As Amazon starts to lay the groundwork for online holiday season sales, the e-commerce giant is also facing some fresh scrutiny from regulators in Europe over its practices. Today, the German antitrust watchdog (Bundeskartellamt) is considering an order against the company over unfair pricing practices on its site, specifically for third-party sellers selling on Amazon’s platform in its Marketplace.
Whether it’s coincidence or calculated spin, the news comes on the same day that Amazon has announced that it will be giving selected third-party sellers on its platform a new opportunity to sell products on its holiday deal pages, including the Today’s Deals page — the first time, Amazon says, that it will be opening this up to outside merchants.
The German antitrust investigation, reported today in the newspaper Sueddeutsche Zeitung, puts the focus specifically on Germany, although as with other country-specific regulatory investigations in Europe, the decisions could have wider, regional ramifications. Germany alone is an issue for Amazon. The country’s regulators are known for being particularly strict in matters of e-commerce regulation and making it transparent for buyers and sellers. It also happens to be Amazon’s second largest market outside of the U.S., with sales last year of €6.5 billion ($8.9 billion) and growing this year at around 25%, the Germany newspaper notes. And the company has already been facing scrutiny there over its tax payments and how it pays employees, with the latter also potentially spilling over into strike action during the holiday selling period.
The antitrust investigation has been ongoing since February of this year, although it appears that for now, Andreas Mundt, the head of the Bundeskartellamt, has yet to issue an order against the company, although that will be the next step if Amazon does not alter practices on its own.
At issue are the company’s terms and conditions specifically over how third-party sellers are able to promote and price goods when selling them on the Amazon Marketplace, alleging that Amazon forces sellers to offer their cheapest prices for goods only on its own platform. In other words, if the seller is also a merchant listing on eBay, that same item will be offered there for a more expensive price. “We are talking with Amazon to eliminate this competitive handicap,” Mundt told the paper. “If necessary, we shall be crystal-clear [with an order].”
The news from Germany comes at the same time that Amazon is looking to sweeten the deal with third-party merchants in the lead-up to holiday shopping season. Specifically, it said today that it will let “thousands” of third-party merchants post goods as part of Amazon’s holiday sales promotions, which appear on specific holiday pages such as Gold Box Today’s Deal page, Black Friday and Cyber Monday deal pages, as well as category holiday pages and Amazon’s Today’s Deal page. Interestingly, these seem to highlight that these prices will be better than those consumers can find elsewhere. “The holiday deals from sellers will be appearing on high customer traffic merchandising pages which highlight limited time discounts on hot holiday items exclusively from sellers,” Amazon writes. This is precisely the issue that the German cartel office is trying to tackle.
Amazon is touting another benefit here, however. On a site where it is sometimes actually very difficult to discover new things, rather than simply burrowing through to the specific item that you know you want, this gives merchants a chance to be more discoverable, Amazon says.
“It will now be easier than ever for our millions of customers to find popular and unique holiday products from our sellers,: said Peter Faricy, VP for Amazon Marketplace, in a statement. “We know that customers expect to find the lowest prices on Amazon and love browsing the holiday deal pages for great bargains. We are excited that for the first time ever our sellers will be able to showcase their unique and high quality items on the holiday promotion shopping pages.”
For now, if there is pressure on third-party sellers to offer their cheapest prices on Amazon.com, as the German cartel office alleges, the tradeoff is that Amazon gives them a lot of potential traffic and conversions on sales. One testimonial from a camera seller notes that listing in a special promotion on Amazon earlier in the year gave this company the ability to sell 30% of its stock in “only a few hours.” Amazon says that during the 2012 holiday season, over 2 million third-party sellers worldwide on Amazon experienced record holiday growth, with unit growth solely from sellers in the U.S. increasing more than 40% year-over-year.
Included with the deal is also the ongoing offer to let merchants also handle the shipping with Fulfillment by Amazon services — something that eBay is also looking to tackle to better compete.
We have reached out to Amazon for comment for this story.