Amazon CEO Jeff Bezos attends a memorial ceremony held in front of the Saudi Consulate on the first anniversary of his assassination, in Istanbul, Turkey, October 2, 2019.
Elif Ozturk | Anadolu Agency | Getty Images
In a recently released response to a house panel examining four Big Tech companies, Amazon maintained that it does not use data from individual third-party sellers to come up with its own products. But it uses "aggregated data" to inform its private label brands, the company said.
Amazon's use of private data to shape and market its own brands seems to be a key issue for lawmakers and regulators investigating the company's competition practices. . If investigators believe that Amazon has a dominant market position, they may seek evidence that could indicate that the company is using its dominance to compete with third-party sellers who also rely on Amazon's platform for livelihoods. Bloomberg reported in September that the Federal Trade Commission has been interviewing sellers on Amazon's marketplace for antitrust issues.
Private label products are made by Amazon or affiliates and are only sold on the Amazon website under an exclusive brand name. They benefit Amazon in many ways: They expand the range of products on the site, offer better profit margins than sell third-party products, make supply chain management easier, and help Amazon persuade big brands to cut prices to stay competitive on the site.
Amazon has increased the number of private label brands it sells over the last three years, sparking the fears and concerns of some sellers and brands selling competing products on the market. The company says it now offers about 1[ads1]58,000 private brand products, plus several variations on these products.
"Just like other stores, Amazon uses public and aggregated data from its stores to identify categories and products with high customer needs over a given period of time," Amazon wrote in its response, defining aggregated data as "data collected on across all third-party sellers and Amazon's first-party sales and therefore not specific to an individual seller, including data such as aggregate sales reports on a product category level. "
The company also said it offers" free, anonymized shopping behavior analysis reports "that sellers can use to find out what other products customers were looking at and what they were looking for.
An Amazon spokeswoman declined to comment on the company's response to the House panel's questions about private label products.
The issue came up during a July hearing
The question of how Amazon uses shopping data to create its own products had been the source of a heated exchange between Amazon's attorney Nate Sutton and House Antitrust subcommittee leader David Cicilline, DR.I. during a July hearing.
"You tell us, sir, under oath, Amazon does not use any of this data collected in terms of what sells, where they sell, what products, to inform the decisions you make or to change algorithms to refer people to Amazon products and prioritize Amazon and prioritize competitors? ”Cicilline asked during the hearing.
"The algorithms are optimized to predict what customers will buy regardless of the seller," Sutton said at the time. "We specify the same criteria, and in terms of popularity, it's public data. On each product page, we rank each product."
Amazon maintains this position in its written response to Cicilline's mailing questions, but also recognizes the use of aggregated data for private label brands. The question was one of 158 Cicilline sent to Amazon after the hearing and is part of a 69-page response, including attachments.
Amazon has also responded separately to a request from the committee along with Facebook, Google and Apple, and collectively has rotated tens of thousands of documents, Cicilline previously told reporters.
The company also answered Cicilline's questions for the record about the factors it considers for the algorithm when ranking its own private label products. Amazon denied that the algorithm takes into account "[w] one product is a private label sold by Amazon." It also said that the algorithm does not matter whether a seller is part of the company's Fulfillment-by-Amazon program or whether they have purchased ads on Amazon.
But Amazon said its algorithm considers factors such as how closely a product's title matches a query, how often a product was purchased, as well as its price and availability. In response to another question, Amazon said it knows that "on average, branded products have higher customer rating ratings, lower ROI and higher repeat rates than other comparable brands in the Amazon store," some of which are factors that algorithm would consider.
SE: Here's a look inside Amazon's store that sells only the most popular products