Amazon Raises Sellers’ Costs by Forcing Them To Split Their Inventoryby@linakhantakesamazon

Amazon Raises Sellers’ Costs by Forcing Them To Split Their Inventory

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Amazon's insistence on FBA for Prime eligibility forces sellers to split their inventory, increasing costs and making it challenging to sell on multiple channels. This impacts product prices and seller profitability, reducing incentives for multichannel selling and bolstering Amazon's monopoly.

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FTC v. Amazon Court Filing, retrieved on Sep 26, 2023, is part of HackerNoon’s Legal PDF Series. You can jump to any part in this filing here. This is part 48 of 80.

a. Amazon raises sellers’ costs by forcing them to split their inventory to sell across multiple sales channels

368. Because Amazon forces sellers to use FBA to receive Prime eligibility, sellers who do not want to sell solely through Amazon must split their physical inventory by putting inventory for Amazon orders into FBA and inventory for non-Amazon orders in a different fulfillment network, such as one operated by an independent fulfillment provider.

369. Splitting inventory among multiple fulfillment networks raises the costs for sellers to offer products for sale through multiple sales channels by, among other things:

(a) (Redacted)

(b) (Redacted)

(c) (Redacted)

(d) (Redacted)

(e) (Redacted) and

(f) (Redacted)

370. For these reasons, many sellers would prefer to commit all of their inventory to a single independent fulfillment provider of sufficient scale to facilitate sales across Amazon and non-Amazon sales channels.

371. Amazon recognizes that (Redacted)

372. (Redacted) By foreclosing these sellers from using a single independent fulfillment provider, Amazon effectively forces these sellers to sell exclusively on Amazon.

373. For sellers who do offer their products across multiple online sales channels, Amazon’s tying Prime eligibility to FBA imposes unnecessary and additional costs that can lead to higher product prices, reduced seller profitability, and fewer sales. This, in turn, reduces sellers’ incentives to offer their products and invest resources into selling on multiple online superstores by purchasing services from multiple online marketplaces.

374. Because most sellers must sell Prime-eligible products on Amazon to be successful, tying Prime eligibility to FBA increases sellers’ costs by forcing them to use multiple fulfillment providers to sell off Amazon. Amazon’s conduct hinders other online marketplaces’ ability to attract sellers and impedes online superstores’ ability to offer enough product selection to compete meaningfully with Amazon. This conduct also artificially contributes to converting more shoppers into Prime subscribers.

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This court case 2:23-cv-01495 retrieved on October 2, 2023, from is part of the public domain. The court-created documents are works of the federal government, and under copyright law, are automatically placed in the public domain and may be shared without legal restriction.