Amazon Used Third-Party Seller Data to Develop Competing Private-Label Products: Report

“We knew we shouldn’t,” one of the former Amazon employees who accessed seller data to benefit the private-label business reportedly said.

Amazon Used Third-Party Seller Data to Develop Competing Private-Label Products: Report

Amazon has more than 45 private-label brands in the US

  • Amazon has rules to only get “aggregated data” from third-party sellers
  • However, its employees reportedly said rules weren’t uniformly enforced
  • Amazon has said that it’s launched an investigation

Amazon employees have reportedly accessed data about independent sellers to build competing products under its private-label brands. The fresh revelation violates the company's stated policies — resulted in the launch of an internal investigation. Last year, Amazon provided a clarification in response to a US congressional antitrust probe and said that it uses “aggregate data” from third-party sellers. The latest report, however, shows that the US e-commerce giant doesn't limit itself to aggregate data in all cases and allegedly looks into insights to develop private-label products rivalling third-party offerings on its marketplace.

Information about third-party products helps Amazon in constructing its pricing and product strategies, reports The Wall Street Journal, citing people familiar with the development. More than 20 former employees and a current one told the publication that the rules related to seller data weren't uniformly enforced. Some past employees also said that the use of such data was a common practice and even discussed openly in some internal meetings.

“We knew we shouldn't,” one of the former employees who accessed the data was quoted as saying by The Wall Street Journal. “But at the same time, we are making Amazon branded products, and we want them to sell.”

Only one percent of total annual retail sales
At present, Amazon has more than 45 private-label brands with some 2,43,000 products in the US. These brands include AmazonBasics that sells everything from batteries to smartphone accessories to cutlery, and Stone & Beam that is meant for furniture. Despite having a large business of private labels on its platform, the Seattle-headquartered company generates only one percent of its total annual retail revenue from private label sales. This is something that has pushed the shady practices.

Some former executives were reportedly told by the management to boost the sales of private-label products up to 10 percent of its retail sales by 2022.

In a statement given to WSJ, Amazon said that it has launched an internal investigation to understand the flaw. “Like other retailers, we look at sales and store data to provide our customers with the best possible experience,” the company said. “However, we strictly prohibit our employees from using nonpublic, seller-specific data to determine which private label products to launch.”

Not the first time
That being said, this isn't the first time when Amazon has been caught for its discriminating practices towards third-party sellers and favouring its own private-label brands. The company was earlier found to nudge people to buy its private-label products against the ones listed by third parties. It also faced scrutiny and antitrust probes due to supposedly giving more attention to its business over third-party sellers. Most recently, the company responded to a US congressional antitrust lawsuit in November last year when it claimed to use aggregate data over individual insights from sellers in its third-party marketplace.

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