Recently, Amazon made news by being the target of an anti-trust report penned by the House Judiciary Committee. The report claimed that Amazon (along with big dogs Apple, Facebook and Google) has been abusing its power to maintain an anti-competitive environment.
One of the biggest accusations that came out of this barrage was that Amazon uses third-party, or 3P, seller data when developing new products. Of course, with Prime Day 2020 bringing in $3.5 billion for these 3P marketplace sellers, this would be excellent data to mine. But even though Amazon might want to use this data, they really don’t need to.
What data does Amazon use?
One good thing about being the largest online retailer in the United States is that you have plenty of information at your disposal. However, there’s a big difference between what information is and isn’t off-limits.
According to this report and a preceding hearing this summer, Amazon stands accused of using 3P seller data to develop new products. However, the company separates internal access by creating two entirely different platforms: ”Vendor Central” for Amazon and its vendors and “Seller Central” for 3P sellers to manage their own listings of other brand’s products.
So if these platforms are separated, what data does Amazon use? Well, signs point to literally everything else.
According to Jeff Wilke, Amazon’s CEO Worldwide Consumer, it (as well as anyone else) can use the “best-seller list” to create new private label brands. According to Wilke, “...the things that we end up making in private labels are the things that sell the most that are at the top of search results.”
Amazon also likely combs through customer reviews and FAQs to determine what products are missing. Again, anyone can do this, but Amazon has the means to do it.
The major advantage that Amazon has is that it can test products on the fly. This massive retailer can carry a limited stock of a new private label product to test its performance. Then, they pull their own 1P data and if the product’s a success, they keep it and if it CRaPs out, they flush it...remember the Amazon Fire Phone?
Also, having a name like Amazon has its advantages. Say Amazon notices that a reseller only has a limited amount of inventory for ASINs in their account, but they’re selling like hotcakes and they can’t keep them in stock. Wouldn’t that be a good indicator for Amazon to test out a private label product (especially if it creates a better customer experience)?
And it’s not like Amazon is the only company out there doing this. It just happens to be the biggest.
All the cool kids are doing it
Private label brands have always been around. We’ve all heard the rumor that Costco gets their Kirkland Vodka from the same supplier as Grey Goose, but we don’t think twice about the fact that Costco also sells everything from dog food to parmesan cheese under the Kirkland brand.