Minneapolis, MN (Sep. 20, 2023): The Connected Commerce Council, an organization representing digitally empowered small businesses, hosted a press conference with three Minnesota-based Amazon sellers who shared their experiences selling on Amazon ahead of the Federal Trade Commission’s (FTC’s) expected lawsuit to break up the popular online marketplace.
“I created a caulk alternative that is easy-to-use and mess-free,” said Greg Amundson, CEO of Scandia, MN-based InstaTrim. “In just three years, I went from selling products out of my garage to selling online at Amazon, Lowe’s, Shopify, and Home Depot. Amazon’s features, like Prime and Fulfillment by Amazon (FBA), helped me grow my e-commerce presence, but if the FTC’s lawsuit makes FBA more expensive, or makes it harder to qualify for Prime, that would hurt my bottom line.”
The FTC’s case will reportedly allege that by integrating Prime, Amazon’s paid subscription service, with FBA, Amazon’s shipping and handling service, Amazon requires sellers to use FBA and limits competition. However, Amazon doesn’t require using FBA to sell on the platform or qualify for Prime. Instead, sellers who choose to use FBA do so because it is often the easiest and most affordable way for them to qualify for and gain the benefits of Prime – chiefly its free, fast shipping. The FTC’s alleged solution – to force Amazon to change how the marketplace operates – would jeopardize Prime for third-party sellers.
Beth Fynbo, president and founder of Busy Baby in Oronoco, MN, says losing access to FBA would be hugely problematic for her fast-growing specialty baby products business.
“I created the first-ever system of food-grade placemats, tethers, and accessories, and Amazon helps me seamlessly ship my products directly to buyers nationwide. Before using FBA, I packaged all my orders, shipped them, and kept track of inventory myself. Now, I save time and money by sending containers of my products to Amazon, and they handle the rest. FBA is an integral part of my business,” Fynbo said.
The FTC is also expected to scrutinize Amazon’s “Featured Offer” function, previously known as the “Buy Box,” which provides prominent positioning in search results. Amazon uses several factors to determine which sellers and products are designated as Featured Offers, including price, returns, customer satisfaction, and shipping speeds. The FTC is reported to allege that sellers are required to use FBA in order to qualify for Featured Offer status. However, Amazon sellers say the opposite.
“Amazon sellers can be really successful without using FBA or Prime,” said Andrew Tjernlund, a third-party Amazon seller, consultant, and owner of Tjernlund Services in St. Paul, MN. “I’ve fulfilled my own orders and done millions of dollars worth of sales. If the FTC disrupts how Amazon operates because it doesn’t fully understand how the platform works, and that sellers that have competitive prices, great reviews, and fast and accurate shipping times succeed regardless of fulfillment methods, that is going to be a serious blow to my and thousands of other sellers’ business.”
The FTC’s investigation and potential lawsuit come at a time of robust competition in e-commerce. A 2021 study showed that 87% of Amazon sellers also sell on at least one other marketplace, with 54% reporting selling on Walmart and 50% selling on eBay. In addition, Chinese online marketplaces Shein and Temu are becoming more popular daily, wooing U.S.-based sellers to their new marketplaces.