NEW YORK, Nov 2 (Reuters) – As Walmart moves into e-commerce, Amazon.com (AMZN.O) is using its own services to limit Walmart’s reach, according to the Federal Trade Commission (FTC). The seller was punished.
Amazon made $1 billion by jacking up prices paid by American households using a secret algorithm called “Project Nessie” and may have also succeeded in curbing Walmart’s ambitions.
In 2014, the arrival of Jet.com caused Amazon to raise concerns that Jet.com could offer lower prices to online shoppers, and removed seller offers from the buy box if shoppers could. The FTC announced Thursday that Amazon’s strategy to do so has begun. Find the same product at a lower price on Jet.com. A Buy Box is a button that allows shoppers to buy directly from sellers.
Walmart acquired Jet.com in 2016.
“Given Amazon’s size and scope, the power of quantitative analysis, and especially given the background of not making a profit in the first 20 years (at Amazon.com), it’s hard to believe they would resort to such tactics against their competitors. It’s not surprising that they’re suing,” said retail consultant Bert Flickinger.
Like Amazon, Walmart operates third-party online marketplaces with products sold by thousands of independent sellers. Amazon currently has millions of independent sellers selling products on its marketplace. Both Walmart and Amazon collect fees and commissions from sellers on their platforms.
In a less redacted version of an earlier complaint against Amazon, the FTC said that by not charging seller fees, Jet.com could offer prices 10% to 15% lower than those advertised by Amazon. said. Amazon recognized that this could result in sellers passing those savings on to customers, the FTC said.
To make matters worse for Jet.com, Amazon has removed some third-party seller offers from the buy box. The complaint cites one Amazon seller who, under pressure from Amazon, adopted a policy that “ensures that the price of a product at Walmart is never lower than the price on Amazon.”
Amazon also introduced what the FTC called anti-competitive algorithms on Jet.com’s most popular products, leading to Jet revising its strategy of matching other companies’ lowest prices, the FTC said. Stated.
Amazon spokesman Tim Doyle said the FTC had “grossly mischaracterized” the pricing tool and the company stopped using it several years ago.
Walmart shut down Jet in 2020 and folded it into its broader e-commerce business.
A spokesperson said Walmart declined to comment because it is not part of the FTC lawsuit.
Reporting by Siddharth Cavare and Ariana McLimore in New York.Editing: Vanessa O’Connell, Lisa Shoemaker
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