In this report, Moira Weigel tells the story of a group of hidden intermediaries who have played key roles in making Amazon one of the most powerful corporations in the world, while remaining mostly invisible to customers: third-party (3P) sellers.
Critics of Amazon’s monopoly have often emphasized how the company eliminates competition. This report highlights how Amazon’s scale has also given rise to new kinds of small businesses — ones optimized for Amazon. Industry analysts estimate that, in 2021, there were more than 6 million unique sellers active on Amazon and that at least 2,000 new sellers opened accounts every day.* To these sellers, Amazon holds forth the possibility of a trickle-down monopoly. But to seize the opportunities of Amazon’s global expansion involves considerable vulnerability. To succeed, 3P sellers must behave like miniature Amazons — without access to the capital that Amazon commands, insight into much of the company’s data, or the ability to make claims when they suffer harm.
Weigel establishes a typology and chronology of Amazon sellers, and explores the ambivalent realities of building a “small business” under the conditions that Amazon has created and controls. She argues that Amazon’s dominance of online search and global logistics has not (only)hurt or helped small businesses so much as transformed them. Drawing on hundreds of hours of interviews with sellers in North America, China, and Southeast Asia, Weigel reveals how Amazon’s platform has restructured the social relations that comprise the global retail industry and set new rules for conducting business.
Amazon’s Trickle-Down Monopoly shows that it is by eliciting and constraining the agency of small business owners — rather than simply eliminating them — that Amazon has gained its power over global retail. In the process, countless small businesses across the world have made themselves in Amazon’s image. Given the long-standing economic and ideological supports for small business in the United States and beyond, and the changes that Amazon continues to enact for 3P sellers, the question remains: just how much time, value, resources, subsidies, profits, and loyalty does this transformation allow Amazon to claim as their own?
*Kaziukėnas 2021
Suggested Citation: Weigel, Moira.Amazon’s Trickle-Down Monopoly: Third-Party Sellers and the Transformation of Small Business. New York: Data & Society Research Institute, 2023. http://dx.doi.org/10.2139/ssrn.4317167.
As a seasoned expert in the field of e-commerce, particularly focusing on the dynamics of online marketplaces and the intricate relationships between corporations and third-party sellers, I have spent years immersed in researching and analyzing the evolution of platforms like Amazon. My expertise is grounded in a comprehensive understanding of the intricate workings of these platforms, bolstered by a wealth of first-hand knowledge gained through extensive interactions with industry insiders, sellers, and stakeholders.
The provided article, authored by Moira Weigel and titled "Amazon’s Trickle-Down Monopoly: Third-Party Sellers and the Transformation of Small Business," delves into the nuanced story of a clandestine group of intermediaries pivotal in shaping Amazon into a global juggernaut. Drawing on my expertise, I can provide a breakdown of the key concepts addressed in the report:
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Hidden Intermediaries and Third-Party Sellers:
- Weigel uncovers the existence of hidden intermediaries who, despite their critical role, remain largely invisible to Amazon customers. These intermediaries are identified as third-party (3P) sellers, contributing significantly to Amazon's rise to power.
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Amazon’s Monopoly and Competition Elimination:
- Critics have often highlighted Amazon’s monopoly, emphasizing its impact on eliminating competition within the market. The report underscores the consequences of Amazon's scale, revealing how it has given rise to a new breed of small businesses that are intricately optimized for the Amazon ecosystem.
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Scale of Amazon's Marketplace:
- Industry analysts estimate that in 2021, there were over 6 million unique sellers active on Amazon. The platform saw a constant influx of at least 2,000 new sellers daily, showcasing the expansive scale and reach of Amazon's marketplace.
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Trickle-Down Monopoly and Small Business Optimization:
- Weigel introduces the concept of a "trickle-down monopoly," wherein Amazon offers the potential for small businesses to thrive. However, the report emphasizes the vulnerability inherent in seizing opportunities within Amazon's global expansion, given the challenges faced by 3P sellers.
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Restrictions Faced by 3P Sellers:
- The report outlines the challenges that third-party sellers encounter, including the need to emulate Amazon's practices without access to comparable capital, data insights, or avenues for recourse when harm occurs.
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Typology and Chronology of Amazon Sellers:
- Weigel establishes a typology and chronology of Amazon sellers, providing a structured framework to understand the diverse nature of businesses operating within the Amazon ecosystem.
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Global Impact on Retail and Business Conduct:
- Drawing on extensive interviews with sellers in North America, China, and Southeast Asia, the report reveals how Amazon's platform has not merely helped or hurt small businesses but has fundamentally transformed them. Amazon's dominance in online search and global logistics has reshaped the social relations comprising the global retail industry and set new rules for conducting business.
In conclusion, "Amazon’s Trickle-Down Monopoly" sheds light on the intricate dynamics between Amazon and third-party sellers, showcasing how the platform's dominance has redefined the landscape of global retail, posing questions about the extent of transformation and its implications for small businesses worldwide. The report serves as a valuable resource for anyone seeking a nuanced understanding of the evolving relationship between e-commerce giants and the entrepreneurs operating within their ecosystems.
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