Amazon is facing major problems in Germany, as it has been revealed that Bundeskartellamt is investigating the company. The competition regulator in the European nation is concerned about how Amazon interacts with third party sellers that use its Marketplace platform.
What is Marketplace?
Amazon Marketplace has become a major avenue for finding items when people are shopping online. It is a little different from the main Amazon site, as it allows for new, used and refurbished items that almost anyone can put up for sale.
It is a marketplace where it is possible to review the sellers, which results in them having a rating out of five. As such, it is quite similar to what you get with eBay, although you do get a little bit more protection from Amazon.
The issue is that Amazon sells a lot of the products that are on its Marketplace through its main site. Say you are looking to buy a laptop or a smartphone on the Marketplace. You would probably see it on the main Amazon site as well.
It may be a little less expensive on the Marketplace, but then you are running the risk of the reliability of the seller. And that is what German’s regulation agency is concerned about. How is Amazon competing against the sellers that are using its own Marketplace?
Rules and Regulations
The concern is that Amazon has many rules and regulations that its third party sellers have to comply with. If they are not agreeing to these rules and complying with them, it is possible for their seller account to be terminated.
Germany is also saying that it wants to look at the product reviews, seller ratings and other factors of the Marketplace to see what influence Amazon has on its own platform. There is a concern that such factors could be manipulated against sellers who were not doing exactly as Amazon wanted.
And there is history for such an action. The company was fined in December 2017 by regulators in France to the tune of nearly 10 million euros. The company was said to have terms and conditions with its third party sellers that were not in accordance with French law. It does appear that such a fate could await the company in Germany as well.
When we assess Amazon Marketplace, it is important to look at what other companies are doing when they allow sellers to put up products using their platform. eBay is the most obvious comparison.
The issue is that eBay does not sell products itself. While it does let actual companies sell their products, while regular individuals are also selling those items, it does not sell anything itself. So a seller that is on eBay does not have to compete with the company that is also selling those items itself through a dedicated platform.
Many third party sellers have complained about the fact their account was unfairly terminated. Others will comply with conditions even if they do not like what they are asked to do. But they do not have many other options, as Marketplace is such a wide reaching site compared to smaller sites.