Third-Party Sellers Aren’t Surprised Amazon Is Reportedly Looking at Their Data

The definition of 'aggregate data' is a point of contention

A recent report confirmed what many Amazon sellers already suspected. Getty Images
Headshot of Lisa Lacy

Key insights:

An investigation by The Wall Street Journal last week found Amazon has accessed third-party seller data to inform its private label business, a practice the platform has repeatedly denied engaging in, including to Adweek.

“We prohibit the use of individual sellers’ information to compete with them through our first-party offerings, including through our private-label products,” Amazon told us in May 2019.

When asked for comment, an Amazon spokesperson reiterated that the platform “strictly [prohibits] employees from using non-public, seller-specific data to determine which private label products to launch” and said Amazon is conducting an internal investigation, even though it does not believe the WSJ’s claims are accurate.

Analysts and sellers, however, are not at all surprised

Oweise Khazi, senior principal at Gartner and lead Amazon analyst, said rumors about Amazon using data from its third-party sellers to better position its own products have swirled since the founding of its private label business in 2007. And, he said, using third-party data on a category level is “good business acumen,” adding, “for them to not use it [would be] myopic.”

Colin Darretta, CEO of personalized nutrition company WellPath Solutions, has always assumed Amazon was using this data to determine what private label products to make.

Jonathan Weber, a private third-party seller focused on outdoor equipment and office supplies, agreed the news is “not surprising to me at all.”

In fact, he previously told Adweek that he’s certain Amazon was accessing aggregated sales data among sellers.

“The only thing that I did not know was how Amazon would attempt to justify this and how thin their definition of ‘aggregate data’ would actually be,” Weber said.

Definition of ‘aggregate data’ is indeed key

Per the WSJ, Amazon defines “aggregate data” as data about products offered by multiple sellers.

“My assumption, and the assumption of many Amazon sellers, [was] ‘aggregate data’ means sales across an entire product category or market,” Weber said. “However, Amazon seems to be considering ‘aggregate data’ the sales of any product with multiple offers, which encompasses virtually all non-private label products on a SKU level.”

In addition, the WSJ said Amazon considers items sold by one seller, as well as through Amazon Warehouse—where Amazon resells returned items at a discount—as aggregate data, too.

This, Weber said, means third-party sellers who use Amazon’s Fulfillment By Amazon (FBA) service can be lumped in because Amazon sells his own lost or damaged inventory through the Warehouse program.

“We have no transparency to, or any control over, this process. An Amazon Warehouse deals listing can pop up on any of our listings at any time, and there is no option to prevent Amazon from doing so,” he said. “Until now, most sellers saw it as a relatively benign side effect of getting reimbursed for warehouse-damaged inventory—but I would consider it a massive breach of trust if Amazon considered this unilateral decision, on their part, to sell a few dozen units of our product as ‘permission’ to mine the sales data for my entire product, which is 99.99% associated with a single seller account. This situation is, in my opinion, absolutely taking advantage of a single seller’s proprietary sales data.”

Still, there’s not much sellers can do because, in many cases, Amazon is their largest—if not only—sales channel.

“Without pivoting to a completely different business model, there is nothing that any seller can do to protect themselves and their data once their products are on the platform,” he added.

Indeed, Khazi noted that seller concerns have been around for a long time, but the number of third-party sellers continues to grow—according to ecommerce intelligence firm Marketplace Pulse, 292,000 new sellers have joined so far this year alone. So he doesn’t see the WSJ investigation fundamentally impacting sellers—or at least those who aren’t creating their own ecommerce platforms or DTC interfaces—because in today’s ecommerce business context, Amazon is where millions of consumers are looking for products.

Sellers aren’t totally at Amazon’s mercy

For starters, Deneiro Bartolini, an Amazon seller with products in categories including kitchenware, baby and mobile accessories, said third-party sellers can mitigate risk by selling elsewhere, too.


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@lisalacy lisa.lacy@adweek.com Lisa Lacy is a senior writer at Adweek, where she focuses on retail and the growing reach of Amazon.