Italy's competition authority fined Amazon 1.129 billion, or roughly $1.3 billion at today's exchange rate. Amazon has abused its dominant market position and pushed third-party sellers to use itsFulfillment by Amazon service, according to the antitrust watchdog.
The Italian authority, the Autorit Garante della Concorrenza e del Mercato, details its thinking in a statement and a report. They say that third-party sellers don't get the same treatment if they use their own logistics stack.
The company has a paid loyalty program for sellers who take advantage of it. Some products are free for subscribers. Products from third-party sellers that come from Amazon's warehouses get a Prime label.
Prime products are included in Amazon's events, such as Prime Day, Black Friday and Cyber Monday. If you useFulfillment by Amazon, you have a better chance of being featured in Amazon events.
That is not the only thing. The company selects a seller for the buy box on the product page. The buy box is on the right side of the screen and allows you to add a product to your cart or buy directly with the button.
There are other sellers in a tiny box below the buy box. According to Italy's competition authority, sellers who use FBA have a higher chance of being featured in the buy box compared to other third-party sellers.
I tried to find a good example on Amazon.it, but I found this toilet seat. Amazon does not sell the product directly. You can only get it from third-party sellers. Woltu is in the buy box on Amazon. The item is shipped by Amazon. You can get free expedited shipping with Amazon Prime.
There is a small box below the buy box that says you can get it from another seller. We can see a used product from Amazon Warehouse again. You can get free shipping on the same seller that ships it directly to you.
Why is the toilet seat the same? A free logistics service is called FBA. Amazon gets a bigger cut from items that are sold through it. It seems like WOLTU would get more revenue from a direct sale. It is unlikely that customers will choose to get the toilet seat from the seller directly.
A recent study from the Institute for Local Self- Reliance highlighted that Amazon is generating more and more revenue from third-party sellers, and that third-party sellers have become a captive audience.
Fulfillment By Amazon is similar to Amazon's warehousing and shipping service. Amazon makes it all but required for sellers to use the service in order to generate sales on the site. The share of sellers who have left other carriers and signed on to FBA has increased in recent years. Amazon has grown into a major logistics provider almost overnight because of the captive base of businesses that use its shipping service. The parcel delivery operation is larger than the U.S. Postal Service. Over the last few years, Amazon has been increasing its storage and shipping fees in order to squeeze more revenue from sellers.
The Italian authority has asked Amazon to create a new set of standards that would be fair to third-party sellers. Behavioral measures will be implemented by the company. The changes will be reviewed by a monitoring Trustee.
I received a statement from Amazon. We will appeal the decision of the Italian Competition Authority. The company said that the proposed fine and remedies are disproportionate.
More than half of all annual sales on Amazon in Italy come from small and medium businesses. Small and medium-sized businesses can sell their products both online and offline, and Amazon is one of those options. We provide multiple tools to our sellers, including those who manage shipments themselves, and we invest to support the growth of the 18,000 Italian SMBs that sell on Amazon.
