At a time when much of the retail sector is collapsing, Amazon is strengthening its competitive position in ways that could outlast the pandemic — and that could raise antitrust concerns. Increasingly, manufacturers of in-demand products are catering to Amazon, while competing retailers take the leftovers, consultants and brand executives told ProPublica.
“Amazon has the power to bury sellers and suppliers if they don’t comply,” said Sally Hubbard, director of enforcement strategy at Open Markets Institute, a think tank that has been critical of Amazon and other big tech companies. “It might be automated through an algorithm, but it’s still the wrath of the monopolist that they are afraid of. … Amazon is able to cut off its competitors’ access to inventory by leveraging its monopoly power.”
As locked-down shoppers have flocked to buy food, medicine, cleaning supplies and personal care products on Amazon, the retailer has in turn upped its suggested inventory levels for many manufacturers that sell their products on its platform. It has also expanded purchases of certain essential products that it sells directly to shoppers, often buying two or three times as much as it did before the pandemic, executives said.
Note from BDS-LA: There is an economic concept called “monopsony” — the power of a BUYER rather than a manufacturer or seller to make the market and set prices. Amazon appears to have created a third category, by straddling the line between wholesaler and retailer as the essential “middleman”. By demanding the lion’s-share of product from producers on an all-or-nothing basis, they become the go-to site for purchasers, driving smaller retailers to the brink.