Jun 08, 2020 17:00:00

Pointed out that Amazon is displaying its own brand products in a more prominent position than other companies' products

Amazon is

said to have adopted a strategy of 'crashing competitors at a cheap price and monopolizing the market one day and then suddenly raising the product price and getting a great profit'. The US Fair Trade Commission is constantly investigating Amazon's strategy. Meanwhile, there is a new survey report that says that Amazon has placed its own brand in the most visible position in the search results, which is also seen as a move toward market monopoly.

Amazon's New Competitive Advantage: Putting Its Own Products First — ProPublica
https://www.propublica.org/article/amazons-new-competitive-advantage-putting-its-own-products-first

The information reported by news media Pro Publica comes from market consultant Jason Boyce.

Amazon has made it possible to advertise in product search results, and the products of companies that paid advertising costs will be posted with the tag 'sponsored' at the top of the search results. There are many companies that use such ads because the products displayed at the top of Amazon's search result page are easy to see and lead to purchases.

However, according to Mr. Boyce's anonymous client who sells natural supplements, when searching inside Amazon for words such as 'melatonin', it is the leftmost column in the column with the sponsored tag, the most visible Amazon's original brand SOLIMO products are displayed at the position. ProPublica confirms that Mr. Boyce's client noticed this specification in late March 2020, and that it was also seen with other products such as Amazon's grocery brand `` Amazon Fresh '' ..

The ones enclosed in the red frame in the image below are Amazon's own brand products. Since Amazon allocates the most noticeable position of 'top row/left edge' to its own branded products, other companies can only post their products behind or below the advertising cost.

Amazon has come up with 'Customer First' as a company, but this move is clearly against Customer First, said former Amazon employee consultant Tim Hughes. “Why is our brand considered a better option for our customers? Not our brand is cheaper and better than others,” Hughes notes.

The above specification changes were made when the demand for Amazon increased due to the pandemic of the new coronavirus infectious disease (COVID-19). Amazon is already under investigation by the Fair Trade Commission, but it has been pointed out that this move creates further suspicion.

When ProPublica contacted Amazon, they acknowledged this 'push their brand' strategy. An Amazon spokesman said, 'Similar to other retailers, we regularly consider the 'what do customers find most useful?' It's a matter of course for retailers, and it's been done for decades.' An Amazon spokesman also denied the idea that this strategy was planned for months and used a pandemic.

In addition, the display position of the pointed out product is not based on 'Amazon only', but it is based on the algorithm to the last, the Amazon product was displayed at the top left end 'The consumer likes Amazon's product That's the result,” an Amazon spokesman explained. “Amazon's own brands have an average higher customer review rating, lower return rates, and higher repeat rates than other brands. As a result, like other retailers, Amazon offers promotion and marketing. In the result, we emphasized our own brand.”

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However, former Amazon employee James Thomson said that Amazon's own branded product may be displayed on the first page of search results, even though it clearly has sales below the standard of the algorithm. Pointed out that there is. As a result of analyzing Amazon's sales, Thomson has two types of Amazon essential shirts displayed on the first page when searching for 'male shirts', and at the bottom of the second page considering the sales for the past 30 days It should be displayed.

According to Mr. Boyce, by adopting a strategy like this, Amazon can reduce the cost of displaying its own brand and lower the product price accordingly. This is a huge advantage over third-party brands.

And if you display products of your own brand in a conspicuous place on the top row / upper left, consumers will buy more Amazon brands, sales of Amazon brands themselves will increase, and algorithm evaluation will also increase, Mr. Hughes. Although Amazon denies that there is no such strategy, this is a mechanism that allows the Amazon brand to gain a better position than its competitors.

Hughes points out that Amazon is becoming more active over time in promoting its own brand. According to the above mechanism, even if it is an Amazon brand product that is not popular at the time of article creation, there is a possibility that it can make a big sales in the future. It has been pointed out that the initiative of displaying products under its own brand before paying advertisements is a strategy that will win Amazon in the long run, although advertising revenue may decline in the short term.