With all of the hard-work and dedication we've put into building an honest business, we feel particularly aggravated when we see big corporations getting away with unfair, greedy, and harmful practices.
We've recently launched our own investigation into what's been going on with Amazon and through performing independent lab testing on a wide selection of their products, we confirmed our worst fears about the state of the behemoth online marketplace.
Here we'll share what we've seen as the most concerning issues & red flags with the state of Amazon today, from the perspective of a small, family-owned business.
Amazon is steadily becoming a monopoly
Amazon began in 1994 as an online marketplace for books, but within just a few short years they were selling video games, electronics, and toys. Flash forward to 2019 and Amazon has become an expansive marketplace that caters to practically every need of the modern consumer.
But their booming growth has not been free of controversy, and today their predatory greed acts as a threat to the basic infrastructure of the American economy effecting small-businesses across the nation.
Whereas Amazon once acted as an oasis for small businesses to find customers, their act of using said small businesses to gain data and to promote their own brands, undermines their initial value proposition and creates an unfair market.
Now, the United States has a set of laws in place called antitrust laws to protect businesses from predatory practices, but that doesn't mean it's a perfect system.
Experts have yet to come to a conclusion in regards to whether or not Amazon is actually violating antitrust laws, but antitrust experts like Sally Hubbard seem to think so,
" Monopoly power is defined as the power to control prices or exclude competition. Amazon has the power to do both".
Economists agree that too much economic power being held by one corporation stifles innovation, drags down wages, gives consumers fewer choices, and makes an economy less competitive.
If there is no way of competing with Amazon's piracy & domination, why would anyone start an e-commerce business in the first place?
Amazon is cashing-in on third-party sellers
Amazon had always capitalized on selling third-party goods, whereas today Amazon's business model involves being in direct competition with brands sold on the site.
Here's how they pull it off according to The New York Times:
- Amazon uses the data from third-party sellers to help determine what it will sell.
- It provides advantageous product placement for its own products over its competitors.
- As a mega-corporation, it can sell products at cheaper prices than its competitors.
- Sellers are dependent on Amazon and cannot effectively take their services elsewhere.
Now, you're probably thinking... isn't this just how business works?
Yes, it's common business practice to become inspired by other brands and to compete within a market; but when you're Amazon, it's bullying and a gross misuse of power.
What the argument comes down to is the unfair environment that is created when Amazon uses third-party sellers for data and then becomes their competition at a lower price.
We rest our case: if Amazon was to discontinue their private label brands it wouldn't come as a huge detriment to them, whereas the continuation of their private label brands comes as a gigantic detriment to thousands of small-businesses.
Amazon's predatory data strategies in action
Amazon has been in the news recently for its blatant rip-off of popular sustainable shoe brand, Allbirds. Amazon not only stole the look of Allbirds signature best-selling sneaker, but they slashed the price in half and threw the sustainability aspect out the window.
Allbirds is a $1.4B business, but even numbers this high can't compete with Amazon's $1T evaluation. And sadly, Allbirds is just one business out of the thousands of businesses that Amazon is doing this to. Mind you, Allbirds isn't even sold on Amazon, so how did they get the idea to create a copy-cat shoe?
Their predatory method:
- Check search volumes on Amazon to see what's trending (i.e. Allbirds)
- Trending searches = consumer demand
- Create a knockoff with a different name at a lower price.
- Outbid original company for ad space to be the first google search result.
Amazon products don't meet prop. 65 standards
Have you seen the proposition 65 warning on the bottom of goods, on the tag of an item of clothing, or posted at a fast food drive-thru?
WARNING: This product can expose you to chemicals known to the state of California to cause cancer and birth defects or other reproductive harm.
This is a Proposition 65 warning and the state of California requires businesses to display it so consumers can be aware of significant exposures to unsafe chemicals.
Prop. 65 became law in 1986 and since then, California has published a list of over 900 chemicals that have been scientifically proven to contribute to serious illnesses.
In short, these warnings exist to keep us safe.
Maybe you're not from California or you've never seen a publicly posted prop. 65 warning, but it is the law and no one is exempt from abiding by it. Even the happiest place on earth, Disneyland, displays the prop. 65 warning on their churro carts, it's true!
Even though California is Amazon's biggest market, many Amazon products directly violate prop. 65 standards by containing serious illness-causing chemicals and not advertising it with a warning.
To illustrate Amazon's sale of unsafe products, take a look at the lab results of Amazon's top-selling fish oil, below.
As you can see in the lab results, this best-selling Amazon product failed a heavy metal screening with highly toxic levels of arsenic.
You might be wondering, is this product's failure to pass a heavy metal screening indicative of the whole Amazon marketplace? Yes, and this sort of misconduct is hardly a secret anymore.
Sadly, the above lab result is just one of our many independent findings. We've identified toxic levels of heavy metals in best-selling Amazon-bought spirulina, called out unsafe Amazon supplements, and performed third-party testing to confirm their false advertising of CBD products.
So, why does Amazon get away with this?
While their gigantic network of third-party foreign sellers is likely the predominant reasoning that illegal products are flying under the radar, Amazon still deserves to be held responsible for putting the health of millions of Americans at risk.
Amazon is filled with unqualified merchants
The Amazon marketplace has become flooded with foreign sellers, and there isn't anything inherently wrong with foreign sellers, but they're not held up to the same standards as American sellers.
In the United States, starting a business that sells consumable products is no easy task.
In order to manufacture & sell Neurogan products while being in compliance with the law, we've had to qualify for dozens of licenses and certifications, and each certification has come as a substantial investment on the part of our business in both time and money.
For example, we're currently Good Manufacturing Practices (GMP) certified, which means we've gone great lengths to ensure that our production meets all of the important standards of the manufacturing industry. We also third-party laboratory test our products to ensure that they're premium quality.
It goes without saying that you'd want all of the products you consume to come from reputable, licensed, accountable companies, like us, but the Amazon market has turned this principle on its head.
With no governing body to regulate what is sold on Amazon, Americans consumers are unknowingly buying from merchants who have not tested their products or facilities for quality measures.
But we don't blame the consumers, it's time that Amazon, an American company, should start to enforce American standards across their marketplace. Amazon's current infrastucture directly disrespects hard-working, compliant business' and puts the health of Americans at risk.
Amazon is losing big brand partnerships
After 2 years, Nike has ended it's partnership with Amazon and according to Inc.com, their departure acts as a larger symbol of things to come.
Nike's departure from Amazon points out that established brands no longer want to be associated with a marketplace that undermines American business & quality.
It makes sense: prominent companies like Nike are watching closely as Amazon's private label brands produce copycats and counterfeits of their products. It's safe to say, these reputable companies are trying to get out while they're still ahead.
In Conclusion
We're sharing this information with you today in the hopes that it helps you think twice before buying goods on Amazon. Not only does the marketplace contain unsafe & illegal products, its very existence is a threat to thousands of small businesses across the nation.
Take action today by supporting small-businesses and thinking twice before you buy.
Please reach out to us with all of your questions and we'll be happy to help.
Sources:
https://www.aljazeera.com/ajimpact/amazon-true-monopoly-bezos-behemoth-qualify-190712212903436.html
https://mashable.com/article/elizabeth-warren-amazon-basics/
