Ecommerce: Competitor Killer

Context

Your platform dominates, hosting thousands of third-party sellers. However, your in-house brands benefit from privileged access to sales data and search rankings, often undercutting small businesses. This strategy boosts profits and consumer convenience but draws criticism for harming competition, raising seller fees, and displacing local economies.

Dilemma

A) Separate platform operations from your retail brands, reduce seller fees, and end self-preferencing—accepting slower growth for fairer competition.

B) Continue leveraging platform control and seller data to maximize in-house brand revenue.

Summary

Report by the Institute for Local Self-Reliance reveals how Amazon’s dominance harms competition and local economies. Controlling over half of U.S. e-commerce, Amazon exploits its dual role as both marketplace operator and competitor, using third-party seller data to launch rival products while prioritizing its own brands. The company’s monopoly power imposes a hidden “toll” on small businesses through steep fees (30% or more), forcing price hikes for consumers. Despite creating jobs, Amazon’s growth comes at a net loss to communities—for every two jobs it adds, three retail jobs disappear elsewhere due to displaced local businesses. The report also highlights Amazon’s anti-competitive tactics, like predatory pricing and self-preferencing algorithms, which stifle innovation and entrench its market control. To counter this, ILSR recommends breaking up Amazon’s conflicting roles as platform and seller, enforcing stronger antitrust measures, and supporting policies that bolster independent businesses. Ultimately, the analysis frames Amazon as a gatekeeper economy that extracts wealth from smaller enterprises while undermining fair market dynamics, calling for systemic reforms to restore competition and equitable growth.

Resources:

• https://ilsr.org/articles/amazon-stranglehold/