The dreaded automated email from Amazon was sent to Fred Ruckel late one day on October 27, 2021.
The Ripple Rug, a well-known cat toy made by Ruckel, was discovered to be available elsewhere for less money by Amazon’s algorithms. The vital buy box on Amazon, where customers click “Add to Cart,” would no longer display his merchandise. Due to the fact that Ruckel is the only vendor of the Ripple Rug on Amazon, the decision all but guaranteed that his product would vanish from the marketplace, losing him thousands of dollars every day.
The email, which CNBC reviewed, stated that certain items in your catalogue are presently ineligible for the Featured Offer because their pricing are not competitive with those of sellers other than Amazon.
He had no idea that Chewy had a sale going on and had reduced the cost of his product by a few dollars to $39.99, which was less than the $43 Amazon was offering. Even though the product on Chewy cost $48.54 after shipping and taxes, the algorithm had marked it as a lesser deal. Ruckel was forced to decide between raising his product’s price and lowering it on Amazon. He made the latter decision.
A comprehensive antitrust action against Amazon was recently brought by the Federal Trade Commission, nearly three years after Ruckel’s incident. The agency charged Amazon with using its monopoly position to penalise businesses and stifle competitors. According to the organisation, this has resulted in consumers paying prices that are unnecessarily high and having a poorer shopping experience.
The Federal Trade Commission said in the 172-page lawsuit that Amazon’s “anti-discounting strategy” and “huge web-crawling machinery that constantly checks online prices” serve to hinder competition. The organisation claimed that by threatening to exclude third-party sellers from showing up in the buy box if it discovers a lower price, Amazon punishes retailers who offer goods for less elsewhere. The case asserts that losing the buy box poses a “existential threat” to the companies of the sellers.