Another Reality Check for the FTC Following Misguided Amazon Lawsuit

Just a few weeks after the FTC and 17 state Attorneys General sued Amazon, alleging that the popular online marketplace impedes competition, CNBC published an article detailing how Walmart continues challenging Amazon for online marketplace supremacy; just the latest in a long line of examples of how all retailers, both physical and online, and marketplaces compete fiercely for customers’ and sellers’ business, leaving everyone to scratch their head about just what the FTC is talking about.

Here’s a fun fact: Amazon makes up less than 5% of the entire U.S. retail industry, according to a recent column by The New York Times’s Farhad Manjoo. He cites data showing total U.S. retail sales are approximately $7 trillion. Walmart makes up 6% of the U.S. retail market, with $393 billion in sales, and Amazon makes up less than 4.5% of U.S. retail with $316 billion in sales across North America.

Let’s put that in perspective. In 1904, Standard Oil controlled 91% of all American oil production. In 1997, Windows owned 86.3% of the desktop operating system market, and today still holds 70% market share worldwide. Compared to those juggernauts, Amazon’s 4.5% of U.S. retail and 38% of U.S. e-commerce sales is flat-out paltry.

Back to Walmart. According to that CNBC article, the nation’s largest retailer has more than tripled its e-commerce sales since 2016 and more than doubled its e-commerce market share over that period. And Walmart is investing heavily in its third-party marketplace to compete with Amazon. More than 60% of Amazon sales come from third-party sellers, and Walmart is beefing up its third-party seller services to recruit and retain hundreds of thousands of third-party sellers.

Retail is not a zero-sum game. It’s the 21st century; sellers are smart and know that diversifying their sales methods and channels makes sense but is easier than ever. That’s why most sellers use five or more different sales methods, including owning a brick-and-mortar store (79%), selling wholesale (78%), and seller-owned webstores (68%). Shopify has made it incredibly easy for sellers to sell through their website. Moreover, of the 66% of small sellers that sell on Amazon, 87% also sell on at least one other online marketplace, including 54% selling on Walmart’s marketplace and 50% selling on eBay. Every day, it seems another major U.S. retailer is launching an online marketplace, including Target, Macy’s, and Home Depot, and all are steadily growing their market share.

Let’s not even get started on overseas competition. Asian-based retailers Shein and Temu are practically paying sellers to list products on their new marketplace platforms as they try to gain a foothold in the U.S. e-commerce market.

If the FTC is correct, and Amazon is impeding competition, that means Walmart, Target, Shein, Temu, Shopify, and everyone else entering the e-commerce space are just throwing away money. Or is the FTC just wrong, and their “big is bad” crusade has caused them to put blinders on and ignore the facts? Because when they conveniently ignore the facts, they can make outrageous claims like the lack of competition, which means Amazon can charge sellers whatever they want and provide no value in return. 

No matter where they sell their products, businesses always have expenses to cover. Brick-and-mortar retailers must pay rent for their physical locations, while wholesalers receive only a portion of the retail price. Online sellers must pay for advertising across various platforms and logistics, and marketplace sellers must pay referral fees and advertising costs to attract customers and logistics expenses.

In addition to providing sellers with access to millions of customers worldwide, Amazon helps sellers store inventory, attract customers, build their brand, deliver products, address customer concerns, and handle returns. Sellers choose Fulfillment-by-Amazon because it is affordable and easy to use, and sellers advertise on Amazon because it drives sales and measurable, high-performing ROI. 

Here is a fact that the FTC definitely should not ignore. Amazon has helped thousands of small sellers reach customers nationwide, grow their business, and succeed, and changing how Amazon operates will have dire consequences for those businesses. Maybe the FTC should stop playing roulette with sellers’ livelihoods and instead focus on the facts.