Distinguishing Online Marketplaces from Vendor Selling: A Game of Control and Pricing

b. Online marketplace services are not reasonably interchangeable with selling as a vendor

191. Selling products as a vendor to a retail store, whether online or offline, who then sells to shoppers is not reasonably interchangeable with buying online marketplace services.

192. Selling products as a vendor to a retailer involves a pricing and transaction structure different from buying online marketplace services. A vendor generally sells goods to a retailer for a wholesale price. The retailer takes legal title to the goods and can sell them to shoppers. Online marketplace services providers price their services differently, typically including a percentage-based commission fee. The seller retains legal title to the goods and sells those goods directly to shoppers on the online marketplace.

193. A vendor typically sells goods in batches to retailers, such as in a wholesale relationship. A seller operating through an online marketplace, by contrast, typically sells goods one at a time to online shoppers.

194. Vendor arrangements also exhibit different features and characteristics from online marketplace services. A vendor usually gives up the ability to set the price offered to shoppers, and the retailer typically sets the shopper-facing prices. But sellers who buy online marketplace services retain the ability to set and adjust prices to shoppers. Many merchants prefer purchasing online marketplace services to vending to a retailer so that they can retain the ability to set their own prices to final customers.

195. Selling as a vendor often requires the vendor to give physical control of its goods to the retailer. That reduces the vendor’s ability to decide which goods to offer and when to make goods available. Unlike the retailer model, an online marketplace services provider allows sellers to maintain control over which of its goods will be offered at what times.

196. Selling as a vendor also limits the seller’s access to retail sales data, which is usually controlled by the retailer. Some providers of online marketplace services, including Amazon, provide customer-level sales and shopping data to sellers but not vendors.

197. Industry participants recognize that these are important distinguishing characteristics. For example, Walmart tells sellers that using its marketplace allows them to “[r]emain in control of your business.”