Amazon Updates Pricing Policy for Third-Party Sellers
Not long after presidential hopeful Sen. Elizabeth Warren voiced her animosity for big tech companies (i.e. Amazon, Google, and Facebook), Amazon made a revision to its third-party selling policy. The new policy states that Amazon’s third-party sellers are no longer forbidden from offering lower prices on rival sites. Thanks to the Unites States’ decision to ditch price parity provisions (aka most favored nation clauses), these third-party sellers—who account for half of all Amazon items sold—can actually list their products cheaper elsewhere.
Former Amazon manager James Thomson believes that this decision could lead to slower growth for Amazon whose shares were slightly down in pre-market trading on Tuesday. “"The Marketplace has been historically a cash cow for Amazon," Thomson told FT. "If it becomes less competitive on price and consumers become less loyal, does that mean the third-party business is going to slow down?"
But this isn’t a new concept. Amazon actually removed parity provisions in the U.K. and Germany back in 2013 during similar investigations that occurred over there. Lately in the U.S., the pressure from politicians to follow suit has been on.
In a letter to FTC Commission Chairman in December, Senator Richard Blumenthal wrote, "I am deeply concerned that the price parity provisions in Amazon's contracts with third party sellers could stifle market competition and artificially inflate prices on consumer goods that millions of Americans are planning to buy this holiday season.”
On Monday, Blumenthal responded to the news saying, ““Amazon’s wise and welcome decision comes only after aggressive advocacy and attention that compelled Amazon to abandon its abusive contract clause. I remain deeply troubled that federal regulators responsible for cracking down on anti-competitive practices seem asleep at the wheel, at great cost to American innovation and consumers. The DOJ and FTC must begin aggressively investigating Big Tech’s potential antitrust violations and take necessary enforcement actions to deter more harmful behavior.”