Amazon and Small Business: Ecommerce Partner or Rival?

 In Ecommerce

In an article from The Wall Street Journal titled, Sellers Need Amazon, but at What Cost?small businesses are coming to terms that the large e-commerce platform helps you find thousands of online buyers, but they not your customers, per se. We take a closer look at how Amazon and small business interact.

Stuck having to compete with thousands of other online merchants, small businesses like Stardust Memorials LLC, have risked their selling privileges on Amazon. Stardust Memorials’ owner, Jordan Lindberg, sells $45 to $400 cremation urns on Amazon and 10% of his $3 million annual sales came from Amazon buyers. Amazon charges Stardust Memorials a 15% fee on every sale made on their site and most sellers will have to pay a fee of anywhere between 8% and 15% of sales made. Many online merchants know that Amazon is their main competitor so many are trying to find a way to be less dependent on them.

Although e-commerce sites like Amazon and eBay are great at providing targeted advertising for third-party merchants, most sellers prefer to make their sales on their own websites. Especially since larger retailers are also on Amazon, small businesses are also stuck having to compete with low shipping costs. In an incident concerning a customer order,  Stardust Memorials received a “Notice: Policy Warning” message after responding to the message. The shopper that was looking for a custom engraved urn asked if it was possible to do it on Amazon. One of the Stardust Memorials’ employees responded saying engraving can be ordered through the company’s own website.

After, Amazon threatened to take away Stardust’s privilege to sell on Amazon if they directed customers to other e-commerce sites. This policy is made very clear for sellers to sell only to the customers on Amazon. Amazon’s spokesman, Mr. Fairleigh says these rules are for “customer protection and payment protection” to prevent anything from going wrong during the purchase. Therefore, Amazon prohibits any encouragement to leave the website.

Friend, Foe, or A Bit of Both?

It just goes to show that Amazon is a friend and a foe when it comes to being a third-party. You either follow their rules or find another way to market your product to a large audience of online buyers.

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Lindsay Brown
Lindsay Brown is Operations Director of the Small Business Center of Excellence (SBCoE). Lindsay is Director of Digital Marketing and a partner at Modern Marketing Partners. Lindsay specializes in startups of all types, along with experience with technology brands. She is Google Analytics and AdWords certified, earning a Bachelor of Science from the Illinois State University.
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