In this past year alone, Amazon has faced an almost unbelievable amount of scrutiny namely on its third party procedures, Amazon’s Choice badge, antitrust probes, among many others. Now, the e-commerce giant is being accused of changing its search algorithm to heavily promote its most profitable products.
According to a Wall Street Journal, Amazon’s A9 engineers were pressured by the retail team to boost Amazon-made products and other private-label brands. Some of these products are part of the Amazon Basics line which includes paper towels, batteries, and clothing. The items also rank high in contribution profit, which is considered a better measure of profitability because it factors in non-fixed expenses like shipping and advertising. The amount that’s left over is then used to cover Amazon’s fixed cost.
The Journal report said the retail team compared this practice to how grocery store chains and drugstores place their products next to national brands on shelves.
The new algorithm supposedly went into effect last year despite being contested internally by the search team and Amazon’s own lawyers. Before then, listings were ranked in order of relevance to a user’s search terms.
As expected, Amazon denied the allegations saying, “The Wall Street Journal has it wrong” and that they in fact did not change the criteria used to rank search results. They also said profitability is just one of the many metrics they consider, and that it’s not a key driver of what is shown customers.
Amazon added that its private-label products only account for 1 percent of total sales, and compared the number to other retailers whose private-label brands generate much higher profit.
Whether or not there’s any truth to either side of this argument, the news is coming in at a bit of an inconvenient time for Amazon. Last week, house lawmakers requested Amazon release personal communications to figure out of there is any evidence of anticompetitive behavior such as this one.