Sellers in Chains: Amazon's Unyielding Approach to Fulfilment Services

B. Amazon Maintains Its Monopolies In Both Relevant Markets By Coercing Sellers To Use Amazon’s Fulfillment Service

351. Amazon maintains its monopolies in both relevant markets by coercing sellers to use FBA, thereby denying rival online marketplace services providers and superstores the ability to gain the scale needed to compete meaningfully against Amazon in both relevant markets.

352. Prime eligibility is a basic prerequisite for sellers to fully access Amazon’s substantial base of shoppers, making it a critical aspect of the marketplace services Amazon offers to sellers. When a seller’s product is Prime eligible, it receives the Prime badge. For sellers, this designation boosts their chance of winning the Buy Box and making significant sales, while sellers who forgo Prime eligibility effectively disappear from Amazon’s storefront. For shoppers that are Prime subscribers, the Prime badge denotes that a purchase of the product will not include additional shipping and handling costs, often making these products more attractive.

353. Amazon exploits sellers’ demand for access to Prime eligibility by generally conditioning that access on use of Amazon’s proprietary fulfillment service, FBA, even though other fulfillment options could provide comparable or better service.

354. Sellers who use FBA must relinquish physical control over their products and place them in Amazon’s fulfillment centers, which principally can be used to serve only Amazon customers. As a result, a seller who wants to sell both to Amazon and non-Amazon customers must maintain a separate supply of inventory dedicated exclusively to non-Amazon customers and engage a separate fulfillment provider to serve those non-Amazon customers.

355. Absent Amazon’s restrictions, many sellers would prefer to use an independent fulfillment provider that would allow them to more easily fulfill orders placed on both Amazon and non-Amazon marketplaces. That, in turn, would increase the ability of rival online marketplace services providers to compete for sellers’ business and increase the ability of rival online superstores with marketplaces to compete by offering greater product selection to shoppers. Conditioning a product’s Prime eligibility on its seller’s use of FBA maintains Amazon’s monopoly in both relevant markets in two main ways. First, it raises the cost of multihoming, forcing sellers who sell through more than one online superstore to bear the increased costs of using multiple fulfillment providers. Second, it forecloses independent fulfillment providers from competing to fulfill Prime orders on Amazon, depriving those independent providers of an important source of business and scale needed to build out an efficient fulfillment network. Because fewer sellers can cost-effectively multihome, rivals and potential rivals to Amazon are deprived of product selection.

356. In the relevant online superstore and online marketplace services markets where scale and network effects insulate incumbents from competition, the effects of Amazon’s conduct continuously compound as it diminishes sellers’ incentive and ability to multihome.

357. Amazon’s conduct constrains its rivals’ ability to compete, harming shoppers and competition in both relevant markets and entrenching Amazon’s monopoly. By making it more expensive for sellers to sell the same product on multiple online superstores and marketplaces, Amazon artificially limits rivals’ ability to gain sufficient growth, momentum, and scale to draw a critical mass of shoppers and meaningfully compete.