Amazon Gets Aggressive on Advertising Lower-Cost Products

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By Published On: March 19, 20190 Comments

According to a report in The Wall Street Journal, Amazon has been quietly testing pop-up ads that advertise the company’s private-label goods, at the expense of third-party product listings.

The Journal’s report indicated that the pop-up windows were appearing on product pages when users searched for goods like ‘AAA batteries’, ‘trash bags’ and ‘nutritional supplements’.

When landing on a product page, users would reportedly be presented with a pop-up ad for an Amazon private label product, which retails for a lower price than the product shoppers were originally viewing. Users were then presented with the option of clicking through to the cheaper AmazonBasics item or closing the pop-up window and viewing the third-party item.

Responding to the report, Amazon said the pop-ups were not ads, but rather a test feature that’s intended to help consumers find the most affordable products for their needs. The company also said that the retail segment of its business, not its ad team, operated the test. The online marketplace declined to comment whether sellers were notified of the test.

If Amazon decides to adopt this trialled feature across its wider marketplace, the Jeff-Bezos founded business could find itself in hot water, having been criticised for its treatment of third-party sellers in the past.

In September last year, European Antitrust Regulator, Margrethe Vestager launched an investigation into the relationship between Amazon and its third-party sellers.

The inquiry was launched after regulators began to question how Amazon uses the customer data it gathers from billions of transactions made on its platform, and whether this data is used to boost its own sales, putting its smaller third-party merchants at a disadvantage.

Google recently faced similar threats when European antitrust regulators fined the US tech company a record €4.34 billion for using its Android mobile operating system to block rivals from appearing in its search engine.

This figure is almost double the previous record of €2.4 billion back in 2017 when Google was also penalised for being unfair to competitors in its online shopping search service. While these fines are barely a dent in the company’s $102.9 billion cash reserve, onlookers have said it has increased tensions between Brussels and Washington and set a precedent for the EU to come after prominent US businesses. At the time, it was unclear whether Vestager would be able to pass a guilty verdict, as the US and EU have different antitrust laws.

Questions also circulated in October 2018 around Amazon’s use of reviews and whether its private-label goods were getting a boost at the expense of third-party sellers.

The Indian e-commerce market, however, is the first one to take significant steps to reduce the competitive advantage of marketplaces selling private-label goods, with new legislation coming into place last month, limiting what marketplaces can and can’t do, to ensure small traders are given equal opportunities in the region.

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