Why We Need Government Action on Amazon
Amazon is a once in a generation company that has built an eCommerce lead so powerful and so vast that it is impossible to conceive of a single competitor who can catch them. If you are one of more than 150 million Prime subscribers then you can search, find, and buy your ideal product from the comfort of your family sofa, click twice, and have it delivered in 1-2 days. No need to enter a credit card, Amazon stores them for you. No need to enter a shipping address, Amazon has your address, and every friend and relatives’ address you’ve ever sent a gift to. If your order isn’t perfect, simply file an A-to-Z Claim and get your money back in minutes. Then once you quickly and easily finish your order, you can go back to your Prime Original programming on your Fire enabled television.
Various sources claim that Amazon has anywhere from 40% to 55% of the online market share, which means that roughly 50 cents of every dollar spent online in the United States is spent on Amazon.com. Amazon is so convenient that nearly 60% of all product searches start on Amazon.com. The 35% of product searches that start on Google produce fist page search results with links of products pointing to Amazon. If the Google link doesn’t point directly to Amazon it does so from a vast network of content affiliate websites who get a cut of the sale when they send sales to Amazon.com from their own content websites. The New York Times is one such Amazon affiliate. Sure, Walmart.com has posted impressive 2020 sales growth numbers, but Walmart.com’s online market share is 5% and that’s not a typo. Yes, the number one retailer in America (although not for long) has only 5% of the online market share in the USA to Amazon’s 55%.
Amazon’s leadership team including Mr. Bezos himself is keen on saying “We’re only 4% of total U. S.” However, Amazon owns a much larger percentage when you subtract auto sales and gas which Amazon does not sell (yet) and grocery which Amazon hasn’t quite figured out (yet). They are a trillion-dollar company that just grew 37% year over year in Q3 2020. Amazon deserves serious credit for what they’ve achieved and even more credit for creating the kind of customer loyalty that would require you to pry a Prime shopper’s Prime account from their cold dead hands before they would give it up. However, Amazon did not do this alone.
Many Amazon shoppers don’t realize that 60% of Amazon sales come from Third Party Sellers, and that Jeff Bezos was famously quoted as saying that he wants, “OPW, Other People’s Work” for selection, listings, and more rather than more employees. In fact, Amazon would not be what it is today without the hard work, product knowledge, capital, and sheer grit of millions on third party Amazon Sellers. Amazon only carries 3% of the half of billion products listed on Amazon today and they could not replace Amazon Sellers if they wanted to.
However, it hasn’t stopped Amazon from taking advantage of the Sellers to which it owes so much as they continue to tilt the scales unnaturally in their favor. Amazon is shielded from consumer product safety and liability risk by Section 230 of the Consumer Decency Act, which should have had never offered protections for more than 10 years. Additionally, they’ve been shielded from class action lawsuits with Seller agreements that force arbitration. Forced arbitration prevents Sellers from collectively addressing inequalities where they should be addressed, in the courts. The same inequalities that make Amazon the judge, jury, and executioner to far too many livelihoods in this new economy. From price controls to counterfeits to unreasonable de-listings that can crush Sellers’ incomes overnight. The lack of due process for US small businesses is not only harmful, it’s Un-American.
Amazon did its job, and it has won eCommerce. There is no second-place challenger who will offer a viable alternative to shoppers and Sellers any time soon. Now it is time for government to do its part and rein in Amazon to accomplish three things. One, to ensure that the products sold to consumers are safe. Two, to make it possible for “the next Amazon” to rise. Three, to protect the livelihoods and small businesses that depend on Amazon to keep the lights on. Small businesses provide half of the jobs in America. Amazon itself was once a small business, a small business that could have never survived competing against the likes of something as frighteningly powerful and dominant as the Amazon of today.
JASON BOYCE, a seasoned entrepreneur and nationally recognized expert on Amazon, is considered one of the world’s leading advocates for Amazon.com Third-Party Sellers. He is the Founder and CEO of Avenue 7 Media, LLC, a seller management group that harnesses the power of Amazon for direct-to-consumer product brands. His new book, The Amazon Jungle is available for purchase at major booksellers.