Amazon's Trickle-Down Monopoly: Third-Party Sellers and the Transformation of Small Business

Weigel, Moira. Amazon’s Trickle-Down Monopoly: Third-Party Sellers and the Transformation of Small Business. New York: Data & Society Research Institute, 2023. http://dx.doi.org/10.2139/ssrn.4317167

51 Pages Posted: 4 Jan 2023 Last revised: 26 Jan 2023

Date Written: January 3, 2023

Abstract

This report recounts a history of third-party (3P) sellers who have played a key role in building up Amazon’s retail business—and thus, Amazon as a whole—over the last two decades. Drawing on dozens of interviews with small-to-medium 3P sellers in the US and abroad I describe the conditions of their surprisingly secretive work. Numerous researchers have documented how Amazon (mis)treats employees and contractors in fulfillment and logistics divisions, as well as the expansion of its private surveillance. I explore another key piece—the ambivalent realities of building a “small business” under the conditions that Amazon has created and controls.

I identify three overlapping periods of marketplace expansion, referred to by the shorthand monikers 3P sellers themselves evoked in interviews: the “Old Days,” the “Wild West,” and “the Jungle.” I argue that the colonial imagery of these terms indicates something crucial about the position of 3P sellers, who treat Amazon simultaneously as a territory-to-be-claimed and as the distant state backing expansion into new territories—whether bargain bins in middle America or the factories of China’s Guangdong province.

I show that the distinctions between these three time periods have been created by Amazon’s continual introduction of new services, regulations, and competitive behaviors—always constraining and sometimes eliminating the businesses of those 3P sellers who have long been responsible for most of their product sales. So, too, do I show that these continual changes produce new business models. The result is that Amazon has not hurt or helped small businesses so much as transformed them, turning traditional forms of commerce into something more akin to day trading.

I propose that we think of this system, and the aspirations that draw sellers to it, as Amazon’s trickle-down monopoly. By platformizing such a huge swath of retail, Amazon has enrolled countless 3P sellers in expanding the company’s influence. But it has also projected their own logics of monopoly onto these small-to-medium scale sellers, who stockpile inventory in their own homes, who sell at losses to try and corner niche markets, and who diligently guard all information about their business.

Keywords: Amazon, monopoly, platforms, China Studies, digital labor, entrepreneurship

JEL Classification: K21, Z13

Suggested Citation

Weigel, Moira, Amazon's Trickle-Down Monopoly: Third-Party Sellers and the Transformation of Small Business (January 3, 2023). Weigel, Moira. Amazon’s Trickle-Down Monopoly: Third-Party Sellers and the Transformation of Small Business. New York: Data & Society Research Institute, 2023. http://dx.doi.org/10.2139/ssrn.4317167, Available at SSRN: https://ssrn.com/abstract=4317167 or http://dx.doi.org/10.2139/ssrn.4317167

Moira Weigel (Contact Author)

Northeastern University ( email )

360 Huntington Avenue
Boston, MA 02115
United States

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