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How Amazon turned small companies into “day merchants”

How Amazon turned small companies into “day merchants”

2023-01-25 12:57:23

Reuters/Rick Wilking/File Picture

Amazon has radically reworked small companies in each the U.S. and China, making them depending on the e-commerce big whereas additionally obscuring their existence, in response to a new report printed Wednesday by Knowledge & Society.

The inspiration-supported analysis institute spent over a 12 months interviewing 40 present and former retailers on Amazon, who described a largely hidden financial system that bears little resemblance to the standard retail business. The corporate’s alleged unfair therapy of its third-party sellers has beforehand come below scrutiny in Congress and by antitrust watchdogs in a number of states.

However numerous retailers burdened that they don’t all see themselves as victims. Relatively than merely making their livelihood worse, Amazon modified how their jobs operate. “It’s much less like operating a mom-and-pop than like day buying and selling,” stated Moira Weigel, a communications professor at Northeastern College who authored the report. Promoting on Amazon “blurs the strains between small enterprise and gig work.”

Amazon lists merchandise on its web site in two alternative ways, although it’s not at all times simple for shoppers to inform the distinction. First, like every brick-and-mortar store, it buys merchandise from wholesale producers after which marks up the worth.

However it additionally operates a market akin to eBay — with one essential distinction. The vast majority of third-party sellers depend on Amazon not simply to market their items, but additionally for transport and logistics, making it simple to overlook {that a} pair of flip-flops or a spatula got here from an unbiased firm (particularly when the bundle arrives in an Amazon field).

There have been an estimated six million retailers on Amazon’s market in 2021, and round 2,000 opened new accounts every day. On common, Amazon collects 34% of every sale they make, in response to research printed the identical 12 months by the Institute for Native Self-Reliance. Estimates from 2020 showed that round 54% of Amazon sellers within the U.S. market had been primarily based within the nation, whereas 40% had been in China.

What’s new about Weigel’s report is that it illustrates how Amazon sellers constructed their firms by adapting to the precise quirks of the e-commerce big, somewhat than by utilizing Amazon to help their very own companies throughout the wider market. Amazon typically touts the methods it helps smaller enterprises, however in actuality, it spurred the creation of a military of contractors who’re reliant on it, she argues.

“Once I first started this analysis, I had naively thought that once I spoke to Amazon sellers, I’d be chatting with individuals who had pre-existing companies,” Weigel stated. “However the folks I talked to — for higher or worse — must create companies which might be designed round Amazon.”

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One vendor, for instance, instructed Weigel how she bought began on Amazon by peddling shoe inserts, a product she selected randomly after shopping for a e book in Beijing about “the right way to turn into a billionaire promoting on Amazon in China.”

The vendor stated she spends 80% of her time optimizing the key phrases she makes use of in her product descriptions and ads, with a purpose to guarantee her items rank extremely in Amazon’s search outcomes. “I don’t use another social media channels to attract site visitors to my retailer,” she instructed Weigel.

A spokesperson for Amazon stated there was a “big selection of public data” opposite to the claims Weigel makes in her analysis. They pointed to Amazon’s Small Enterprise Empowerment report launched in November, which says Amazon has two million promoting companions worldwide, who’ve created an estimated 1.5 million jobs within the U.S. as of 2021.

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