In an effort to boost its bottom line, Amazon will no longer allow products that don’t turn a profit to advertise on its site.
CNBC reported that Amazon has recently been telling more vendors, as well as brand owners who sell their products wholesale, that if the eCommerce giant can’t sell their items at a profit, the merchants can no longer pay to promote them.
“Amazon is trying to be much more profitable than they were in the past,” said Joe Hansen, CEO of Buy Box Experts. “But this policy shows there’s bias in Amazon’s ad service, even though it says it’s an open advertising platform.”
An Amazon spokesperson defended the move, saying it has been a common practice for retailers for decades.
“Like all retailers, Amazon decides which products to market and promote in our stores based on a variety of factors, such as relevancy, availability, profitability and other factors,” the spokesperson said.
Amazon employees refer to these products as “CRaP,” which stands for “Can’t Realize a Profit.” These items are usually sold for less than $25, but could be as high as $2,000 if large and expensive to store and ship, explained Hansen.
The move to get unprofitable products off the site is yet another issue vendors have with Amazon, who has been accused of using its eCommerce market power to change its policies suddenly.
In addition to angering merchants, Amazon’s practices could also lead to regulatory scrutiny — especially with lawmakers in both the United States and Europe taking a tougher stance on big tech companies. Just this week, Google was hit with its third antitrust penalty by European Union regulators. This time it was fined €1.49 billion ($1.7 billion) for limiting how some websites used display ads sold by competitors.
And Democratic presidential candidate Elizabeth Warren has even proposed a plan to break up large tech firms, saying they “have too much power.”