What:  Amazon is using data that should remain private to sellers to fine-tune its own private-label products, and then promote them over the original ones

Why it is important:  The worrying point is not that Amazon engages in such practices, which are finally common practices for any retailer with private labels business, but that it also uses data taken from third-parties selling on its marketplace.

Reuters reports that Amazon has secretly exploited internal data from Amazon India to copy products sold by other companies and then offered them on its platform. They also rigged the search results in order to make the private label products appear in the top tier results.

After identifying the most interesting or promising brands, the Amazon India team partnered with them and sold them on the website, in order to learn from the data gathered and replicate their key success factors, with products sold 10 to 15% cheaper. Amazon started operating in India in 2013 and soon recorded significant losses, leading to setting up a target of 40% of total sales achieved through private labels.

We already reported Benedict Evans’ thoughts on Amazon’s approach to private labels here. He points out that retailers have watched what they sold and copied their suppliers since the 19th century, and this is a basic part of how the industry works (private labels represent 20-30% of retailers’ revenue, vs. 1-2% for Amazon).

He mentions that such an approach on the marketplace (60% of Amazon’s business) is more worrying: marketplace vendors are not just Amazon’s suppliers but also its customers, and Amazon has always promised that it would not look at this kind of data. So far, there is no technical nor legal framework guaranteeing Amazon’s promise.

Amazon copied products and rigged search results, documents show