Amazon Marketplace merchants complain of competition with…Amazon?

Amazon’s Marketplace has been a boon for third-party merchants looking to sell their products online. But according to a new report, it’s not always fun working with the online retail giant.

The Wall Street Journal is reporting today that some retailers in Amazon’s Marketplace have witnessed the online company examining which products they sell that are popular, and then offering them itself to the detriment of those merchants.

The Journal spoke with one retailer, Jeff Peterson of Collectible Supplies, who sold as many as 100 Pillow Pets a day. After continued success, he claims Amazon started selling the stuffed-animal pillows, which are made to look like NFL mascots. Soon after, Peterson’s sales plummeted by as much as 80 percent, he told the Journal.

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But it might be difficult to peg that loss on Amazon itself. Upon searching for NFL Pillow Pets, CNET found that Amazon was giving top billing in its search results to a company called Fabrique Innovations.

Amazon’s Marketplace has exploded over the last several years, and accounts for a surprisingly large chunk — around 10 percent — of its total annual revenue. The company takes a piece of the revenue generated on each sale, but leaves the lion’s share to the individual retailer. According to the Journal, Amazon told it that sales are up in the Marketplace, and sellers can expect a 50 percent increase in sales just by joining the Marketplace.

At the same time, Amazon has made it clear that it’s not necessarily partnering with Marketplace vendors, and has from time to time, offered the same products. The issue, according to retailer Brad Howard of, who spoke to the Journal, is that when Amazon joins the fray, “it’s pretty much impossible to compete.”

“There are countless items that they (Amazon) didn’t sell before that they sell now because of Marketplace,” Howard told the Journal.

CNET has contacted Amazon for comment on the Journal’s report. We will update this story when we have more information.

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