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Amazon to Pay $2.25 Million Fine for Unlawful Price-Fixing

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Amazon, an American leading e-commerce and technology company, has been asked to pay a fine of $2.5 million for price-fixing and ordered to shut down its ‘Sold By Amazon’ program by the attorney general of Washington.

On Wednesday, Bob Ferguson, Attorney General of Washington, announced that “as a result of his office’s price-fixing investigation, Amazon will shut down the “Sold by Amazon” program nationwide.”

Explaining the ‘Sold by Amazon’ program and how the leading brand fix prices of items, Ferguson said Amazon lured third-party sellers on its platform to join the ‘Sold by Amazon’ program by assuring them that they would receive at least an agreed-upon minimum payment for sales of their consumer goods in exchange for their agreement to stop competing with Amazon for the pricing of their products.

Consequently, if sales exceeded the negotiated minimum payment, Amazon and its competitors split the surplus proceeds amongst themselves. For example, if a seller and Amazon agreed to a $20 minimum payment and the item sold for $25, the seller would receive the $20 minimum price and share the $5 additional profit with Amazon, in addition to any fees.

The “Sold by Amazon” program resulted in prices for some products increasing when Amazon programmed its pricing algorithm to match the prices that certain external retailers offer to online consumers.

As a result, when prices increased, some sellers experienced a marked decline in the sales and resulting profits from products enrolled in the program. Faced with price increases, online customers sometimes opted to buy Amazon’s own branded products — particularly its private label products. This resulted in Amazon maximizing its own profits regardless of whether consumers paid a higher price for sales of products enrolled in the “Sold by Amazon” program or settled for buying the same or similar product offered through Amazon.

Prices for the vast majority of the remaining products enrolled in the “Sold by Amazon” program stabilized at artificially high levels. This is because Amazon programmed its pricing algorithm to maintain the seller’s pre-enrollment price as the price floor. This meant participating sellers had limited, if any, ability to lower the price of their products without withdrawing the product’s enrollment in the Sold by Amazon program.

For example, while sellers were once able to offer price discounts on their products, Amazon subsequently prevented many sellers from continuing to offer discounts. Sellers then bore the risk of having their products not sell in a timely manner, or at all, while still paying Amazon for things like storage fees of their enrolled products. Many sellers remained stuck with an artificially high price for their products while Amazon was able to maximize its own profits.

Following the investigation, the court, therefore, said “Amazon must stop the “Sold by Amazon” program nationwide and provide the Attorney General’s Office with annual updates on its compliance with antitrust laws. In addition, Amazon will pay $2.25 million to the Attorney General’s Office, which will be used to support the Attorney General’s antitrust enforcement, which does not receive general fund support.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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E-commerce

50 Percent Discount as Jumia Commences Online Food Festival

Jumia, one of the leading e-commerce stores in Africa, has commenced its online food festival where consumers can get discounts as high as 50 per cent on their orders. 

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Jumia, one of the leading e-commerce stores in Africa, has commenced its online food festival where consumers can get discounts as high as 50 per cent on their orders. 

Jumia’s head of Commercial on Demand Services, Oluwafemi Ajulo, said the Online Food Festival which started on Monday 26th of September will last for two weeks ending on the 9th of October. 

Ajulo further stated that consumers could order their favourite meal from any of the available restaurants on Jumia Foods. 

A check by Investors King shows that there are a number of well-known food brands which consumers can order from. Some of these brands include Cold Stone Creamery, Dodo Pizza, Indomie Cafe, and Tantalizers.

Others include Pizza Hut, Burger King, Krispy Kreme Doughnuts, Ying Yang Express, and Sooya Bistro among others. 

It is interesting to note that consumers will have the opportunity to buy their favourite meals from any of the aforementioned brands with up to 50 percent discount. 

While commenting on the rationale behind the Online Food Festival, Ajulo said:

“We have seen more consumers shift to online delivery platforms as a convenient and safer option to enjoy delicious recipes still. We have partnered with the best restaurants to ensure consumers enjoy convenience and affordability while ordering their favourite meals. 

This campaign also allows us to support our consumers despite the challenges related to inflation and high cost. The campaign will also feature buy one get one free, flash sales, and more,” he said.

In addition, the marketing manager of Cold Stone Creamery and Pinkberry Nigeria, Mr Maruf Lamidi noted that Cold Stone’s partnership with Jumia for the Online Food Festival will provide another opportunity for the company to serve its customers and reiterate its commitment to outstanding services. 

Mr Maruf added that Cold Stone is excited to join the Online Food Festival. He said that any of Cold Stone customer who buys on the Jumia Food platform will get the best value available. 

 

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Jumia Launches Integrated Warehouse in Kenya to Improve Logistics Operations

Nigeria and Africa’s leading e-commerce store Jumia, has launched an integrated warehouse and logistics network facility in Nairobi to improve operations in Kenya

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Nigeria and Africa’s leading e-commerce store Jumia, has launched an integrated warehouse and logistics network facility in Nairobi to improve operations in Kenya

This new warehouse will transform Jumia’s logistics operations by ensuring faster product delivery and subsequently improving customers’ shopping experience.

The 11,000-metres squared warehouse and network facility is strategically positioned and centrally located along Mombasa road, which is closer to the airport as well as the city center, according to the company.

It allows Jumia to leverage on the new Nairobi Expressway to enhance delivery time and improve efficiency. Because of the proximity, the newly built warehouse will eliminate the need to transport items from warehouses to sorting centers, reducing the operational cost and gas emissions of first-mile deliveries.

Speaking on the newly launched warehouse, the CEO of Jumia Kenya Juan Seco stated that the facility will enable the company to be more efficient and meet future needs as the company grows.

In his words, “The new integrated facility has enabled us to converge our multiple warehouses and network operations under one roof.

“This will help us to improve our fulfilment operations to be more efficient and scalable thus taking care of our future needs as the business continues to grow. We shall be able to offer more products across different categories and deliver them faster to our consumers”.

Jumia’sintegrated facility also provides improved working conditions for employees, such as more workspace and a more convenient location in terms of accessibility.

Speaking on how the facility will improve Jumia’s sustainability practices, Jumia Services Country Manager, Ankur Agarwal, said: “The convergence of our operations has helped us to reduce up to 15 truck trips per day, enabling us to reduce carbon emissions significantly. We will continue to look for opportunities to contribute positively to the environment.”

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NGOs Urge EU to Reject Amazon’s Proposal to End Anti-trust Charges, Citing Loopholes

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A group of 11 non-governmental bodies has urged the EU regulators to reject Amazon’s proposal to halt anti-trust charges, citing loopholes.

The NGOs who wrote the EU, disclosed that the proposals were too vague, which leaves room for evasion and abuse by the e-commerce company.

They further urged the EU to force Amazon to split its marketplace from its retail and logistics operations in order to address concerns about its dominance and control over interrelated services.

The statement reads “We urge the European Commission to reject Amazon’s commitments outright and in full, and instead continue vigorously to pursue its antitrust cases against Amazon, imposing remedies and penalties (on the Commission’s own terms) as necessary.

“They are weak, vague, and full of loopholes, leaving too much room for evasion and abuse by Amazon. Moreover, the proposed limitation of these commitments to five years, or indeed any time horizon at all, is unjustifiable”.

The European Union (EU) had earlier charged Amazon with anti-trust charges, where it disclosed that the e-commerce platform misused its position to compete against third-party businesses by misusing seller data.

In a response to the charges filed against the company, it has been consistently making some significant commitments in an attempt to escape fines from the EU as a result of its breach of seller data.

The company admitted to claims from the EU and has pledged to avoid using private seller data in situations where there’s competition with Marketplace shops, whether it is obtained through automated tools or employee access.

Amazon trying to leave no stone unturned has also promised “non-discriminatory” terms for third parties selling to Prime subscribers, including a choice in delivery and logistics services.

The e-commerce platform through one of its commitments, vowed “equal treatment” when ranking sellers in the Buy Box section that will enable consumers to quickly purchase goods.

The European Commission is asking for public feedback on Amazon proposals that theoretically give third-party sellers a better chance of competing with Amazon’s direct sales.

Comments on the proposals will remain open until September 9th. Whatever conditions the EU accepts, will remain effective for five years with oversight by a trustee reporting to the Commission.

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