Amazon is often portrayed as the big, bad corporation that helped kill brick-and-mortar stores nationwide. However, a recent report shows the online retailer has actually helped small businesses flourish, boosting their sales across state lines.
In other words, Amazon is giving small business the chance to reach more customers.
According to Amazon’s second annual Small Business Impact Report, the company helps exactly 1.9 million U.S.-based small and medium-sized businesses. In 2018 alone, the report said, the firm helped them generate more than $160 billion. Furthermore, the report found that the average business pulls in $90,000 a year from Amazon sales, meaning that despite small businesses’ limited means, Amazon is helping them sell more by offering their products to consumers who would have never heard of them otherwise.
But Amazon also helps small businesses in other ways, by lending them more than $1 billion so they can build inventory. The result is a mutually beneficial relationship, helping small businesses grow by giving Amazon more products to sell.
What Do the Numbers Say?
In 2018, sellers alone sold more than $1 million, 20 percent more than the year before. According to Amazon, these small businesses sold an average of 4,000 items a minute through the site during the same period.
But it wasn’t just small retailers who benefited; writers also sold big on Amazon.
Last year, writers sold more than $260 million thanks to Amazon’s ebook publishing outfit, Kindle Direct Publishing. These authors, who are mostly independent, also made an average of $50,000 in 2018 and over 1,000 authors made more than $100,000 in royalties.
Even organizations like ours benefit from Amazon’s platforms, as AIER sells all of its books through the online retailer.
But that’s not the only way Amazon is helping to grow small businesses. According to the report, the Seattle-based company allows entrepreneurs to get their business off the ground by delivering packages. In 2018, this allowed companies operating fleets of up to 40 vehicles to earn as much as $300,000 in annual profit.
With a platform designed to be friendly and helpful to small business such as Amazon, it’s hard to see how small companies wouldn’t benefit from engaging with the giant retailer. Still, there are those who believe Amazon excels by crushing business ventures.
According to Amazon's worldwide consumer division CEO, Jeff Wilke, it’s clear that the firm isn’t providing small businesses with these tools out of the kindness of their hearts. In the long run, when more companies sell through Amazon, the firm ends up making more money.
"As we work to help them grow their businesses, we are making big investments in our delivery network, data centers, AI research (and) robotics,” he said in a statement. Furthermore, the firm is often “inspired by the type of inventiveness that makes entrepreneurs tick.” That’s why Amazon invests tens of billions to get them started.
This is a great example of the power of the market.
Consumers benefit because entrepreneurs and companies see a financial incentive to offer a particular good or service. In Amazon’s case, the firm sees a financial incentive in expanding its inventory. In order to do so without having to increase its own infrastructure, the firm decided to invest in small and medium businesses. This helps both Amazon, as it has more products to offer, and the small-business owners and other entrepreneurs, as they have a platform to sell their products to more people.
In the end, companies and consumers all benefit.
Needless to say, this proves that Amazon is far from a big, evil capitalist monster. If anything, Amazon is a great example of how the removal of monetary incentives from the picture makes for reduced options and unsatisfied customers. And why would anyone advocate for that?