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EcommerceBytes-NewsFlash, Number 2748 - February 27, 2012 - ISSN 1539-5065    1 of 5

Amazon Pulling Brand Names from 3P Sellers

By Kenneth Corbin
February 27, 2012

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Amazon has put its third-party sellers on notice that they are no longer to list products carrying the Gillette brand name in their stores on the marketplace.

This directive, issued late last year, kindled considerable uncertainty among sellers. Amazon's discussion boards became a forum for that confusion, as several posters wondered if they were learning of a new rule issued from the company itself, regarding its marketplace, or if they were being subjected to an edict from the supplier, in this case Gillette, and its parent company, Procter and Gamble.

Kristen Gugliotta, a spokeswoman for Procter and Gamble, cleared the air about the origin of the decision, but left its reasoning a mystery.

"This was a decision made by Amazon," Gugliotta told Ecommerce Bytes. "Thus we cannot comment on the rationale."

Amazon was not much inclined to speak to the rationale for the decision, either. After several messages left with Amazon communications staffers, spokesman Ty Rogers offered, "I'm afraid I don't have anything to share."

This leaves Amazon's motives for its policy on sales of Gillette products - or other brands, such as Oral B, for that matter - a matter of speculation, and there was no shortage of theories on the retailer's discussion boards. Some thought it seemed plausible that the new policy could be an anti-counterfeiting measure, particularly given the product line in question.

"Gillette products, especially razor blades, have always been a huge target for knockoffs - high price point, easy to fake," explained Chris Green, director of FBA Power, a suite of tools geared for sellers using the Fulfillment by Amazon service.

But Green acknowledged that the matter of liability for knock-offs remains an unsettled question. Indeed, as eBay has discovered, the question of responsibility for policing an online marketplace is an evolving area of the law, one that has seen various interpretations by different judges.

But Procter and Gamble's assertion that the decision to pull third-party listings of Gillette products was entirely Amazon's might seem to argue against intellectual property concerns.

Some commenters took for granted that Amazon would seek to squeeze out competitors, that it is in an essential friction with its third-party merchants over price, placement and other factors.

But that often repeated narrative sets up a false tension pair, according to Eric Best, CEO of the ecommerce marketing and services firm Mercent.

"What's sometimes lost in that comparison is the benefits that Amazon sees from the third-party seller program," Best said, noting that Amazon rakes a commission from each marketplace sale and monetizes the visits that customers make to its pages. "Those are important factors for Amazon that weigh in favor of the third-party seller program over time."

Best pointed to Amazon's most recent quarterly earnings report, when the firm topped analysts' expectations in revenue from its marketplace segment.

As for efforts to curtail third-party sales, "I believe it sort of runs contrary to the trend we're seeing now," he said. "As a percentage of Amazon's overall retail business third-party sales are growing and have been growing over a period of time."

So if Amazon has a growing business on its hands, why would it want to enact policies that would limit those transactions?

It depends on how you view the balance sheet, Best argued. Though he firmly believes that Amazon's long-term interests are aligned with growing the marketplace business, the contrarian view that prizes the owned-and-operated retail segment would see Amazon in competition with its third-party sellers, giving it every incentive to maximize its scale with an A-list supplier like Procter and Gamble.

"The counterpoint is if you're measuring Amazon's success purely on the basis of the retail business and the retail metrics, the more they can buy from specific suppliers, in general the more negotiating leverage and buying power they're going to have in their relationship," Best said.

In any case, sellers' recourse against the policies of marketplaces and suppliers, such as minimum advertised pricing provisions, is hardly a clear-cut matter in the eyes of the law. And Amazon already has an established policy of restricting certain items from third-party sellers, such as Kindles and Kindle accessories.

"Some items Amazon will not let third-party sellers sell at all and it may be because they want to control the entire customer experience for a particular product," Green said. "Since it's their sandbox, there is nothing that a seller can do about it."

Comment on the EcommerceBytes Blog.

About the author:

Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.

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