Amazon is hit by an antitrust lawsuit, and FBA is the focus of attention!

Recently, the U.S. Federal Trade Commission ( FTC) and attorneys general from 17 states launched a historic lawsuit against Amazon, accusing Amazon of using "chain anti-competitive means and unfair strategies" to maintain an illegal monopoly, harming the interests of sellers and consumers.

Among them, the accusation against Amazon's FBA service is an important part of the official antitrust complaint against the company. The official indictment stated that sellers not only bear the rising delivery costs, but are also forced to abandon other logistics suppliers and use Amazon's delivery service.

Here are the four allegations made by the FTC in its antitrust lawsuit against Amazon regarding FBA services:

1. The increase in FBA service fees has caused sellers to raise product prices

The indictment mentioned that Amazon has long been increasing service fees for sellers. Sellers mainly face four types of fees when using Amazon's services: delivery service fees; sales fees; commissions based on product prices; and advertising service fees.

Among them, the cost of delivery services has increased by nearly 30% from 2020 to 2022. In order to cope with the increase in costs, sellers have to increase the prices of goods on other platforms, thereby raising the prices for consumers to shop on other online channels.

2. Sellers are forced to use Amazon FBA service

Amazon links the Prime logo with the FBA service. The traffic of sellers without the Prime logo is significantly lower than that of sellers with the Prime logo. Therefore, sellers who do not use the FBA service cannot reach Amazon's huge customer base, which forces many sellers to use the FBA service.

The indictment states that many sellers prefer to use different delivery methods that allow them to sell products through multiple channels or to sell goods through multiple channels at a lower cost.

3. Damage the interests of third-party logistics companies

The indictment states that FBA is by far the largest online delivery logistics provider. By binding with Prime, it not only drives its own market share growth, but also limits the growth of other companies in the same industry. Without this restriction, other delivery service providers can compete with Amazon for market volume and gain sufficient scale to reduce sellers' costs.

In addition, FBA is not limited to orders in the Amazon market . Sellers can also complete orders outside the platform after paying additional fees, which further squeezes the living space of other delivery service providers.

4. The problem of sellers’ self-delivery service has not been completely solved

Amazon launched the Seller Fulfillment Program (SFP) in 2015, but the service began to block new sellers in 2019. Sellers who have already participated in SFP are worried that their delivery standards are stricter than FBA. In addition, although Amazon has reopened SFP registration, it requires more than 99% of orders to be shipped on time and provides delivery services for standard-sized products nationwide.

The complaint also alleges that Amazon’s search filters “suppress Prime offers fulfilled through SFP.”

In response to the FTC's allegations, David Zapolsky, Amazon's senior vice president of global public policy and general counsel, issued a statement on the company's website saying that the company fundamentally disagrees with the FTC's allegations, calling them "false or misleading in many cases" and will defend against the lawsuit.

Amazon

Antitrust

FBA