In our series “Amazon: The Prime Effect,” we take a look at how the $1.6 trillion company is changing everything about how we live, work and shop.
The third installment of the series focused on the part of Amazon that’s likely most familiar to you … Amazon Marketplace. That vast “everything store,” as journalist Brad Stone put it, that’s transformed e-commerce in the United States.
Amazon Marketplace is one of the company’s oldest businesses. In the late 1990s, Amazon was the only seller on its platform. That changed in 2000, following the dot-com bust, when Amazon opened the platform to third-party sellers, at a fee of course.
As Stone writes in his latest book Amazon Unbound:
“[Jeff Bezos] had an epiphany. … By adding outside vendors … the company drew in new shoppers and earned commissions on those sales, which it could use to lower prices or subsidize faster delivery. That in turn drew in more shoppers and attracted more sellers – invest in any part of the loop, and this cycle would accelerate.”
It did. By 2018, Amazon was the nation’s number one e-commerce company, controlling 45% of an industry valued at hundreds of billions of dollars.
Amazon’s size and influence over e-commerce has drawn criticism from advocates – for its contribution to the decline of local brick-and-mortar retailers. It’s also drawn scrutiny from regulators. Both the Federal Trade Commission in the U.S. and the European Commission are investigated alleged monopolistic and unfair business practices at Amazon over those third-party sellers on the site.
But none of that has dampened Amazon’s ambitions.
As senior executive Dharmesh Mehta recently said: “Our general mental model … is actually quite simple. We want the vast selection of every genuine product in the world, and we want it at the lowest prices.”
Mehta is Amazon’s vice president of worldwide customer trust and partner support. In this web exclusive, we speak with him about the Amazon marketplace, third-party sellers and how customer data is used.
This article was originally published on WBUR.org.
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