while his client’s product had been bumped to a lower row. Then Boyce typed “ground coffee” in the search bar, only to find AmazonFresh Colombia ground coffee in the top left, pushing down another client.

“This is madness,” Boyce said. “They’re putting their own product right in the front of the line.”

He said the clients, whom he declined to name because they feared retaliation from Amazon, were outraged. “They were thinking, ‘What is Amazon going to do next?’” he said.

Although customers don’t necessarily realize it, brands have for years been able to bid on search terms to secure the most visible listing positions at the top of Amazon’s product search results pages, where their products carry a “sponsored” tag above the description. Now, they still bid for top-row placements, but the best spot — the top left on the first page — is unavailable across dozens of product search terms, according to consultants and ProPublica’s own review. During the pandemic, Amazon has begun to use that position for its own private-label products, without bidding, under the heading “featured from our brands.”

The domino effect of Amazon’s new strategy has demoted competitors’ listings for products including diapers, copy paper, kids’ pajamas, mattresses, trail mix and lightbulbs. By putting its own private brands in some of the most valuable slots, Amazon is sacrificing short-term ad revenue to build up sales of its private brands over time, consultants said.

The new approach violates Amazon’s mantra that every decision must put the customer first, said Tim Hughes, a consultant who used to work in product management at Amazon. “Why would their brand be a better option for consumers?” said Hughes, chief operating officer of a firm that helps brands manage Amazon accounts. “It doesn’t necessarily have to be cheaper, or better, or anything. So then what’s their justification to say, ‘We’re just going to put this up in front of everybody else’? This is just another example of Amazon being able to manipulate the platform for its own good use.”

While Amazon has promoted its own private-label products in various prominent spots on its site over the years, consultants and legal experts said this latest iteration takes advantage of the surge in online buying during the pandemic and may accentuate antitrust concerns for a company already juggling domestic and global probes. Amazon’s share price has increased more than 30% this year, although the company missed earnings estimates for the most recent quarter because of higher costs.

Amazon’s dedicating of prime positions to its own brands could be viewed under U.S. law as “exclusionary conduct” — which, along with proving a company has substantial market power, is a key element of antitrust cases, said Christopher Sagers, a professor of antitrust law at Cleveland State University in Ohio. Continue Reading…

Courtesy: ProPublica.org

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