Amazon systematically used third-party sellers' data to copy products and promote them to shoppers, despite saying otherwise, according to a new report
- Internal Amazon documents reportedly show the firm systematically copied popular products in India.
- The docs show Amazon used third-party sellers' data to rig search results to favor its own sales.
Internal Amazon documents show leadership at the company's India marketplace developed strategies to copy competitors and sell their own products at a lower cost, according to a Wednesday report from Reuters.
The outlet viewed thousands of pages of internal emails, strategy papers, and business plans that revealed how Amazon worked to siphon data from third-party sellers in India to create its own knock-offs and profit in the country, which is one of Amazon's largest potential growth markets.
Amazon has long fielded backlash over what critics say is undercutting the competition on its online marketplace and has faced lawsuits and antitrust scrutiny over the matter. The company has consistently pushed back on that characterization, including during a July 2020 Congressional testimony by then-CEO Jeff Bezos where he said Amazon does not favor its own retail products over those of third parties.
Private label marketing has a long history in retail, and many brands including Target, Costco, and Walmart, rely on in-house products for a sizeable portion of their revenues. Still, the documents show the extent to which Amazon has been able to leverage its power as the world's largest e-commerce platform.
The internal material reviewed by Reuters shows Amazon not only used third-party data to beef up its private brand business but also rigged the company's search results so that its private brand items would appear "in the first 2 or three … search results," according to a 2016 strategy report for India.
Leadership was in on the plan as well - Reuters reported that one current Amazon executive, Russell Grandinetti, personally reviewed the strategy.
Amazon did not immediately respond to Insider's request for comment on this story but told Reuters it "strictly prohibits the use or sharing of non-public, seller-specific data for the benefit of any seller, including sellers of private brands" and doesn't display search results based on whether those products are private or third-party. The company also called the claims in the report "unsubstantiated" and "factually incorrect."
In one instance, Amazon specifically zeroed in on a popular Indian shirt company, owned by India's "retail king." The e-commerce giant opted to "follow the measurements" of the shirts, like the neck, armhole, and sleeve dimensions, and sell their own copycats, the documents said according to Reuters.
The same 2016 document reportedly showed that Amazon wanted to partner with the manufacturers that worked with its third-party rivals in India to "fully match quality with our reference product." The company referred to that as "Tribal Knowledge."
One current seller told Reuters that Amazon's strategy "destroys the level playing field." Another, who told the publication that he used to earn $1,500 a month selling Logitech mouse pads on Amazon's India marketplace, said his sales dipped off after customers started buying an AmazonBasics one that was about 60% cheaper. He said his Logitech product also started dropping in the search results.
"It's very frustrating, he told Reuters. "They are mistreating sellers."
The report appears to support arguments from Lina Khan, the new US Federal Trade Commission Chair, who has long described Amazon's private-label business as anti-competitive.
"It is third-party sellers who bear the initial costs and uncertainties when introducing new products; by merely spotting them, Amazon gets to sell products only once their success has been tested," she wrote in 2017. "The anti-competitive implications here seem clear."