Amazon has become a significant part of our lives. With its insane catalogue of products and fast deliveries, you’d be hard-pressed to choose any other e-commerce platform.
Although for customers, it's a magical portal where you can find anything, the same can't be said for small businesses and sellers.
Anyone planning to sell products online will always have amazon as a viable option because of its significant exposure and market holdings. However, your decision couldn’t be more wrong. People get caught in the facade and fail to see how it exploits its sellers with unfair rules and tactics.
With their monopoly over small businesses, they control the online market. Leaving them with no choice but to use its platform. By doing this, they restrict the seller's market opportunities and also eat away potential their profit.
Although Amazon claims they help small businesses out, in reality, they’re the reason why 40% of small businesses don’t exist anymore.
How Does Amazon Destroy Small Business Owners?
Amazon put its competition in a tough spot by offering products at a very competitive price point. But ever thought about how they manage to offer such low prices? Don't you find it suspicious?
By paying low wages and evading taxes, they’re able to lower the prices. And of course, a customer will choose the cheaper, more convenient option over local retailers. This stay-at-home shopping is slowly choking the life out of small businesses.
As small businesses struggle to survive, they feel like selling their items on amazon is the only way to keep their business alive. But amazon charges sellers for selling and advertising their products on the site. Since they own such a massive market share, the sellers feel like they don't have any other choice. And this is how they dominate their competitors.
Their shady tactics and dominance over other businesses create a power imbalance. Combined with lax e-commerce tax on their products, retailers' chance of having a thriving business plummet.
Ripping Off Product Ideas
You probably already noticed something like this. The exact copy of a third-party product displayed right next to it with a more affordable price tag you see – this isn’t a coincidence.
Amazon identifies popular products by third-party sellers and then steals their information. They then make cheaper versions of that product using their label. And to make it worse, they advertise them right next to the products they stole from.
They label their copy products as “Amazon Basics” and promote them extensively. This makes it more appealing to the consumer than the original product. This ultimately plummets the third-party sellers' sales of that product.
A former third-party seller said that amazon kept undermining his business, chasing him away from the platform.
Ridiculous Policies for Sellers
Amazon’s rules and regulations are great for buyers. While the buyer gets the deal of their life, the seller ends up with a terrible loss. What’s more, Amazon doesn’t have any rule or policy to protect the seller from fake reviews. And there’s always a chance of the rules changing out of nowhere. This is the most annoying part of selling on amazon.
Fake Negative Reviews
Negative review attacks are also a thing. Sellers can lose their entire business overnight from a swarm of negative feedback from Chinese Wholesalers. These reviews are hardly ever properly evaluated for authenticity.
These negative reviews can plummet your rating, causing severe damage to your business. Chinese Wholesalers hire freelancers to write negative reviews to wash away the competition.
There are a lot of stories about amazon sellers that were doing incredible, then because of fake negative reviews, they went bankrupt. While Amazon didn’t even evaluate the authenticity of those feedbacks to help its sellers.
Love For Chinese Sellers
Amazon allows big Chinese organizations to use unethical schemes and scams on its platform. Because they bring in the most profit and help them employ unequalled dominance over the e-commerce industry.
As previously mentioned, Amazon tries to offer products at the lowest possible price to beat the competition. And Chinese sellers can make bootleg copies of popular products and offer the lowest price possible. They don’t care about suffering a loss at first. Because their strategy is to drive off the competition from the first page and then dominate that space. This destroys small businesses rendering them bankrupt.
Blocking Sellers from Offering Lower Prices On Other Sites
Before 2019 amazon had a contract restricting its third-party sellers from offering products at a lower price on rival e-commerce sites. Although amazon removed this contract in 2019, they continue to enforce this rule indirectly.
Amazon uses bots to scour the internet and try to find if a seller is offering lower prices on other sites. If they detect such a thing, then Amazon demotes the sellers' product in search results. This causes sales to nosedive. This restrains the seller from selling goods at a lower price anywhere else. Thus maintaining Amazon's dominance over the market.
Complete Disregard for Its Sellers
While Amazon's “Helping Small Businesses” campaign may paint them in a positive picture, it’s all smoke and mirrors. Amazon only cares about the 30% charge for the ‘honour’ of selling on their site. They rip off sellers without any repercussions.
False feedback can get a third-party seller suspended without any notice. Amazon doesn’t even bother to check its authenticity. The sellers are completely helpless in these situations. These things make doing business on amazon a nightmare.
Although they do offer an appeal process, it's there for the sake of being there and nothing else. Appeals never seem to reach a solution. You’re either going to get ghosted, or you’ll get an automated message.
Amazon doesn’t only exploit its sellers, it also exploits its workers by paying them disgustingly low wages while maintaining strict working hours and conditions.
Explains a lot about how they became a Tech Giant.
Closing Thoughts
Yes, Amazon does some shady unfair practices. But that doesn’t mean you can’t have a successful business on Amazon. A lot of people are doing great and making substantial profits.
People fail to do business on amazon because they don’t know the proper strategies and tactics to flourish their business on the platform. The tech giant dominates the online market, and its products get ultimate exposure in this space. It would be a waste not to use this to your advantage. But having your e-commerce site opens multiple doors of opportunity. It will help drive costs of sales down.
USAZON.COM manages our brands for customers. We only sell from USA-based small businesses.