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Amazon Scooped Up Data From Its Own Sellers To Launch Competing Products (wsj.com) 49

Posted by msmash from the closer-look dept.
Amazon.com employees have used data about independent sellers on the company's platform to develop competing products, a practice at odds with the company's stated policies. From a report: The online retailing giant has long asserted, including to Congress, that when it makes and sells its own products, it doesn't use information it collects from the site's individual third-party sellers -- data those sellers view as proprietary. Yet interviews with more than 20 former employees of Amazon's private-label business and documents reviewed by The Wall Street Journal reveal that employees did just that. Such information can help Amazon decide how to price an item, which features to copy or whether to enter a product segment based on its earning potential, according to people familiar with the practice, including a current employee and some former employees who participated in it.

In one instance, Amazon employees accessed documents and data about a bestselling car-trunk organizer sold by a third-party vendor. The information included total sales, how much the vendor paid Amazon for marketing and shipping, and how much Amazon made on each sale. Amazon's private-label arm later introduced its own car-trunk organizers. "Like other retailers, we look at sales and store data to provide our customers with the best possible experience," Amazon said in a written statement. "However, we strictly prohibit our employees from using nonpublic, seller-specific data to determine which private label products to launch." Amazon said employees using such data to inform private-label decisions in the way the Journal described would violate its policies, and that the company has launched an internal investigation.
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Amazon Scooped Up Data From Its Own Sellers To Launch Competing Products More

Amazon Scooped Up Data From Its Own Sellers To Launch Competing Products

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  • Of course they do, just like everyone else (Score:4, Insightful)

    by JeffOwl ( 2858633 ) on Thursday April 23, 2020 @09:54AM (#59979950)
    See Wal*Mart and Target for example. I often see products introduced in stores from third party companies and then when it gets popular next thing you know there is a store brand copy on the shelf next to it for 20% less. In a few cases I've noticed the original disappear from the store shelf leaving only the store brand. I've seen the same thing at grocery stores.

    • Re:Of course they do, just like everyone else (Score:4, Insightful)

      by jonsmirl ( 114798 ) on Thursday April 23, 2020 @10:03AM (#59979970) Homepage

      This has been going on for a hundred years. Why are you surprised by this? Store brands are nothing new, and for sure store brands get data from the other brands being sold in the store. This is not limited to groceries, it happens in many markets including electronics and drugs.

      • Re: (Score:2)

        by mi ( 197448 )

        Why are you surprised by this?

        Only because the actions seem, according to TFA to be in contrast with Amazon's statements...

    • just like everyone else

      They've taken things to a new level.

    • Re: (Score:2, Flamebait)

      by ITRambo ( 1467509 )
      "We did nothing wrong. But, we'll investigate ourselves to confirm. Yep. We're good." -Any corporation investigating itself

    • next thing you know there is a store brand copy on the shelf next to it for 20% less.

      That is how capitalism works. You overcharge, you get competition.

      If the original manufacturer had more reasonable prices, there wouldn't have been enough margin for the store brand to come in under them.

      • Re: (Score:1)

        by tacarat ( 696339 )
        The thing is that Amazon has more negotiating clout. The original manufacturer may be selling to get X profit after bills and such. Amazon can get it made cheaper by negotiating it with other things being made, bringing the cost down. The issue is that they'd never have known this was a niche without the massive data trove to sort and sift. The main issue is the breach of trust and ethics on Amazon's side of the house. Keeping agreements is a bedrock of capitalism too. No trust, no trade.

    • Insightful? Really? That earns a (pending) Insightful mod on today's Slashdot? No, I can't actually pretend I'm surprised. Even allowing for the FP eyeballs.

      But I have a new theory about a factor that is helping to dumb down Slashdot. I call it the Twitter effect. Short, even for complicated ideas. Slashdot is just copying the style imposed by Twitter. FP has always suffered from excessive brevity, though in the FP case that's because of the race condition that exists to "capture" the unique FP position. It

    • Re: (Score:2)

      by kenh ( 9056 )

      The information included total sales, how much the vendor paid Amazon for marketing and shipping, and how much Amazon made on each sale.

      How much the vendor PAID Amazon for marketing and shipping is not "private, non-public data", it's Amazons own internal numbers.

      Likewise, how much AMAZON MADE on each sale is also not "private, non-public data", it's Amazons own internal numbers.

      In every transaction observed by Amazon, Amazon is part of the transaction.

    • 2 differences. 1 Target does not say it is just a carrier and won't use sales data. Amazon claims to be impartial. 2 when White label brand fails, problems are not sent to the name brand. Amazon knockoffs have used the originals artwork and refund requests have been routed to the originals.
  • I've seen articles for years saying the same things. Right here on slashdot. And Adam Explains Everything even did a show on it. So is this dupe or are they saying Amazon is getting away with it still?
    • They've been doing it non-stop since they launched. It doesn't become "old news" when it's their entire business model.
    • I thought most of their Amazon Basics line was based on this idea. Sometimes they go straight to manufacturer and undercut the seller if the seller isn’t the manufacturer.

  • Games Workshop are 30 years ahead of them (Score:4, Insightful)

    by nagora ( 177841 ) on Thursday April 23, 2020 @10:00AM (#59979962)

    GW did that from the late 80s onward - wholesale their crappy Warhammer stuff to shops and if they ordered enough then GW would open a shop next door and shit all over them.

  • I would be surprised if this action in any way violates Amazon's boilerplate agreements with their resellers.

    If they see that a particular type of product is hot then those agreements probably allow them to bring in competitive products, either from other companies or themselves.

  • Recently I've noticed a few better deals, and many identical deals, for products on Ebay. I've also found many products on Ebay to have faster shipping than Amazon. There are also more scams on Ebay, so both product and seller/origin research is even more important on Ebay.

    Just because unethical behavior has been going on since the dawn of recorded history does not mean it should be condoned.

    • Recently I've noticed a few better deals, and many identical deals, for products on Ebay. I've also found many products on Ebay to have faster shipping than Amazon. There are also more scams on Ebay, so both product and seller/origin research is even more important on Ebay.

      Just because unethical behavior has been going on since the dawn of recorded history does not mean it should be condoned.

      Amazon has a huge fraud problem, especially for things that are harder to tell like higher end shampoo and other beauty products. Hair salons will be safe until Amazon gets serious about fraud.

    • Recently I've noticed a few better deals, and many identical deals, for products on Ebay. I've also found many products on Ebay to have faster shipping than Amazon. There are also more scams on Ebay, so both product and seller/origin research is even more important on Ebay.

      Just because unethical behavior has been going on since the dawn of recorded history does not mean it should be condoned.

      I don't know about faster shipping on Ebay vs. Amazon prime. My last few Ebay purchases took 7-10 days to arrive while Prime deliveries are 1-2 days max.

  • How it should have gone..? (Score:3, Insightful)

    by Kohath ( 38547 ) on Thursday April 23, 2020 @10:19AM (#59980030)

    "So we want to launch our own products. Should we get data about what sells and what doesn't?"

    "No, we better not use any data. Some media people might complain. Let's launch some products based on absolutely no data."

  • Like Carefour, Costco, Aldi, Cencosud & others (Score:4, Informative)

    by williamyf ( 227051 ) on Thursday April 23, 2020 @10:21AM (#59980034)

    This is nothing new. Ever since the "White Label revolution" in retail, this is common practice.

    Aldi Operates in the USoA, Germany and a great swates of Europe. They will use sales data from bread manufacturers across all Geographies (including Bimbo, which operates in all those markets through Holsum), and from Procter&Gamble, and many others, to inform their choices of white labels.

    Walmart operates in many countries around the world, and guess what? They agreagate sales data from providers to inform their white label choices.

    Cencosud operates all over latam (Chile, Peru, Brazil, Colombia, among others, but using differnt names in each market), and guess what? Yes, they also use sales data from competing products to inform their choices on White Label house/own brand products.

    Cerefour operates across Europe and in big swates of LatAm. They do it too? Yes, they do it too.

    Costo? Yes, they too. WinDixie (or whatever is left of them)? Yes, they too. Publix? Yes, they too? Excelcior Gama (a chain of less than 10 supermarkets in Vz)? Yes, they too. Mercadona in Spain? Yes, they too.

    See a trend here?

    And, as the examples of Aldi, Waltmart, Cencosud and Carefour (among others) prove, is even on companies that have international scale across borders.

    So, nothing to see here, move along.

    • This is nothing new. Ever since the "White Label revolution" in retail, this is common practice.

      I knew a vendor of Pottery Barn and they did this to them long before they had online sales.

      Once a big company gets a big retail chain presence or online footprint it becomes almost impossible to stop them from doing this. They sure as hell won't sign any non-compete agreements. They just don't need anyone vendor that much.

      And it also becomes hard to stop selling to them. A huge segment of many product markets is dependent on their channel.

      Hence: anti-trust laws. Not the greatest solution but I

    • Re: (Score:2)

      by kenh ( 9056 )

      I don't see the issue in the example in the source article - if I run a store, and I sell a wide range of products, I'm not supposed to notice I'm selling a whole lot of a particular item? I'm not supposed to look for similar items to also offer my store, esp if I can offer it at a lower price (good for consumer) or higher margin (good for seller, me)?

      The specific example involved Amazon taking note of the amount paid TO AMAZON by the seller for marketing and shipping and AMAZONs profit per sale. When the s

    • It’s actually IP theft. It takes a huge amount of resources to create a great product and brand awareness, so these stores are effectively stealing that.

      • It’s actually IP theft. It takes a huge amount of resources to create a great product and brand awareness, so these stores are effectively stealing that.

        Let me get this straight:

        Bimbo makes a loaf of white bread, in a plastic bag. Like other thousand bakers do. A grocery store realizes that we are selling lots of loaves of bread from different brands, so they contact one of the bakers, and sign a contract for them to provide those loafs of bread, but with the store's logo on them. And that's IP theft how exactly?

        Or, since this is a tech site. Lot's of sellers sell USB trinkets on an online store. All these trinkets are exactly the same trinket under the ho

  • Anyone giving up their data to someone else is going to have it mined. Anyone giving up code to someone else is going to have it stolen. The cloud was an obvious scam from the start.

    • Re: (Score:2)

      by kenh ( 9056 )

      The numbers were discussing all involve Amazon - amount paid TO AMAZON for marketing and shipping, and AMAZONs profit per sale. The latter is clearly an Amazon proprietary number, the first two is nothing more than basic accounting of the Amazon/seller interactions.

  • We all know that Amazon is lying whenever they say they "are" or "are not" doing something.

    • Another red flag: mention of "customer experience". When you hear that phrase, you can be sure something horrible is about to go down.

  • I for one am shocked to hear this. Shocked!

    No, wait... I said that they were doing this from 4 or 5 years ago. I'm only shocked that it seems to be a surprise to anyone, today.

    As I've said before, it's a sweet-ass scam. Third party sellers pay for the inventory and pay Amazon to store and ship the products, while Amazon assesses whether or not they want to sell that product. If sales are sufficient, Amazon decides to get in the game.

    The game being direct purchase from the manufacturer/distributor with much

  • ... Captain Obvious Research Institute.

    • ... Captain Obvious Research Institute.

      Do not forget the contribution of Ric Romero to this story.

  • Ceterum autem censeo Carthaginem esse delendam.

  • They discontinued a certain baby wipes from their Subscribe & Save program around the time a similar Amazon Basics item was introduced.

    I had been subscribed to this product for more than nine years!!

  • They have also "let" some Chinese mfg see the data to make knock offs. Those cheap POS versions use the original's artwork and even have gotten the originals shut down using Amazon's arcane rules. The originals then get hit with product failure claims for product they did not sell. I am beginning to see people who advertise, Not On Amazon.

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