Why we must rein in Amazon -- and how

But 27 cents on the dollar was but the beginning of what became systematic coercion. Amazon punished vendors if their products were available elsewhere at a better price—and, in some cases, refused access if they sold through anyone else. To further quash competition from other platforms, it cut the price of vendors’ products below what they sought, then paid them the difference—effectively converting vendors to instruments of market dominance. Amazon required vendors to purchase advertising on its website—an expenditure essential to maintaining sales and, therefore, a ranking which entitled them to the preferential placement through which Amazon directs customers to products. But Amazon also pushes its own products in competition with vendors, using its platform to secure an advantage. Worse, Amazon uses sales data from its vendors to design knock-offs of their most popular products—then sells them at a lower price. To accelerate delivery times, Amazon opened huge warehouses—and then informed vendors that those who used them would be eligible for Amazon Prime, thereby broadening Prime’s popularity among consumers. By 2013, the number of vendors using Amazon warehouses had risen by 65 percent. In turn, vendors had to pay a monthly fee merely to speak to a live customer sales representative about any delivery problems. By now consumers are addicted to Amazon Prime. And so, of necessity, are Amazon’s vendors.