(MENAFN- Wadsam) Over the past decade Amazon has fought its way into
dominating the e-commerce market through a series of predatory pricing
techniques. The company proposes a dual function: serving as a marketplace for
third-party vendors and well as producing and selling their own products.
Amazon allows consumers to compare prices of similar products,
which increases price competition between competitors and ultimately lower
prices. In theory, the inclusion of third-party products is in the consumes
best interests; however, in Amazon's case, this is far from reality…
It has been revealed that Amazon, upon agreeing to
collaborate with other producers, requires them to disclose information about
their production process to access the marketplace. The power and market share
of the tech supergiant leaves third party producers with little to no other
choice, if they with to engage in e-commerce. Having access to production methods,
Amazon can develop the same product for a lower cost, courtesy of its economies
of scale, thus allowed them to undercut third-party producers.
Additionally, the company's financial prowess, with a market
capitalization of $1.56 billion, has allowed it to favor growth over profit in
the short term, resulting in predatory pricing.
Considering the sheer size of Amazon, the company can sustain
a much bigger hit in their return than almost any other retail store. In short,
it becomes a waiting game for the third-party company to pull out. For
instance, the price war between Amazon and Diapers.com, culminated in the sale
of the company—a deal valued at $545 million.
However, unlike normal competition, this is not the best interest
of the consumer. Once the competitor has been driven into bankruptcy, Amazon
can now exercise its monopolistic powers by bumping up prices in light of
minimal price competition. Consumers have no other choice of suppliers.
Amazon's abuse of its growing monopoly power in the e-commerce
sector has attracted the attention of both the European Union and US Congress,
from which it has been undergoing investigation and will be soon facing antitrust
allegations.
While the giant will most likely be facing consequences, the question remains whether these will lead to actual change. Do you believe that Amazon's growth tactics are unethical? If so, what regulations should be implemented to prevent such behavior?
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