After leaving a job at the Embassy, the Claimant started a business which involved selling lovely items she found in the UK and Europe on Amazon.co.jp. The Claimant has been conducting this business since June 2013.
By providing quality items with good service (e.g. items wrapped with the brand’s logo ribbons, which the Claimant purchased directly from the brand) on Amazon.co.jp over the years, the Claimant has built a strong customer base.
Although the Claimant, who is not a Brand Registry Seller, could not find out exactly how many customers repeatedly buy from her shop, she knows she has many loyal customers from the multitude of positive reviews mentioning repeat purchases as well as from the messages she has received (e.g. I look forward to the shop’s new listings!). In fact, the Claimant often receives requests to list items which customers would like to buy from her shop on Amazon. The Claimant’s shop has never had any problem selling items on Amazon as the items sell fairly quickly upon listing. The number of sales on Amazon was huge, even for a small shop like the Claimant’s.
Although the Claimant’s shop had never requested it, Amazon offered to provide a consultant who would be responsible for helping her business grow on Amazon. The Claimant found out that this service is not provided for every seller, only for selected sellers on Amazon; however, this was not particularly useful for her shop as the consultant frequently advised the Claimant to provide Amazon points for customers, points which the Claimant buys from Amazon and customers can then redeem on any other items on Amazon.
The Claimant discovered that some sellers enrolled in the Amazon Brand Registry by registering the names of their shops as trademarked using the Amazon IP Accelerator. Although Amazon prohibits putting a shop’s name on a product title and details unless the item is a private brand, which is written in the User’s Agreement as this will provide a significant advantage over other shops when searching on Amazon, ‘brand’ names registered in the Amazon Brand Registry are exempted from this prohibition. As a result, these shops were selling famous brand items with prizes of pocket tissues, hand wipes, and message cards which have the shops’ logos on them. The Claimant’s competitor, which sells the same brand as the Claimant, was no exception. This shop registered their name with the Amazon Brand Registry and created an exclusive catalogue of the brand item with a gift bag, which can easily be bought on the Internet as original items from their shop. By providing gift-wrapping, the shop made all the brands they sell original brands only – their intention being to make exclusive sales on Amazon. The shop even displayed the following warning to other sellers in the information they provide: ‘To all our competitors, please do not use our catalogue which comes with our original gift wrapping or try to rewrite it (i.e. by removing the shop’s name). To protect consumers, your cooperation would be appreciated.’ This was surely not designed to protect consumers but to block the competition, as the Claimant can reproduce exactly the same gift wrapping if the name of the seller is not displayed in the product title and details. In fact, these items offered by Brand Registry sellers are strongly guarded by Amazon so that other sellers cannot rewrite the catalogues without the owner’s consent. If this is allowed, it becomes possible to sell every conceivable brand as the shop’s original without any competition.
By contrast, the Claimant, who is not a Brand Registry seller and buys expensive ribbons from the brands (e.g.10m for 20GBP from Harrods) for gift-wrapping, found that the gift-wrapping prize could easily be deleted by other sellers who wanted to sell the item without it. The Claimant complained to Amazon; however, as long as you enrolled in your ‘brand’ on Amazon, this brand is prioritised over other brands so there was no problem. If you are a Brand Registry Seller, you can use A+ content which allows you to sell many other items of your brand on the catalogue. This can be the same as opening you own shop on Amazon. Thus, you have no reason to open the shop elsewhere. The Claimant thought that this was unfair, but there was nothing she could do. Over the years, the Claimant listed over 3,000 items on Amazon; however, she started to feel anxious selling only on Amazon.
The Claimant opened her own shop on Shopify (Canadian ecommerce platform used by famous companies including Louis Vuitton, Tesla, Netflix) in July 2021 and on Mercari Shops (Japanese ecommerce platform) in August 2021.
Shoppers using these shops have increased in number. The Claimant knows customers are buying from these shops as she received an email from a customer who said, ‘Thank you for selling lovely items. I had kept buying your items mainly from Amazon.’ The Claimant made sure her prices on Amazon and her shop on Mercari Shops were always the same, although the sales commission was cheaper for Mercari Shops at 10%, whereas Amazon charges 15%. However, the Claimant ensures that the prices of items selling on her own shop on Shopify are 600 yen cheaper, as customers have to pay 600 yen for shipping unless they buy the minimum 7000 yen for free shipping.
Because Mercari Shops offered deals to business sellers, including a 0% selling fee for a certain period, the Claimant cut 600 yen from her prices which benefits consumers; these then became the cheapest prices, including prices for items sold in the Claimant’s shops on the internet.
As of 23 September 2022, Amazon started to claim that the Claimant had committed a series of policy violations, making it impossible for the Claimant to conduct any business on Amazon, other than selling the items left in their warehouse, since 1 January 2023.
Instead of the Claimant, Amazon allowed a Russian seller who was selling Russian Army equipment from the UK to sell the items that the Claimant was selling on Amazon. For instance, in May 2023, the Fortnum & Mason’s tea timer, which the Claimant had listed on Amazon, was used for a prop in the most popular TV drama of the year in Japan (‘Even if you don’t do it’). This item, sold for 4280 yen, was flying off the shelves in the Claimant’s stores; however, she could not restock the items on Amazon (sold for 4880 yen) as they claimed that, contrary to what they permit under ‘parallel imported items’ in the User’s Agreement and made the Claimant sell over the years, selling parallel imported items requires a letter confirming permission to sell from the brand. Nevertheless, Amazon was allowing the Russian seller to sell the item at a ridiculously expensive price (8280 yen), with an estimated arrival date of over 2 weeks to Japanese consumers from the UK, on the parallel imported catalogue created by the Claimant.
The Claimant knew the reasons as to why her shop received notice of successive policy violations from the legal document submitted by the FTC, which was disclosed in the public interest. The Claimant’s shop became the target of Amazon’s punishment – banishing her from selling on Amazon. The following information was included in the document:
When Amazon detects elsewhere online a product that is cheaper than a seller’s offer for the same product on Amazon, Amazon punishes that seller. It does so to prevent rivals from gaining business by offering shoppers or sellers lower prices (p. 8, 11-13).
If caught offering lower prices elsewhere online, these sellers face the ultimate threat: not just banishment from the Buy Box, but total exile from Amazon’s Marketplace. As Amazon internally admits, these tactics have a ‘punitive aspect’ and many sellers ‘live in constant fear’ of them (p. 9, 7-10).
Moreover, Amazon’s one-two punch of seller punishments and high seller fees often forces sellers to use their inflated Amazon prices as a price floor everywhere else. As a result, Amazon’s conduct causes online shoppers to pay artificially higher prices, even when shopping somewhere other than Amazon (p. 9, 11-14).
Amazon’s various anti-discounting tactics upend the normal give-and-take process of competition. Even rivals that offer lower-cost marketplace services struggle to attract sellers, and watch as sellers hike prices on their storefronts due to fear of Amazon’s penalties. Many sellers raise their prices off Amazon to avoid punishment. Others never try discounting in the first place; fear of retribution by Amazon drives them to pre-emptively set higher prices everywhere. Still others simply stop – or never start – selling anywhere other than Amazon to avoid any possibility of Amazon’s sanctions (p. 11, 3-9).
Moreover, because Amazon’s anti-discounting conduct punishes sellers who offer lower prices at rival online stores with lower fees, many sellers set their price on Amazon – high fees and all – as the price floor across the internet (p. 78, 4-7).
Amazon relentlessly stifles actual price competition by punishing sellers who offer lower prices anywhere other than Amazon and disciplining rivals that undercut Amazon’s prices (p. 85, 16-18).
Using their price-surveillance team, Amazon punishes third-party Marketplace sellers who offer lower prices on other online stores (p. 85, 21-22).
Without the ability to attract shoppers or sellers through lower prices, rivals are unable to gain a critical mass of either shoppers or sellers, despite needing both to compete against Amazon. Further, by punishing sellers when there are lower prices off Amazon and disciplining rivals that try to compete on price, Amazon teaches shoppers not to look for lower prices off Amazon (p. 86, 11-15).
Using its vast surveillance network, Amazon systematically punishes sellers when it detects a lower price on other online stores. Amazon does this in two ways. First, the company disqualifies a seller’s offer from appearing in the Buy Box when it finds a lower price on another online store for an item being sold by a seller on Amazon. For many sellers, losing the Buy Box – and even the ability to qualify for the Buy Box – is an existential threat to their business. Amazon has amassed and maintains a huge shopper base, making it a vital sales channel for many sellers. The second way Amazon punishes sellers is by imposing contractual obligations on certain important sellers, backed up with the threat of even stronger penalties, including total banishment from Amazon’s Marketplace (p. 87, 14-23).
As a result of Amazon’s threats and punishments, even rival platforms that charge sellers less than Amazon for marketplace services would not be able to draw shoppers through lower prices (p. 88, 1-3).
Today, Amazon tells sellers that they will be punished if Amazon detects a lower price on any other online store. In 2022, for example, Amazon explained to thousands of sellers that a ‘pre-requisite’ to ‘win[ning] the “Buy Box”’ is to ensure that lower prices are never available off Amazon (p. 90, 15-18).
