Small Business Sellers Respond to FTC Lawsuit
Washington, DC (September 29, 2023): The Connected Commerce Council, an organization representing digitally empowered small businesses, today hosted a press conference with three small business sellers with insights and experience selling on Amazon in response to the Federal Trade Commission’s (FTC) lawsuit intended to disrupt the popular online marketplace, which was filed Tuesday. The participants disputed the FTC’s claims and highlighted misconceptions about the suit, particularly Amazon’s value to small sellers. 3C also released a Myth vs. Fact document that further evidences the FTC’s lack of understanding about how Amazon or ecommerce works.
The suit falsely claims that Amazon charges costly fees that harm sellers. Sellers dispute this because the FTC only examined the costs and ignored the value Amazon provides in exchange for their fees, especially when compared to other marketplaces and sales methods, both online and off.
“Besides selling on Amazon for 15 years, I run a consultancy that helps sellers maximize their reach and profit on the Marketplace. Amazon provides more value than any other marketplace or sales method that me or my clients use,” added Scott Moller, co-founder of Grill Sergeant, which sells grilling tools online. “The FTC blatantly ignores that being a successful seller requires spending money on customer acquisition, warehousing and shipping, customer service, and more. Sellers that choose to use Amazon for these services do so because they are better services at a better price than anyone else can provide.”
The FTC also alleges Amazon engages in several anti-competitive practices, including punishing sellers who do not use Fulfillment-by-Amazon (FBA), Amazon’s logistics service that offers warehousing, packing, shipping, and delivery. Amazon doesn’t require sellers to use FBA to sell on the marketplace or qualify for Prime, the valuable brand synonymous with fast, free shipping. They also do not suppress listings in search results or make it harder for sellers who do not use FBA to convert sales.
“I read the entire FTC complaint and am baffled that a federal agency would put its name to such garbage. Contrary to what Lina Khan says, Amazon has never discriminated against or punished me for not using their marketplace services,” said Evans Richards, owner of reVend, a toys and collectibles business selling on multiple marketplaces, including Amazon and Walmart. Not only do I compete successfully against products Amazon sells directly, but I fulfill my own orders and provide warehouse and shipping services for other sellers in direct competition with FBA.”
The FTC also claims that Amazon floods the marketplace with paid advertisements and “junk ads” that make it harder for small sellers to get noticed. However, Amazon doesn’t replace organic search results with ads. It’s an algorithm that intersperses ads with regular search results. Changing the way Amazon ads operate could have a serious impact on small sellers who use ads to bring in business.
“Amazon ads are extremely important for our visibility,” said Alfred Mai, founder and CEO of ASM Games, a San Francisco-based tabletop card game company. “We use ads to stand out against the Milton Bradley’s of the world, and advertising on Amazon is the most effective way to convert sales and find customers. The idea that the FTC wants to fix something that isn’t broken and works incredibly well for small businesses should have every seller deeply concerned about this suit’s consequences.”
The FTC’s lawsuit comes at a time of robust competition in e-commerce. A 2021 study shows 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.
