In a recent revelation, the Federal Trade Commission (FTC) has brought to light Amazon.com Inc’s purported punitive actions against its own sellers, with a suspected intention to hinder Walmart’s expansion into the e-commerce domain. The FTC’s claims extend beyond Amazon’s accumulation of $1 billion through the clandestine «Project Nessie» algorithm, pointing to a potential strategy to impede Walmart’s progress in the online retail space.
This alleged approach dates back to 2014 when the emergence of Jet.com posed a perceived threat to Amazon’s market dominance. Fearing potential price undercutting by Jet.com, Amazon is said to have initiated a tactic involving the suppression of sellers’ offers in the Buy Box—a crucial button for facilitating direct purchases. This move was strategically designed to dissuade shoppers from opting for lower-priced alternatives on Jet.com.
Following Walmart’s acquisition of Jet.com in 2016, the alleged tactics continued.
Burt Flickinger, a seasoned retail consultant, commented on Amazon’s aggressive strategies, noting, «Given Amazon’s size and scale, their quantitative analytical might, and particularly against the background that they had not made a profit on Amazon.com for the first 20 years, it’s not surprising that they would resort to such tactics against competitors.»
Both Amazon and Walmart operate third-party online marketplaces, and the FTC asserts that Jet.com, by refraining from collecting seller commissions, could offer prices 10% to 15% lower than those advertised on Amazon. Recognizing the potential impact on sellers’ pricing, Amazon reportedly removed certain third-party offers from its Buy Box, as detailed in the complaint.
The complaint references an Amazon seller compelled to ensure their products were not priced lower on Walmart than on Amazon due to pressures from Amazon.
In addition to these tactics, the FTC alleges that Amazon deployed anti-competitive algorithms against Jet.com’s popular products, prompting Jet to adjust its strategy to match the lowest prices elsewhere.
Amazon spokesperson Tim Doyle responded, stating that the FTC «grossly mischaracterizes» the pricing tool, noting that the company ceased its use several years ago.
Walmart, not directly involved in the FTC litigation, chose not to comment on the matter, according to a spokesperson. Stay informed about the latest developments in this unfolding narrative.