Watch out, Amazon.
The German Federal Cartel Office (Bundeskartellamt), an independent competition authority whose task is to protect competition in Germany, has extended two abuse control cases against Amazon regarding anti-competitive practices.
“We are examining in both proceedings whether and how Amazon impedes the business opportunities of sellers that are active on the Amazon marketplace and compete with Amazon’s own retail business,” Andreas Mundt, president of the Bundeskartellamt, said. “Amazon operates the most important marketplace in e-commerce and thus has a key position in that area, which allows the company to set far-reaching rules for competition on its platform. Our new competencies, which are precisely intended to restrict such power to set rules, allow us to intervene more efficiently against Amazon’s anti-competitive practices.”
By its July decision, the German watchdog had already determined Amazon’s paramount significance for competition across markets and held that the new tool is thus also applicable to the company. Amazon has appealed this decision to the Federal Court of Justice. However, it remains preliminary enforceable until the Federal Court of Justice’s decision.
“We disagree with the FCO’s interpretation of this complex new legislation and have filed an appeal,” a spokesperson for Amazon said to Sourcing Journal. “The retail market that Amazon operates in is very large and extraordinarily competitive, online and offline. We continue to cooperate with the Federal Cartel Office in these proceedings.”
Related Stories
In the first proceeding, the Bundeskartellamt examines price control mechanisms, for example, the practice of algorithmic control of prices set by third-party sellers on the Amazon marketplace. Applying such means can make it difficult for customers to find offers by sellers or even lead to these offers no longer being visible at all.
“Amazon succeeds when sellers succeed,” the company’s spokesperson said. “Sellers delight our customers every day with vast selection, convenient delivery, and great prices, [making] up approximately 60 percent sold in our store and are growing faster than Amazon’s own sales. Selling partners set their own product prices in our store. We want customers to buy with confidence anytime they make a purchase on Amazon.de and find products at competitive prices. Amazon has waived the price parity in Germany since 2013. We encourage selling partners to contact our selling partner support at any time.”
The second proceeding deals with the brand-gating issue. The Bundeskartellamt examines possible disadvantages for marketplace sellers caused by various methods that Amazon applies, for example, agreements with brand manufacturers on whether individual sellers can or cannot sell brand products on the Amazon marketplace.
“We continue to innovate in order to make our store better for both our buying customers and our sellers,” the spokesperson said. “We continuously strive to bring our customers the broadest selection of products while simultaneously investing tremendous resources to keep a trusted shopping experience by protecting our store from illegitimate goods. We never change selling privileges without good reason.”
This news comes as Klarna attempts to offer an alternative to Amazon.
One of the leaders in the generational shift away from credit cards has launched what it bills as an unbiased search and compare tool in the Klarna app, comparing prices across thousands of retailers to help consumers find the best price available. In addition, consumers can filter their search by various parameters like color, size and ratings. This search and compare tool aims to provide consumers with an alternative to Google or Amazon as a starting point for their online shopping journey and unlocks a new revenue stream for Klarna. The tool build’s on the Afterpay rival‘s acquisition of PriceRunner, the brand’s largest acquisition to date.
“You could spend the whole day comparing offers at conventional search engines or marketplaces, but you’ll always have doubts—have I really found the best product at the best price? Klarna’s new search and compare tool does the hard work for consumers and compares thousands of websites in real time to ensure they have all the information they need to make informed and confident purchase decisions,” Sebastian Siemiatkowski, co-founder and CEO of Klarna, said. “For Klarna, [this] launch is a major milestone in our evolution from a payment network to a single shopping destination that covers everything from inspiring product discovery through to delivery tracking, digital receipts and seamless returns.”
By comparing thousands of retailers, the tool lists product results in price order, helping consumers find the best deals for any product faster. The tool also shows how the price of any item has fluctuated, providing consumers with the information they need to decide whether to purchase now or wait to get the best deal. At check-out, a pop-up panel will automatically look for and apply available coupons to discount the price of their chosen products further.
The search and compare tool becomes a key acquisition channel for retailers, boosting their visibility, traffic, and sales with an engaged audience. This provides retailers with an alternative to Google and Amazon for attracting traffic to their websites and provides Klarna with an important additional revenue stream. This builds on Klarna’s already strong affiliate marketing business, which generates 600 million leads a year for Klarna’s retail partners.
And Klarna isn’t the only one attempting to compete with Amazon.
TikTok officially entered the United Stated e-commerce market this week, allowing users to make purchases directly through the app’s TikTok Shop feature, which the company began testing in America this week after it was previously available in the UK and seven countries in Southeast Asia, as first reported by Semafor. This comes two months after the social media giant filed a trademark for the phrase “Fulfillment by TikTok Shop,” suggesting it plans to compete with “Fulfilled by Amazon.”
A spokesperson for TikTok told Semafor that the ByteDance-owned platform has invited select U.S. businesses to participate in the initiative, meaning that China-based livestreamers who sell products on the app will need to continue directing shoppers to third-party websites. Eventually, international merchants will be allowed to use TikTok Shop, Matsakis said. And by only including U.S.-based sellers, TikTok can cater to small businesses—something Amazon has done to enhance its standing and influence.
“We are always guided by demand and exploring new ways to enhance the TikTok experience,” a TikTok spokesperson told Sourcing Journal. “We’ve seen the positive impact of TikTok Shop, and we’re excited to continue experimenting with this new commerce opportunity to support businesses of all sizes and enable our community to discover and engage with products they love.”
Competition for Amazon comes as the company plans to lay off approximately 10,000 people in corporate and technology jobs starting as early as this week, The New York Times reported Monday. While the total number of layoffs remains unclear, 10,000 makes up roughly 3 percent of Amazon’s corporate workforce.