Amazon sellers are organizing against the retailer in the middle of probes

• Amazon and the FJ and the FTC investigate violations of anti-trust laws.

• Third-party sellers, some of whom generate millions of sales every year, are preparing to complain to government authorities about why Amazon is competing with them – and destroying their businesses.
• Amazon's third-party platform accounts for about $ 307 billion, according to a Morgan Stanley report.
• Visit the Business Insider home page for more stories.

Third-party sellers are quietly feeding the dominance of Amazon's retail business.

According to a recent Morgan Stanley report to analysts, Amazon's third-party business accounts for $ 307 billion on a $ 1.1 trillion company value, accounting for 58% of all sales of merchandise. Meanwhile, the platform of the first party is worth $ 93 billion.

In his 2018 letter to shareholders, Amazon's founder, Jeff Bezos, touted third-party sellers, who he described as being primarily small and medium-sized businesses. From 1999 to 2018, these sellers had a compound annual growth rate of 52%. On eBay, these same small sellers had a CAGR of 20%.

"To put it bluntly: third-party sellers are attacking our first party," writes Bezos. "Wrong."

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But the third-party salespeople who spoke to Business Insider do not feel exactly the same love for Bezos he professed to them.

Complaints abound

"I've been selling on Amazon for seven years," said Business Insider Scott Needham, CTO, Amazon Market Vendor, BuyBoxer. "From the beginning, if you look at the mechanics of things, in some situations, it's just not a fair deal."

Some sellers say that Amazon has an unfair advantage in accessing sales data on its third-party platform. For example, a company told Bloomberg in 2016 that its world's best-selling notebook stand had been moved when Amazon Basics launched a very similar product at half price.

Another major complaint of Amazon sellers is that their accounts could be suspended without notice or explanation. The process to restore his account is brutal, said salespeople to Business Insider.

"I think a lot of sellers are aware that they are against it and that Amazon is not their friend," Business Insider Paul Rafelson, Tax Lawyer at Francissen Rafelson Schick, LLP told Business Insider. , whose practice is focused on helping Amazon sellers. "Amazon will use them if necessary and will eliminate them if necessary.There is no love there."

An Amazon Flex driver providing packages.Pat Greenhouse / The Boston Globe via Getty Images

Chris McCabe has worked at Amazon for more than five years on account compliance. Mr. McCabe, who is now an independent consultant and helps Amazon sellers whose accounts were suspended, told Business Insider why it was so stressful for sellers whose accounts are abruptly canceled.

When customers complain to a seller about a seller, Amazon takes these complaints seriously and risks suspending the account, even if the reasons are more "obscure," McCabe said.

"The Amazon market is "the experience of a buyer is king", "McCabe, founder of the consulting firm ecommerceChris, m said. "So any claim from the buyer, unless your account defines that it is a competitor, is considered a valid claim that must be handled by a seller, so you can imagine that it's easy to accumulate a handful of claims that might warrant scrutiny. "

But, McCabe added, "buyer complaints are not really scrutinized, they are more or less considered worthwhile almost every time." This means that seller accounts can sometimes be suspended while they really should not be.

Third party sellers are not always dinky mom-and-pops

WAlthough they may be considered small businesses, some of these sellers in the market are huge. About 50,000 third-party sellers of Amazon generated sales of more than $ 500,000 last year.

Take BuyBoxer, where Needham works. The Logan, Utah-based company partially manages Amazon's sales for BIC, Hasbro, 3M and nearly 200 other well-known brands, according to its store page. In total, BuyBoxer has about 100,000 products on Amazon at any given time.

BuyBoxer was indeed suspended for seven days for what Needham said was a poorly formatted label. The company was informed of its suspension only two days after the start of the process.

"We had to send a hundred employees home for a week," Needham said.

"I just know that, like every salesman, he fears the application of the policy," Needham said. "Amazon says they're picking on the bad guys, I support them completely and I want them to do it, but I can name dozens of salespeople who have tried to do things right." faith and they meet them again. "

NOAH SEELAM / AFP / Getty Images

But if BuyBoxer were to be suspended longer than a few days, it would be catastrophic for its employees and its company.

"There are all those stories of ways that Amazon has basically ruined the life of a seller, "said Rafelson. A strong suspension or misunderstanding can destroy the affairs of a seller. "

Amazon has not responded to Business Insider's comment request on this story. Amazon told The Wall Street Journal in a 2012 report that sellers who join Amazon and use its order management service report a 50% increase in sales.

"Our goal is to help sellers succeed, "said Peter Faricy, then vice president of Amazon Marketplace, in the Journal.

Amazon sellers big and small see the need to organize

In order to take ownership of their business, Amazon sellers have organized themselves to communicate their needs to the Department of Justice and the Federal Trade Commission. Both organizations launched antitrust probes on Amazon this summer.

These surveys have largely focused on how Amazon has crushed rivals by reducing logistics costs and bundling a myriad of services, such as Amazon Prime Video and Amazon Prime's two-day delivery, under a unique cost. Both are considered predatory and anti-competitive.

Read more: Key metric in FedEx financial statements shows why the shipping giant has abandoned Amazon as a customer

But sellers are trying to claim another perspective: Amazon's unfair competition with its own third-party sellers. In this measurement, Needham brings together a group of salespeople to address the FTC and the GM through a public comment.

"We are a group of sellers or some kind of movement," Needham said. "We are trying to unify the voice and make sure that we, who contribute to the Amazon market, are also being listened to."

Stephen Brashear / AP Images for Amazon

This is not the first time that Amazon sellers have joined forces to express their concerns to the political authorities. Rafelson has created a nonprofit organization for sellers called Online Merchant Guild, which is currently campaigning with the state of California for a tax law that would recover sales tax from online merchants.

Rafelson said that it can be difficult to make sellers understand the importance of banning together.

"It's an effort," he said. "It's hard to get small businesses to understand the importance of that."

Nevertheless, these concerns have already been heard by leading politicians.

Senator Elizabeth Warren, also a pioneer in the 2020 presidential election, said that Amazon "crushes" its own third-party sellers.

Some claim that Amazon can see from its own online data which products are selling best. Then, the retail giant is able to launch its own product to capture sales in this specific area. This allows Amazon to launch only private label products in the most popular markets, rather than creating products that no one will buy.

"It's their site – it's the site of Amazon," Needham said. "But you never know exactly when they are the ones who are taking advantage of something they've built or when it's an open market that should be all things equal."

Are you an Amazon seller? Send an email to the reporter at the following address: [email protected].