Amazon’s Product Dumping is Bad For The Market
Snap Supply’s Amazon listings have come under attack by an unlikely enemy: Amazon. And Snap isn’t the only one. Amazon have resorted to toxic business practices in order to make up for the hit they took as a result of their “essentials-only” policy.
This policy saw Amazon devoting 100% of its order fulfillment resources to only essentials, leaving smaller sellers like Snap Supply to pick up the slack by shipping all of their own orders received through Amazon.
Now that that policy has been rolled back - and Amazon is up and running more or less as usual - they have resorted to product dumping: undercutting smaller sellers with prices that are completely impossible to compete with - prices that will result in a loss of $9+ per order.
The same sellers who kept Amazon afloat during their hardest time by taking on the task of fulfilling all orders on their own are being repaid with underhanded business practices that will no doubt put many sellers out of commission.
For example, a certain PRYSM by Snap item sells on Amazon for $22.89. As we are committed to customer service, these prices are the absolute lowest we can offer while allowing us to continue operating as we do. Amazon has listed the same item, as the “Amazon’s Choice” top rated pick, for $13.30.
Independent sellers on Amazon pay hundreds of dollars a day to advertise on Amazon. This is necessary to have any sort of visibility while selling on Amazon. It is free for Amazon to advertise on Amazon, and they have even been advertising their own products on Snap Supply listings. Independent sellers are spending hundreds of dollars per day to stay viable on Amazon’s marketplace and they are being automatically undercut by the owner of the marketplace itself.
When a customer searches for this product, the top result will always be the “Amazon’s Choice.”
On parts sold by Snap, Snap Supply will normally get the top result because we are the top seller for that particular part. However, Amazon has changed the rules behind the scenes. They have automatically given themselves “Amazon’s Choice.” This means when customers search for this part on Amazon, Amazon’s own listing, the “Amazon’s Choice” will be the first and therefore most popular result.
This is happening across multiple products for multiple markets, affecting thousands of independent sellers. Even big brands like Frigidaire are having their top result spot stolen by the “Amazon’s Choice” option. It seems that no one is off the table.
We have seen a similar trend across other Snap Supply items on Amazon. In each case, Amazon is selling at a price so low that it is guaranteed they are selling at a loss. Why would they do this?
For one thing, Amazon has excess product that they accumulated during the essentials-only policy that they are trying to move - hence “product dumping.”
However, Amazon can also benefit in substantial and malicious ways using this tactic.
They know that sellers cannot compete. Snap certainly cannot lower their prices by $10 and be able to survive that kind of hit. This is true for nearly every independent seller on Amazon.
In cases where Amazon is selling at such a steep loss, customers will ignore the independent seller option and choose the Amazon product. This lack of sales for independent sellers will result in their stock not moving. Amazon can charge penalty fees for this.
If a seller attempts to lower their price in order to compete with Amazon, Amazon can later penalize that seller when they try to raise their prices back to normal. Again, here Amazon retains control and abuses its power in its own marketplace in order to strongarm smaller sellers and eventually force them out of the marketplace altogether.
While bigger brands can sustain a temporary reduction of sales, many smaller sellers will not be able to make it through this. With fewer independent sellers operating in any given market on Amazon, the retail giant themselves will have more room to step in and gain more power.
These tactics are toxic and harmful to sellers and customers - if Amazon establishes a big enough foothold in a market, which they have resources to do in nearly every case, competition will disappear and Amazon will be in complete control of pricing and quality of product. As they have demonstrated through their recent actions, when Amazon chooses to abuse its power, everybody loses.