Multi-seller retail platforms now account for about half of online sales (1). Such marketplaces as Amazon and Alibaba play a significant role in retail business and their influence on the industry continue growing (2). These competing giants provide customers around the globe with an opportunity to order almost any product and to get it very fast. Even though clients get an advantage of companies’ wide network and infrastructure, new e-com platforms and retailers, which are interested in platform’s services, face significant challenges. I would like to trace the difficulties for both sides using an example of Amazon.
Amazon has already attracted attention of public when “Amazon’s Antitrust Paradox” by L. M. Khan was published. Its dominant position allows the company to lower prices through efficient use of infrastructure and wide network, thus gaining even more loyal and satisfied customers. It also gives the company power to operate not only as a retailer, but also as “a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space” (3). Given its strong market position – company controls almost 50% of US retail e-commerce (4), – Amazon does not allow grow up any new potential competitor and enters other industries itself.
Apart from being almost unbeatable competitor, it also jeopardizes the business opportunities for retailers, which use platform’s services. It was recently published in NYT that Amazon has become a particular focus of antitrust scrutiny because the company “is unfairly using data collected about third-party sellers to make its own decisions about products to sell” (5). Such activities border on monopolistic behavior and should be confronted by government agencies.
While Amazon behavior can be considered as a competition on the market with strong influential players, we need to think about potential dangers of such dominant position as Amazon and other big players have. It creates very unfavorable economic environment and restricts competition.
(1) Market Research (2018). Global E-Commerce Marketplaces 2018. Available at: https://www.marketresearch.com/yStats-com-GmbH-Co-KG-v3734/Global-Commerce-Marketplaces-11539636/
(2) Hanly, K. (2018). Amazon and Alibaba compete for global market dominance. Digitaljournal.com. Available at: http://www.digitaljournal.com/business/amazon-and-alibaba-compete-for-global-market-dominance/article/516532
(3) Khan, L. M. (2017). Amazon’s Antitrust Paradox. Yale Law Journal, 126(3), 710–805
(4) Thomas, L. and Reagan, C. (2018). Watch out, retailers. This is just how big Amazon is becoming. CNBC. Available at: https://www.cnbc.com/2018/07/12/amazon-to-take-almost-50-percent-of-us-e-commerce-market-by-years-end.html
(5) Satariano, A. (2018). Amazon Dominates as a Merchant and Platform. Europe Sees Reason to Worry. Nytimes.com. Available at: https://www.nytimes.com/2018/09/19/technology/amazon-europe-margrethe-vestager.html
