Amazon Dominates E-Commerce. Should you be worried?

Over the past decade Amazon has fought its way into dominating the e-commerce market through a series of predatory pricing techniques. The company proposes a dual function: serving as a marketplace for third-party vendors and well as producing and selling their own products.

Amazon allows consumers to compare prices of similar products, which increases price competition between competitors and ultimately lower prices. In theory, the inclusion of third-party products is in the consumes best interests; however, in Amazon’s case, this is far from reality…

It has been revealed that Amazon, upon agreeing to collaborate with other producers, requires them to disclose information about their production process to access the marketplace. The power and market share of the tech supergiant leaves third party producers with little to no other choice, if they with to engage in e-commerce. Having access to production methods, Amazon can develop the same product for a lower cost, courtesy of its economies of scale, thus allowed them to undercut third-party producers.

Additionally, the company’s financial prowess, with a market capitalization of $1.56 billion, has allowed it to favor growth over profit in the short term, resulting in predatory pricing.

Considering the sheer size of Amazon, the company can sustain a much bigger hit in their return than almost any other retail store. In short, it becomes a waiting game for the third-party company to pull out. For instance, the price war between Amazon and Diapers.com, culminated in the sale of the company—a deal valued at $545 million.

However, unlike normal competition, this is not the best interest of the consumer. Once the competitor has been driven into bankruptcy, Amazon can now exercise its monopolistic powers by bumping up prices in light of minimal price competition. Consumers have no other choice of suppliers.

Amazon’s abuse of its growing monopoly power in the e-commerce sector has attracted the attention of both the European Union and US Congress, from which it has been undergoing investigation and will be soon facing antitrust allegations.

While the giant will most likely be facing consequences, the question remains whether these will lead to actual change. Do you believe that Amazon’s growth tactics are unethical? If so, what regulations should be implemented to prevent such behavior?

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