Every week, The Interline rounds up the most vital talking points from across the fashion technology landscape. We provide our take on what matters, and why. This roundup is also delivered to Interline Insiders by email.
Big tech is not backing down, and retail is still in its sights.
This was a big week in technology. On Wednesday, the heads of Apple, Google, Facebook and Amazon were called before US Congress to defend themselves against accusations that their businesses have become so large and all-encompassing that they wield monopolistic power of the kind that Microsoft was famously taken to task for in 2001.
While Apple, Google, and Facebook (represented by Tim Cook, Sundar Pichai, and Mark Zuckerberg respectively) drew the most fire, Amazon (in the person of founder and CEO Jeff Bezos) did not escape lightly.
Among the questions and criticisms sent his way by Representatives were two that – especially in the way he responded to them – should give any brand or retailer that doubts Amazon’s ambitions in our industry pause.
First, Bezos was asked: “Does Amazon ever access or use third-party seller data when making business decisions?”
This is a claim that has some serious substance. The Interline has mentioned it on numerous occasions, ever since the Wall Street Journal ran a revealing expose in April of this year suggesting that Amazon had, in fact, done precisely that.
It’s telling that Bezos did not try to deny it, saying that: “I can’t answer that question yes or no. What I can tell you is we have a policy against using seller-specific data to aid our private label business but I can’t guarantee that policy has never been violated.”
If you are a brand that sells through Amazon, you are not going to receive an admission of guilt more direct than this. The marketplace giant has a policy not to take your key product data, sales information, search performance, dwell time, basket value and other essential assets and then use them to undercut you on price, beat you on fulfilment, and position their private labels higher in search rankings than your competing products. But they can’t promise they’ll stick to it.
There are, to be clear, other implications from this week’s antitrust hearing – for search, advertising, social commerce and more, all of which matter to our audience – but Amazon’s rap sheet is undoubtedly the most directly relevant to the business of making and selling products.
The other relevant question put to Bezos on Wednesday was this: “Isn’t it an inherent conflict of interest for Amazon to produce and sell products that compete directly with third party sellers, particularly when you, Amazon, set the rules of the game?”
To which Bezos responded with perhaps the clearest sign to date that big technology companies with a retail interest do not intend to fight fair: “The consumer is the one making the decisions.”
On the one hand, the question itself betrays a lack of understanding of the business of retail. Amazon’s position is not fundamentally different from the department store model (where the retail floorspace owner could easily introduce their own competing private label brands) but what matters is its scale. And in an article for Vox, Jason Del Ray argues that the most cut-and-dried evidence that Amazon is in a monopolistic position as a retailer is that it can steamroll small sellers by accident, without even noticing.
On the other, Bezos’s response cut right to the heart of the matter: Amazon is not going to stop its march to dominate not just online but physical retail, because the level of convenience, variety, and service it offers are still capturing customers. The model works.
Just two weeks ago, in our news roundup, we considered whether brands and retailers should join forces with retail technology giants like Amazon, Alibaba, and JD to leverage their technology. This week, it’s clearer than ever what that sort of pact will mean; external regulation for big tech companies is not likely to come any time soon, and self-regulation is not on their agendas. The implications this has for fashion retail, given that one of those big tech players is also one of the planet’s biggest retailers, with a raft of private labels in apparel and footwear, are profound.
And given that this week also revealed just how reliant online retailers other than Amazon are on third party logistics providers – who are beginning to throw their heightened power around by increasing prices – it’s apparent just how much of retail’s future is reliant on big platforms and services that do not have retail’s best interests at heart.
(Images throughout this article were taken from Amazon’s press vault.)