Amazon and ProPublica butted heads Tuesday over a report from the investigative journalism organization claiming that the e-commerce giant is prioritizing its own product listings and those from preferred sellers even when cheaper options are available.
ProPublica studied 250 products, over several weeks, to discover which items were listed first in search results, a position known as the buy box. “About three-quarters of the time, Amazon placed its own products and those of companies that pay for its services in that position,” ProPublica reported.
Products that Amazon sells directly and those listed by sellers who pay for the Fulfilled By Amazon (FBA) program are displayed on the site without shipping costs. The items reflect the hypothetical cost of the order if it exceeds $49 or if the customer is part of Amazon’s $99 per year Prime membership program — two cases where shipping would be free.
If the order doesn’t qualify for free shipping, those costs are added at checkout. In that case, customers often inaccurately believe they are purchasing the cheapest option, based on the initial search results, according to the report.
ProPublica claims “the company appears to be using its market power and proprietary algorithm to advantage itself at the expense of sellers and many customers.”
Amazon says the report is based on assumptions and inaccuracies.
“With Prime and Super Saver Shipping (which requires no membership and ships orders above $49 for free), the vast majority of our items ordered – 9 out of 10 – can ship for free,”said Craig Berman, Amazon vice president of communications, in a statement to GeekWire. “The sorting algorithms the article refers to are designed for that 90 percent of items ordered, where shipping costs do not apply.”
The ProPublica report concedes Amazon’s rankings are accurate for Prime members and orders over $49. It focuses, instead, on orders where shipping does apply but isn’t counted in the price when products are ranked, giving an advantage to Amazon and the sellers that pay for its services. “Amazon’s pay-to-play culture is forcing online sellers to choose between paying hefty fees or leaving the platform altogether,” says ProPublica.
GeekWire tested the report’s claims on a Stansport Wool Blanket. The first search result was a $15.56 blanket sold by Amazon, followed by a $17.99 product from Outdoor Sports. Both items advertised free shipping, though Amazon’s came with the caveat “on eligible orders.”
At checkout, shipping costs brought the Amazon blanket up to $23.17. The account was not part of Amazon’s Prime membership and the order was below $49. The Outdoor Sports blanket remained $17.99 with free shipping, as advertised.
Amazon’s algorithm certainly makes Prime membership and fulfillment services attractive and that shouldn’t come as much of a surprise. Both products are big cash cows for the company. Amazon hasn’t been shy about its strategy to encourage more customers to become Prime members. Until recently, it wasn’t shy about promoting FBA services either.
“For a few years, Amazon even advertised the advantage it offered to its paid partners,” ProPublica reports. “According to Web pages stored by the Internet Archive, the Amazon website said: ‘Because most FBA listings are ranked without a shipping cost, you get an edge when competing!’ The language remained on the page from February 2013 through December 2015.”