Competing With Amazon on Amazon

Small Retailers Need the Site to Reach Millions of Shoppers but Some Say Behemoth Swoops In on Hits

Thousands of small merchants depend on Amazon.com Inc. to reach customers who otherwise wouldn't know they exist. A few of them complain, though, that Amazon sometimes eats their lunch.

According to some small retailers, the Seattle-based giant appears to be increasingly using its Marketplace—where third-party retailers sell their wares on the Amazon.com site—as a vast laboratory to spot new products to sell, test sales of potential new goods, and exert more control over pricing.

Jeff Peterson, owner of Collectible Supplies Inc., a Garden Grove, Calif., retailer of sports merchandise, last summer began selling $29.99 Pillow Pets—stuffed-animal pillows modeled after NFL ...

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