ACCC raises fears online marketplaces are boosting their own listings ahead of small business sellers

Australia’s consumer watchdog has again aired its concerns over online marketplaces like Amazon, Kogan, Catch, and eBay Australia, highlighting fears that such platforms may “self-preference” their own goods over the listings of third-party sellers.

In a fresh statement, released Thursday, the Australian Competition and Consumer Commission (ACCC) underlined findings from a March report conducted as part of the wide-reaching Digital Platform Services Inquiry.

That report, the fourth delivered as part of the five-year inquiry, focused on the operations of online retail marketplaces.

While acknowledging the ways online marketplaces can expose Australian businesses to vast customer bases, the ACCC said “a number of seller concerns … may reflect the lack of bargaining power sellers, particularly smaller sellers, have with online marketplaces”.

Such claims remain front-of-mind for the ACCC, chair Gina Cass-Gottlieb said Thursday.

“Online marketplaces have an important role in connecting Australian consumers and sellers, and make up a growing share of consumer sales,” she said.

“But we are concerned about their impact on both consumers and third-party sellers who rely on online marketplaces to reach their customers.”

ACCC airs concerns over platforms boosting their own listings

Of particular concern are business allegations of platforms “self-preferencing” their own listings ⁠— that is, ranking or displaying goods and services sold by the platform itself before the listings of third-party sellers.

“Hybrid marketplaces, like other vertically-integrated digital platforms, face conflicts of interest and may act in ways that advantage their own products with potentially adverse effects for third-party sellers and consumers,” Cass-Gottlieb said.

The consumer watchdog said online marketplaces should be more transparent with sellers and consumers about how those ranking systems operate.

The ACCC said those fears also echo concerns raised by overseas regulators.

Amazon Australia rebuffed those claims in its submission to the fourth report, saying its marketplace stands to benefit from robust competition between sellers.

“We have a strong, long-term incentive to ensure vigorous and fair competition amongst Seller Partners, as well as between Amazon Australia and Seller Partners,” it said.

“That intra-marketplace competition is itself an important part of the experience that the Amazon Australia store offers to customers as we compete against the myriad of other retail channels described above.”

Regarding claims that online marketplaces may list or rank their own goods above those of third-party sellers, Amazon Australia defended its ‘featured offer’ system.

“The vast majority of customers who take the time to compare all of the non-featured offers ultimately select the offer we’ve featured on the product page, which confirms that we’re doing a good job predicting what customers want,” it said.

Catch responded similarly: “The two-sided nature of marketplaces, and the associated network effects, strongly incentivise Catch to compete vigorously for both customers and sellers, and to treat both stakeholder groups fairly,” it said.

SmartCompany has contacted the Australian Small Business and Family Enterprise Ombudsman for comment.

Despite concerns, no player has secured market dominance

The ACCC noted that unlike some markets, no one enterprise dominates the Australian online marketplace.

While Amazon Australia become the company’s fastest-growing international expansion upon launch in 2018, and continues to gain ground domestically, it enjoyed $1.29 billion of the $8.4 billion in online marketplace sales assessed by the ACCC report between 2020-2021.

eBay Australia, which described itself as a “a pure third-party online marketplace” in its ACCC submission, recorded $5.34 billion in sales over the same period.

Backdropped by the pandemic-era turn to e-commerce, and the nation’s lingering preferences for digital purchases, the ACCC fears the market “tipping” towards one player could see a marketplace “behaving anti-competitively or reducing the benefits consumers and sellers would otherwise gain from competition.”

The inquiry’s fifth report, focusing on how small businesses interact with platforms like Facebook, Google, and Apple, will be handed to the Treasurer in September.

Submissions for that report close today.