Amazon, the Bully of the Boardwalk when it comes to eCommerce, sells things on its powerful website for third parties. They also sell their own private label products.
As you can imagine, there is a lot of data captured thereby. Take a second and imagine what data such an assignment might generate — popularity of product, names of buyers, pricing info?
So, there has been a persistent “rumor” that Amazon has been using this third party data to decide what items to make for its own account. Act surprised to learn that Amazon makes its own private label offerings — 158,000 such products at last count. Wow!
Immediately, your ethical alarms begin to signal. The red light goes on, it twirls, the siren sounds.
When asked by the US Congress, Amazon gave this answer:
“Well, no, of course, we don’t use third party data to determine what things we might private label, make for our account, but, but, but we might use something we call ‘aggregated data.'”
So, now you are asking: WTF is “aggregated data?”
Before you can get to that answer, turns out that Amazon DOES, in fact, use its third party data to decide what products to make. This wasn’t revealed by Amazon’s leadership, but leaked out by people engaged in doing just that. The little people ratted the company out.
Amazon lied to Congress. Amazon lied to the media — don’t say it. Amazon lied to its customers. Amazon lied.
“You’re telling us, sir, under oath, Amazon does not use any of that data collected with respect to what is selling, where it’s selling, what products, to inform the decisions you make or to change algorithms to direct people to Amazon products and prioritize Amazon and deprioritize competitors?” House Antitrust Subcommittee Chairman David Cicilline, D-R.I. asked at a hearing of his Subcommittee in July 2019.
“The algorithms are optimized to predict what customers want to buy regardless of the seller,” Amazon’s associate general counsel Nate Sutton said at the time. “We provide this same criteria, and with respect to popularity, that’s public data. On each product page we provide the ranking of each product.”
As it turns out, Amazon makes 158,000 private label Amazon products which it sells cheek-by-jowl with third party products on its website. Of course, Amazon controls what comes up under its search function.
They admit that this information is used to influence third party sellers, but in a favorable manner they contend:
1. Amazon private label offerings expand the selection for the consumer.
2. Amazon itself enjoys a better profit margin on selling its own products than in just peddling a third party sellers’ products.
3. The practice injects competition and persuades big brands to cut their prices to meet that heightened level of competition.
Sound beneficial to third party sellers?
Jeff Bezos, potentate supreme at Amazon and a multi-billionaire, famously said, “Your margin is my opportunity!” Wow.
So, dear reader, there you have it. This is happening right now. Stay tuned.
Is Amazon doing the third party data shuffle to inform their own product offerings? The answer could be YES. Stay tuned.