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Amazon’s Impact on Small Businesses

Amazon makes headlines seemingly every month for its potential to “disrupt” another business. Whether it’s the company’s purchase of Whole Foods upsetting the apple cart for companies such as Kroger and Walmart, to fears that it will enter the pharmacy business and put the screws to the likes of Walgreens and CVS, Amazon is often viewed as a scourge in any industry it enters.

The picture is a little more complicated as it pertains to small businesses.

When it comes to entrepreneurs, Amazon is something of a mixed bag. Yes, some businesses fall right in the e-commerce titan’s crosshairs … but others are well out of its shadow and still others actually benefit from Amazon’s existence.

How Amazon Helps Small Businesses

Some of Amazon’s benefits to small businesses must be taken with a grain of salt, given that much of the information comes from the company itself.

This year, Amazon released its first “Small Business Impact Report,” and here are just a few of the highlights:

  • Amazon estimates that millions of small and midsize businesses sell on Amazon Marketplace, its third-party e-commerce platform.
  • Amazon has created more than 900,000 jobs via Marketplace.
  • Half the items sold on Amazon come from small- and midsize businesses.
  • More than 20,000 small and midsize businesses generated at least $1 million in sales last year.
  • Small businesses selling on Amazon don’t just come from all 50 states and the District of Columbia, but also 130 countries around the world.

Separately, a survey by Insureon and online small business directory Manta said that more than two-thirds of polled small business owners claimed Amazon had a positive impact on their sales.

Amazon is many ways is a no-brainer for small businesses looking to sell their wares. Joining Amazon is relatively easy to do, and with a few clicks they suddenly can reach literally anyone with online access.

But Amazon also can be a pain to small businesses – not just those it competes with, but even those that it serves via Marketplace.

How Amazon Hurts Small Businesses

Amazon obviously is a growing threat to businesses of all stripes just because of how many different industries it’s entering, expanding into or rumored to be dabbling in – be it the cloud, pharmaceutical sales or media content.

And even selling on Marketplace isn’t all puppies and rainbows.

As Amazon itself says, literally millions of retailers are selling on the site, which means there’s enormous competition to be seen by people. That’s a problem for the obvious reason: it’s difficult to stand out when you’re literally one fish in a sea filled with millions of others. But it’s also a problem in that particularly ruthless retailers will go so far as to “game” the system by both flooding their own product listings with positive reviews, as well as delivering negative reviews to anyone they view as a competitive threat.

On top of that, Amazon isn’t exactly providing a free service. Amazon takes a commission, which can be difficult to deal with if you’re already trying to compete on price – which selling on Amazon often forces you to do. Plus, there’s also the difficult onus of Amazon’s aggressive shipping and returns policies to deal with.

Point being: Amazon can help small businesses, but it doesn’t mean it necessarily will.

Every small business should be well-educated on their competitive threats, whether it’s a giant like Amazon or even just a local incumbent. McManamon & Co. offers consulting services for small and midsize businesses to help them stay ahead of the competition.

If you need help building and improving your business, we can help, regardless of whether Amazon is in the way. Get in touch with McManamon & Co. by contacting us online or calling us at 440.892.9088.


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