Amazon’s continuously increasing costs is like fighting fire, but is a more profitable Amazon strategy on the horizon? We think it might well be. Amazon has reached an agreement with the European Commission on commitments related to how it treats third-party sellers on its platform. If you’re a third-party seller on Amazon’s platform, these commitments could have some major implications for your business.

One of the commitments that Amazon made is to ensure that the “Featured Offer” is non-discriminatory. This means that Amazon will no longer weight the Featured Offer in favour of itself over third-party sellers. Instead, both Amazon and third-party sellers will be treated equally when it comes to deciding which seller/vendor to show the featured offer for. This means that Amazon will no longer receive its own special treatment, and all sellers will have an equal chance at getting the Featured Offer spot. Hurrah! No more fighting Vendor on the Buy Box (in theory…).

The second commitment Amazon made is to add a “Second Displayed Offer” for third-party sellers. This will allow third-party sellers to have a chance to be displayed on the product detail page when their offer is different from the featured offer but still attractive. For example, a third-party seller may have a lower price but a slower delivery speed. This feature is especially useful for seller-fulfilled Prime sellers, as it will allow them to be just as powerful as FBA Prime sellers.

Finally, Amazon has committed to not using non-public data to compete with third-party sellers. This is a significant commitment as it ensures that Amazon will not use data that is not publicly available to compete with third-party sellers. No seller wants the risk of Amazon using the data the seller has added to Amazon, only for Amazon to use that to compete against them.

Amazon has historically made changes to its search algorithms that can negatively impact third-party sellers. In 2020 for example, Amazon changed its algorithm to prioritise products that generate the most profit for Amazon, rather than products that are most relevant to customers. This change made it harder for third-party sellers to compete with Amazon’s own products and has been a point of contention for many sellers.

Despite these challenges, Amazon’s commitments to the European Commission are a positive step forward for third-party sellers. It shows that Amazon is making changes for a more transparent and fair marketplace. And while the impact of these commitments may not be felt immediately, it’s a step in the right direction towards creating a more sustainable and profitable platform for third-party sellers.

What does this mean for third-party sellers on Amazon’s platform?

While we need to see everything in practise before knowing for sure, we think this could mean traditional FBA has less power than it does now, and more on a par with Seller Fulfilled Prime. Amazon’s FBA costs are rising, and fast, and everyone’s feeling that. But, Prime is particularly attractive because of the Prime badge – which increases traffic and conversion rates. It also ranks you higher in search results – another source of the increased traffic. But if you can run Prime through your own logistics, without any front-end drawbacks, then this could be a noticeable way to increase your profitability again, as Amazon’s FBA fees are often higher than you can get from other couriers.

Of course, it remains to be seen how these commitments will be enforced and what impact they will have on the market. But for now, it’s a positive development for sellers and customers alike. So let’s hope that Amazon continues to make commitments like these and keeps the e-commerce market fair and competitive for all.