Amazon’s dirty reseller tricks exposed

Amazon South Africa’s marketplace has been accused of forcing sellers to adjust the prices of their products so that they match or beat their listings on other online platforms like Takealot.

MyBroadband first learned of the alleged practice from a South African reseller group that represents sellers on several eCommerce websites in South Africa.

One of the members posted a warning to other sellers that Amazon automatically forced them to set pricing the same as on Takealot, or their product would not feature the “Add to Basket” button.

“The reason I know they are matching my offers directly is because it was about ten items where I was forced to set my Amazon price to the same as Takealot, and the pricing they suggested was the Takealot price, of which all items were on promotion,” the seller explained.

Although a customer can still buy the items, not having the “Add to Basket” button on the listing makes it far less likely to be seen or bought.

Another seller complained about the same problem. “I decreased the price, and once the Takealot promotion ended, I was allowed to revert to the original price,” they said.

This could be one explanation for what MyBroadband witnessed first-hand on Amazon.co.za’s launch day on 7 May 2024.

While comparing Amazon and Takealot, the pricing of many products on the two sites initially differed significantly.

However, as time passed, many of the products on Amazon saw their prices reduced to be identical to the ones on Takealot sold by the same resellers.

Amazon acknowledges that it constantly compares its pricing to competitors to ensure its prices are as low or lower than those of all relevant competitors.

While this could benefit shoppers, it makes it difficult for sellers who want to participate in sales or promotions on other sites but not on Amazon.

Marketplaces may offer sellers commission discounts or other special benefits during a promotional period. However, with Amazon.co.za’s price-matching practice, a customer would not be incentivised to buy from another shop.

Sellers would effectively have to shrink their profit margins and hope shoppers prefer the other shop.

Takealot got in trouble over similar practice

Amazon.co.uk sellers have recently also complained about this alleged price-matching practice.

Based on its previous actions, the Competition Commission is highly likely to take issue with the action, which seems eerily similar to implementing a price parity clause.

Following its Online Intermediation Platforms Market Inquiry, the commission required Takealot to make a flurry of changes to its operations to fix what was deemed to be uncompetitive behaviour.

Among these requirements was that Takealot scrap its “narrow price parity” clause in contracts with sellers.

That rule prevented sellers from pricing their products lower on their own websites, impeding their ability to reduce their reliance on Takealot.

Takealot had argued that the clause ensured customers were not being overcharged for items on its platform.

Another company that the Competition Commission criticised for price parity clauses was Booking.com, which was also instructed to stop both narrow price parity and wide price parity.

The latter demands that accommodation providers offer their rooms on Booking.com at rates similar to other third-party platforms.

The Competition Commission argued that wide price parity was “generally accepted to be a hardcore restraint of trade”. It ordered Booking.com to scrap both practices.

Before the commission’s ruling in South Africa, the European Union (EU) had already cracked down on the practice and forced Booking.com to remove it within the EU’s jurisdiction.

The EU also cracked the whip on Amazon’s price parity in 2013.

While Amazon quietly killed its price parity clause in the US in 2019, a new lawsuit alleges that it began interpreting its “Brand Standards,” a so-called “Fair Pricing” Policy, and a “Seller Code of Conduct” to make it a “violation” for a seller to offer an item off Amazon for less than it sells the same item on Amazon.

Amazon allegedly scans the Internet for the same products offered via other websites at lower prices than they are listed on Amazon.

It then alerts sellers for so-called pricing “violations” and imposes penalties like removing Amazon Prime shipping eligibility from their items.