Debate: Is Amazon good for small businesses?

Amazon is a nursery for new small businesses while providing unprecedented opportunities for entrepreneurs and vital convenience and pricing for consumers – a necessary hotrod engine for the U.S. economy. Or, Amazon is a monopoly that intimidates its workers and illegally undermines the companies it hosts on its platform and, therefore, is an innovation killer and should be regulated by the US government.

Which statement is true? Both? No more? This is what Intelligence2 set out to discover by organizing its latest online debate: Amazon Is Good For Small Business.

The provocative premise is intentional, according to the non-partisan nonprofit that hosts what it calls substantive, informed, critical-thinking, yet civil debates on the main issues of the day. And few companies spend more time in the news than the nation’s largest employer, online retailer and e-commerce cloud hub.

American Enterprise Institute professor and economist Mark Jamison and former Amazon CEO and current third-party vendor consultant and Kaspien CEO Kunal Chopra, based in Seattle, have championed the idea that Amazon is good. for small businesses.

Financial Times author and tech reporter Rana Foroohar took issue with the idea that Amazon is a net benefit to society, the U.S. economy, and small businesses. She was joined by Stacy Mitchell, historian, author and frequent Amazon critic who wrote one of the founding research papers calling on the US Congress to regulate the company.

Amazon faces increased regulatory control over its marketplace and the nearly two million third-party sellers who now account for more than half of its overall sales. The tech giant released a report on empowering small businesses in October, noting that more than 200,000 new sellers started selling at its U.S. store last year, up 45% from 2019. US sales partners averaged over $ 200,000 in sales from September 2020 through August. 2021, for $ 170,000.

Early in the debate, Jameson claimed that Amazon was obviously not a monopoly – Etsy, eBay and Walmart are proof of that, he noted. On the contrary, the company is doing exactly what a large capitalist company should do: create new markets where there were none.

Amazon’s size and influence in the market, he said, prompted Target and Walmart to open up their online retail platforms to third-party sellers, he said. “Amazon has created opportunities for small businesses that didn’t exist before,” he said.

“If you sell on Amazon, you will be handing the fate of your business, your livelihood, to your biggest, most aggressive enemy – an enemy who has every intention of eating your lunch. ”

Foroohar said Amazon makes the same arguments all aspiring monopolists make: They make things cheaper and easier so that consumers are happy. But while Amazon’s prices are cheap, she admitted, the way it siphons and uses information from its sellers isn’t.

“The problem is, we’ve had monopoly laws for several years that only view pricing as a measure of consumer success,” she said. “But when you look at the way Amazon does business, you’re not talking about price; you’re talking about bartered information.

Chopra said examples of Amazon misusing seller information are rare. Amazon, he argued, isn’t just good for small businesses, it’s great for small businesses. Amazon’s huge global marketplace is accessible to all listed businesses, not just large ones, he said.

“Seventy-four percent of US customers start their product search on Amazon,” he said. “Amazon has become more of a product finder and branding tool than just a shopping destination. “

“For the first time in history, a small store around the corner or a home-based entrepreneur can access a global audience and infrastructure that can support the global scale.”

Mitchell countered that Amazon had taken over the online market. She said Chopra’s view of three in four consumers starting their product searches with Amazon isn’t evidence of a healthy business ecosystem, it’s evidence of a single overly dominant player.

“In 15 of the 23 major product categories, Amazon captures more than 70% of online transactions,” she said. “This means if you are a small business and you make or sell anything (online)… you have two options and both are bad.”

The first, she said, is to try and keep selling exclusively on your own website, which is like “hanging your shingle on a dirt road” where no one is traveling. Or, she says, you can become a seller on Amazon. This means that your business data is now in the hands of a multinational giant ready to compete with you on specific products, she added.

“If you sell on Amazon, you will be handing the fate of your business, your livelihood, to your biggest and most aggressive enemy – an enemy who has every intention of eating your lunch,” Mitchell said.

The debate was moderated by former ABC foreign affairs office and White House correspondent John Donvan. Watch the full debate above or on the Intelligence2 website (pronounced intelligencer-squared).

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