Please ensure Javascript is enabled for purposes of website accessibility

Report: Amazon Used Independent Sellers Data When Developing Competing Products

By Donna Fuscaldo – Apr 23, 2020 at 5:26PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Amazon is launching an internal inquiry into the report, saying the actions violate the company's policies.

Amazon (AMZN 2.75%) has reportedly used data from independent sellers when developing in-house products to hawk on its vast eCommerce platform. 

Citing interviews with more than 20 former Amazon employees of its private-label unit and documents, The Wall Street Journal reports that the tech giant used the information to decide pricing, which features to emulate, and whether or not to enter certain product categories. Those practices fly in the face of what Amazon has long claimed, namely that it doesn't use data on third-party sellers to influence the development and production of its own products. 

A business owner packaging up a product to ship out.


According to the report, in one case employees used data and documents about a hot-selling car trunk organizer to introduce a competing product. The paper noted Amazon employees looked at total sales, the amount spent on marketing and shipping, and what Amazon made off of each sale. In another example, some Amazon executives were able to get access to data that included proprietary information. The data was then used to research what products are best sellers on the platform to determine if Amazon should launch a competing offering. If managers didn't have access to the proprietary information, they would ask a business analyst within the organization to create reports with the information included. 

In a statement to the WSJ, Amazon said it "strictly" prohibits employees from using nonpublic, seller-specific data for private label products. Amazon also said it was launching an internal investigation and that the behavior would be in direct violation of the company policy. 

Amazon's private-label business has long been criticized by some third-party sellers who argue Amazon favors its products over those of rivals. Its aggressive push to promote its own products has also raised the ire of regulators including the Federal Trade Commission, which is probing its retail and cloud computing practices. 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Donna Fuscaldo has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned, Inc. Stock Quote, Inc.
$117.56 (2.75%) $3.15

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.