Amazon WSJ Data

Purpose

This document is intended to provide marketers and commerce specialists with a perspective on the recent WSJ Article “Amazon scooped up data from its own sellers to launch competing products” from April 23,2020.

Overview

It has long been a concern that Amazon has implicit bias in acting as both a seller and vendor on its own platform. Vendors/Sellers on Amazon have had to consider how much data is at their disposal as creators of the product to the public and a customer of Amazon vs the data that Amazon amasses and tracks as a marketplace, and calculate risk accordingly. Amazon had, in July 2019, testified to Congress that they do not use the data they acquire as a seller to inform their private label products. Amazon Associate General Counsel Nate Sutton said at the time; “We use data to serve our customers. We don’t use individual seller data directly to compete with them.” At the time of testimony he did not mention if Amazon used aggregate data on sellers or products to gain a competitive edge for the products it sells.

Regardless, the argument had been made that Amazon crafting and selling private label brands alongside their customers’ branded products, is no different from other retailers selling private label brands. While it is true that many of our clients have faced this issue with Drug, Mass and Grocery retailers in the brick and mortar world, the concern has been that Amazon can access data on pricing and consumer data that in many cases is not accessible to the branded product owners.

A Bit of Perspective

First, it is important to put this concern in context. Amazon has heft and knowledge; and for many brands, is a critical part of building their business in the long-term. However, Amazon is still a relatively minor piece of overall sales. So while an Amazon private label product could steal share on Amazon, it is unlikely to have a large effect on the bottom line. Private label products that will be margin accretive and appeal to the largest target will always be attractive to retailers looking to build their brand lines. In the brick and mortar world, this is a cost of doing business in many cases and a negotiation point. Building a brand that proves its worth in product, price and proposition to a consumer, is brand marketing at its core. Second is the concern around data access. Quite simply, most of the data Amazon collects, is available to all. It may be found by alternate means, it may be slightly delayed or is not free, but it is there. At the macro level, brands must routinely assess their capabilities and right to win. The true issue is access to the marketplace. Brands are paying for access to what Amazon has built. The conflict is for fair placements, margins and charges for retail and media access on Amazon, particularly when your competitor is Amazon itself.

What Can We Do:

Our clients should consider the following when launching products on Amazon:

• Is selling on Amazon critical to brand or brand extension success? What is my risk profile to enter any markets and where is my right to win?

• Will Amazon provide me with data and what data will it be? If I am not getting the data I need to succeed, how can I access it through alternate means?

• How can the brand use Amazon data or observations to be more strategic in planning or building a business? How can the brand think offensively and defensively? As Publicis, when guiding our clients through this thought process, frame this issue within the larger business perspective. Amazon as a retailer in terms of importance of client business versus (or in addition to) Amazon as a media channel and partner in terms of importance of their business. How can we think through launching a product on Amazon or a media buy in terms of the greater business?

• This article is the complete antithesis of Amazon customer obsessed mentality (where Sellers and Vendors are the customer). This will be a point of contention that Amazon will endeavor to prove a non-issue.

• How will Amazon build trust with their customers (sellers and vendors) going forward? What concessions are they offering clients who may have been affected by this practice? If none, what would be most helpful to ask for?

• Weigh the pros and cons of Amazon data, breadth and access vs this potential issue.

• How can we strategize a protective communications plan to build our client’s brands to full strength? Amazon having data is not the same as having the ability to build, brand and market a product effectively. Our clients were built for that.

• For clients that have a product directly affected by Amazon competition, keep a watchful eye on pricing, brand hygiene (is the PDP A+, how is their eContent, are their campaign well-planned and performing up to par) and media metrics. For example, if GVs and DPVs are not up to par or keywords are consistently being outbid, question and be on top of results on a daily or weekly basis, to ensure that media is effective and not undercut by Amazon products.