Yesterday, the Federal Economic Competition Commission, also known as Cofece, announced a series of measures against the marketplace dominance they have amazon and Mercado Libre in Mexico. A stoppage of combos that offer subscriptions to streaming services, such as HBO Max and Star+, was mentioned here. Now, this does not end here, since this organization has revealed that More measures are already underway to stop the dominance that these two companies have in our country.
According to Cofece, Amazon, Mercado Libre and an undisclosed third company have 61% of the Mexican marketplace, that is, they have a domain in the form of distribution and purchase of products online. This leaves competitors like Walmart, Liverpool and Coppel with very few cards in this industry.
It has been mentioned that the hoarding of Amazon and Mercado Libre goes beyond the hoarding of buyers, since sellers have also been captivated by these two companies, leaving the others in the market without options to attract more sellers. In this way, the Cofece ruling has indicated that sellers have no interest in migrating between platforms for a simple fact: the two giants are in charge of the distribution of their products.
The document has revealed that sellers choose to pay a fee to Mercado Libre and Amazon so that their products are operated by their logistics networks. Thustheir products appear labeled “Prime” or “Fulfillment.” This means that these products are favored and are delivered in a shorter period of time than products that are not part of the programs. This is how these people become exclusive partners of these companies, something known as “singlehoming.” This is what was said about it:
“These two economic agents are the ones who offer the highest prices and complex tariff schemes for the marketplace service (…) without this motivating sellers to move to other platforms, which is evidence of their ability to set prices.”
To solve this problem, or at least part of it, Cofece has proposed eliminating the “Fulfillment” and “Prime” programs. In this way, Amazon and Mercado Libre would stop facilitating the distribution of products operated by their own logistics networks, and instead these concepts would be attributed to criteria such as delivery speed, product quality, seller reputation and return rate.
For the moment this remains a proposal, but considering how aggressive Cofece has been against these two companies, the possibility that these measures come into force sooner than thought is not ruled out. At the moment, It is unknown how these measures will affect the user, but it will surely be a blow for small and medium-sized businesses. On related topics, you can learn more about the measures against streaming packages here.
Editor's Note:
Rather than affecting large companies, it is very likely that these decisions will have a severe impact on small and medium-sized companies, which will now have to decide whether to stay with Amazon and Mercado Libre, or change marketplaces. We can only wait to see how the industry will react.
Via: Coffee
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