With Amazon’s ‘Prime Day’ here, we ask how the online retailer impacts small businesses in good and bad ways. We recall the 2017 retail bankruptcy filings of iconic brick and mortar stores like RadioShack, Toys R Us, Payless Shoes, and more recently, Sears and Modell’s Sporting Goods.
The decline of these and others was due to a variety of factors. It included the shift to online shopping and many retailers failing to move into the e-commerce market quickly. Plus, the last 13 months didn’t help matters. The pandemic forced an already high number of online shoppers to grow even bigger. But long before COVID-19, the convenience of Amazon’s one-stop shopping model, disrupted just about every major industry. Today it makes up nearly half of all online shopping sales!
Now, while it’s easy to do, let’s not be so quick to hate on Amazon. They have made strides in helping the 27 million small businesses in the U.S. that makeup half of the US GDP. Amazon has an entire section dedicated to supporting small businesses – but there’s a bit of a catch that we’ll get to a little later in this post. While there’s no question that Amazon and other online retailers gut-punch small businesses, there are many small business owners who benefit from them.
The nearly 27 million small businesses in the U.S. generate 50% of our GDP
Small Biz Going Digital
More and more small businesses are going digital, whether through email automation or by using a platform such as Fingercheck to automate payroll. This isn’t lost on Amazon. They allow small businesses (if they qualify) to create enhanced brand content, or EBC, a digital storefront. This offers small business owners the ability to place their products in front of an online audience and tell their stories. For many, it can be a difficult process of transforming themselves digitally while also learning how to operate within the online market. That said, a survey taken by the Institute for Local Self Reliance revealed that 93% of independent retailers say Amazon hurts their business. While just 11% of those who sell on Amazon’s marketplace say, they have been successful.
Capitalizing on Amazon: The Good & The Bad
The immense traffic Amazon Prime Day generates to their website offers some incentive for consumers and retailers to try selling there. However, keep in mind that just like Groupon, the e-commerce marketplace connecting subscribers with local merchants takes a piece of anything sold.
While Amazon’s marketplace and its fulfillment services can be helpful by allowing smaller companies to compete, their fees range up to 30% of the sale. This leaves many feeling like they’re working for Amazon. Experts say it’s vital for any small business to make the move to online. However, small business owners must do their homework. Get as much information about the category they are in. As with any business, it’s important to learn about competition and read reviews. See what positive and negative feedback is provided from buyers. Doing this makes you learn a heck of a lot about how you can improve and pivot within a highly competitive marketplace.