New Report: Amazon’s Toll Road

Institute for Local Self-Reliance’s article on Revenue Management was released in December 2021.

This report finds that Amazon is exploiting its position as a gatekeeper to impose steep and growing fees on third-party sellers. Even as these exorbitant fees bankrupt sellers, they are generating huge profits for Amazon, a fact that the tech giant conceals in its financial reports. These profits are not only the spoils of Amazon’s monopoly power. They are the essential fuel that feeds its market-domination strategies, enabling it to absorb massive, predatory losses designed to lock-in market control and fund breakneck expansion.

Even though some competing platforms charge much lower fees, if Steve lowers his prices on another shopping site, Amazon’s algorithms punish him by demoting his products in its search results or making them ineligible for the buy-box, which causes his sales to plummet.[9] He can’t afford that, and so he inflates his prices on other sites to match those on Amazon.