A recent report by the U.S. Small Business Administration’s Office of Advocacy found that Amazon’s business practices are crushing small businesses and stifling competition.
The report found that Amazon is increasingly dominating the online marketplace, putting small businesses at a disadvantage.
According to the report, “Amazon’s platform has given it an unfair advantage in the marketplace, and this advantage has been to the detriment of small businesses.”
The report also found that Amazon is stifling competition and engaging in anticompetitive practices.
Amazon has long been criticized for its impact on the economy and its treatment of workers. This new report adds to the growing body of evidence that Amazon is bad for small businesses and the economy.
Let’s find out.
How Does Amazon Do It
So why is Amazon so destructive to small businesses?
There are a few reasons.
- First, Amazon is a behemoth. It's the largest online retailer in the world, and it's getting bigger every day.
- Second, Amazon is a platform. That means it's not just a retailer but a marketplace where other businesses can sell their products.
This is a double-edged sword for small businesses. On the one hand, it gives them access to a huge audience of potential customers. On the other hand, it puts them in direct competition with Amazon itself.
- Third, Amazon is ruthless. It's known for putting immense pressure on its suppliers, often demanding impossibly low prices. This drives down the prices of goods across the board, making it difficult for small businesses to compete.
- Fourth, Amazon is efficient. Its massive warehouses and cutting-edge technology allow it to operate at a level of efficiency that small businesses can't match. It's famous for using every competitive advantage it uses to crush its rivals.
Examples
Amazon copies the products of small businesses and sells them at lower prices
This practice, known as "private label selling," has killed many small businesses. In some cases, Amazon has even copied the packaging of a small business's product and sold it as its own.
Private label selling has made it difficult for small businesses to compete with Amazon. Many small businesses have been forced to close their doors because they cannot compete with Amazon's prices.
Amazon has been able to get away with private label selling because of its size and power. The company has used its clout to pressure suppliers into selling to them at lower prices.
This has made it difficult for small businesses to compete and has led to the death of many small businesses.
Amazon has been known to use its vast resources to drive small businesses out of business
In 2015, Amazon launched a new program called "Amazon Exclusives," which offered exclusive products from small businesses and start-ups that could only be sold on Amazon.
The program was designed to help small businesses and start-ups get their products in front of Amazon's millions of customers.
However, many small businesses soon found out that the program was not all it was cracked up to be.
To be accepted into the program, businesses had to sign an exclusivity agreement with Amazon, which prevented them from selling their products anywhere else.
This put many small businesses in a bind, as they now relied on Amazon for all their sales.
If Amazon decided to stop carrying a product or if they lowered the price of a product, there was nothing the small business could do to stop it. And they do this as well.
Amazon offers discounts to customers who buy products from small businesses and then return them
This practice, known as "brushing," is used by Amazon to inflate its own sales figures and trigger positive reviews from customers who may have never even received the product they purchased.
The problem is that many of these small businesses can't afford to take back the products, and they end up losing money on the deal.
In some cases, Amazon has even been known to cancel orders from small businesses after the products have been shipped, leaving the businesses with inventory they can't sell and no way to get their money back.
It's a ruthless business practice that is putting many small businesses out of business, and it's something that Amazon needs to be held accountable for.
Closing Thoughts
All these factors combine to make Amazon a formidable opponent for small businesses. And it's no wonder that the company has driven many of them out of business.
If Amazon continues to copy the products of small businesses, it will eventually kill off all innovation and creativity in the United States. Amazon has already killed many small businesses, and it is only a matter of time before it kills more.
So what can small businesses do to compete?
The answer is– not much.
The best thing small businesses can do is to try to build a brand that Amazon can't copy. They can also try to build a customer relationship that Amazon can't replace. This is where USAZON comes in.
Support your local businesses made by, with, and for Americans. Shop on USAZON today.