Amazon Customer Satisfaction Belies FTC Anti-Trust Suit

As anticipated, the US Federal Trade Commission accused Amazon of illegally limiting competition in its core retail business last week. Whether this case makes sense or who might prevail is beyond the scope of our data. We can look at the case from Amazon customers’ perspective, however.

The case centers on how Amazon treats third-party sellers, those that use Fulfilled by Amazon or otherwise sell on the Amazon retail platform. The ultimate harm cited is reduced competition, higher prices, and limited options for consumers.  This is a two-step argument. The FTC argues Amazon’s third-party seller program restricts how those retailers otherwise sell their products online, and those restrictions are anti-competitive, harming consumers. 

In addition, the FTC argues that Amazon uses its power in the relationship to extract a growing percentage of the third-party sellers’ gross margin, and in some cases to compete directly with the third-party sellers. We look forward to seeing how this plays out in court, and what we will learn about Amazon’s retail strategy as the discovery is shared.

In the meantime, we want to look at the consumers’ perspective on Amazon. Despite these possible monopolistic actions, Amazon customers seem very happy with Amazon. Indeed, it would be difficult for third-party sellers to serve Amazon customers better than Amazon already does. We looked at a reliable measure of customer satisfaction, intent to renew an Amazon Prime membership. About three-quarters of Amazon customers in the US are Amazon Prime members, so this data measures broad satisfaction among all Amazon customers fairly well.

And these customers are really happy. In the most recent June 2023 data, over 95% of Amazon Prime members either “definitely” or “probably” will renew their Prime membership (Chart 1).