Over the past few years, Amazon, similar to Walmart, has become a controversial industry giant constantly creating questions around its benefit (or non benefit) amongst smaller entities. According to data analytics firm Potoo, Amazon sellers have more than doubled over the past five years, with an estimated 4 million sellers on Amazon today and more than 1,000 being added daily. “Some 2 billion items were sold this way across the globe last year alone, according to Amazon. And this year, small businesses sold 140 million items from the Thursday of Thanksgiving through Cyber Monday alone.”
With over half of the items sold on the Amazon platform belonging to small businesses due to Prime’s two-day shipping offering, it would seem to be hard to argue its positive outlook, however not all is what it seems. The two day shipping offering is due to small firms “preshipping their items to Amazon fulfillment centers, and letting the company handle packaging, shipping and customer service.” This in addition to competition has caused for profit tightening, meaning businesses are making a lot less in revenue then they would on other platforms. But with so much traffic coming from Amazon, there’s not much anyone can do.
“Small business owners have mixed opinions on Amazon and what it means for Main Street. CNBC and SurveyMonkey polled small businesses on the e-commerce giant last quarter and found about one-third think Amazon is good for business, nearly half say Amazon is bad for business, but less than 10 percent said they actually compete with Amazon for customers.”
While the marketing is built in, such low profit margins are hard on businesses and ultimately cuts revenue, employees, and business models. Still, if a company can make it work they can be rewarded with millions.