Does Amazon Help or Hurt Small Businesses?
Updated: Jun 28
Does Amazon help or hurt small businesses? It's a question on a lot of entrepreneurs' minds, especially since the pandemic forced so many local stores to move their focus to online shopping in order to stay afloat. Amazon's commercials boast that a large percentage of their sellers are small businesses, even showing a store owner packing up boxes in their garage with the familiar arrow smile logo we all know so well, stamped on the side.
From their website:
"At Amazon, supporting small and medium-sized businesses (SMBs) is a fundamental part of our work and an extension of our customer-centric culture. We see value in investing in the success of sellers, artisans, authors, package-delivery and logistics services, and software developers. When they thrive, our customers benefit from the products and services they offer. That’s part of the reason that over the course of 2019 and 2020, Amazon will have invested more than $30 billion in logistics, tools, services, programs, and people to foster the growth of our SMB sellers."
Many smaller retailers are thinking it may be in their best interest to work with Amazon as opposed to against it. A new Small Business Awards program was announced, aimed at celebrating small businesses with Amazon seller or vendor accounts. According to the press release, they intend to invest more than $15 billion this year to help third-party sellers grow through their platform.
“We are committed to helping them harness the power of online sales, reach new customers, and provide fantastic selection, value, and convenience,” says Nicholas Denissen, Amazon Vice President of Small Business whose been with the company for over a decade.
Recently, Amazon had "Prime Day" and according to their blog, this past Prime Day 2021 was the biggest two-day period ever for third-party sellers, nearly all of which are small and medium-sized businesses, growing even more than Amazon’s retail business.
Amazon says its working to help small companies “operate at Amazon speed and scale” by taking a large portion of the logistics off their plate, inviting them to partner with their brand.
Here in Seattle, we just so happened to be living in the birthplace of some major corporations that are taking over the world. Starbucks coffee cups have become a photo accessory on social media posts globally. Influencers in England are doing brand deals with Amazon Prime to promote that you can literally buy ANY-thing from their website. So does that mean it's time to jump on the bandwagon if it's an opportunity to expand your online sales and help keep that brick-and-mortar afloat? Especially considering online sales hit $791.70 billion in 2020, up 32.4% from $598.02 billion in the prior year, according to Commerce Department figures, thanks to Covid. It's a decision everyone has to weigh in on using their own better judgment.
We have been getting the feedback we hoped for from small businesses around Tacoma after we posted this blog. Earlier in the week, we asked for an open discussion about it and wanted to hear from our local entrepreneurs as to how they feel about Amazon. We will continue to update here if we get more responses trickling in, but we did get some really great feedback from you all.
First, we heard from Craft Theory Lakewood, fluid artist(s) based here in WA, they linked A Drop In The Ocean's page and recommended their blog titled "How to Break Up with Amazon". It has some important information on how, in their research, Amazon has impacted the environment, small businesses, its own employees, and even Covid. They also mentioned in the blog-
"Amazon uses its massive access to big data to track what products sell well on its platform. When they find a product doing well, they’ll turn around, mass-produce that exact same item themselves, then use their own technology to boost their product in the listings and push the original product to the bottom."
It's interesting this was mentioned in their blog post when we got similar feedback from Mattice of Mattice Beauty Supply here in Tacoma as well.
"My cousin in California has a small shop. She is on Amazon. She, like myself, sells items you can get at other stores. What Amazon did was see what some of her best sellers were (ex. Sharpies pens in pastels) then they'd change their own prices so it's lower. By being on their site they now have access to seeing your high sellers and your price. They can even make a cheaper version by making an "Amazon basics" brand of whatever item. I'm weary of it."
We asked if her cousin felt like it was even worth joining forces with Amazon as a small business and she mentioned how the first 6 months was ok, she said,
"A lot of it was trying to get folks to know she too was on Amazon and how to make things easier with shipping, etc. But after the 6 months, she noticed she was getting underbid." And that if you specifically looked for an item Amazon would do one of their own ads for the same item at a lower price.
So how do we navigate this? How do we find a way to resolve the issues faced with competing with lower prices? It sounds like raising awareness to the shoppers that they can choose to shop small is imperative. If they do choose to shop on Amazon, which gets over a million daily purchases alone, they need to know they have an option to support a small local business before they click-n-buy, even if it means paying a little more.
A great idea A Drop in the Ocean's blog made is the pledge to shop 1 in 5. "The Shop 1 in 5 Pledge encourages us all to make just one in five of our purchases from a small business - whether online or offline." So breaking the practice of clicking and buying or stopping into the big markets to shop for something that can just as easily be purchased locally from a small business in your area. That is such a simple habit shift we all could undoubtedly make.
Please do go read their blog, it's full of information and their entire website is dedicated to sustainability and raising awareness to lower your carbon footprint as well as being an online store! Click here for more reading.
Thanks to all who've shared the info with us, we appreciate you!