Is Amazon Killing Small Businesses? [Case Study]

🔍Insights

Pratyusha Srivastava

Aug 27, 2021 — 6 min read

The pandemic has transformed the world into a digital one. There has been observed drastic change with the people in the field of shopping. And with such an advancement, people are entirely relying on the internet for any purchasing.

From household products to festive clothing, everything is available on the Internet and people are purchasing these as well. A wide fraction of people prefer online shopping apps for any purchase.

Among these, Amazon is one of the most established shopping applications across the world. In fact, Amazon is counted among the triumphant companies that hold the position to beat the consumer and retail industry!

With the popularity of Amazon, many small businesses consider it quite dominant in the retail industry. People are acknowledging how Amazon's immense success is causing great loss to small businesses. Whether these are accurate and true, can't be asserted right away! But a question arises, Is Amazon killing small retail businesses?

Well, looking back at some previous analytics, this accusation on Amazon isn't something new. As of 2019, Steven Mnuchin, the United States Treasury Secretary also mentioned that Amazon, being a harm to the retail industry. To discuss this matter briefly, we have presented this case study- Is Amazon killing small businesses? Let's begin!

Amazon and Small Businesses
Consumers' perspective during the Stay at Home orders
Amazon's perspective on being responsible for the downfall of Small businesses
Modifications by Amazon for Success of Businesses
FAQ

Amazon and Small Businesses

Amazon, being the world's one of the biggest online shopping companies, managed its way to success even in the dreadful pandemic of 2020. It made a huge profit towards the sales. At the beginning of 2020, Amazon made a profit of $5.2 billion beating its previous record of $2.6 billion in 2019.

The most significant thing about Amazon's success is that the company modifies its policies and practices based on the resources and customers' requirements. The company adjusted its services during the pandemic, that's why it made such a remarkable profit.

With the immense success and fame of the company, the accusations on Amazon for killing the small businesses increased more vibrantly. The small businesses entirely blame Amazon for destroying the consumer and retail industry. Many examples and proves came out claiming Amazon for killing the small businesses but, many of these couldn't be proven accurate.

**Amazon Annual Net Revenue (in billion U.S. Dollars)**

Consumers' perspective during the Stay at Home orders

With the dreadful condition of Covid-19, people have become more cautious with their lifestyle, especially in the shopping part. People across the globe changed their offline shopping techniques into digital ones. And on that note, Amazon experienced massive progress and development. Because of this, Amazon made such a great profit even during the global crisis.

Amazon spent over $4 billion on further Covid-19 costs. And with this, the company took over various services adaptation. Amazon functions with great strategies and process improvements.

But even after this, Amazon is considered the destroyer of small businesses. It is highly criticized by the critics in a bewildering manner. But the company believes in helping and driving more audience to the small businesses but not in being a destroyer for them. However, the company remains on the top, regardless of its various accusations.

No matter how many proofs come out, any company itself cannot be blamed responsible for the downfall of small businesses.

Amazon's perspective on being responsible for the downfall of Small businesses

On asking about the accusations made on Amazon, Jeff Bezos, the founder and executive chairman of Amazon mentioned in an interview that the company itself holds a very strong and beneficial relationship with its sellers, who are small and medium-sized businesses. Amazon believes in helping the sellers to gain profit and success as it would bring more choices that could actually lower the prices of their products.

In fact, Amazon works with around 1.5 million small to medium sellers, just in the United States. As the more such sellers would join Amazon, the more benefits the customers will get such as free delivery, shipping, and low prices.

Although Amazon is affecting the small businesses, it means no harm or demise for them and brought a performance standpoint in the marketing field. Amazon has brought a great advantage in the retail industry as reaching customers has become very easy and profitable.

With the digitization in every sector, people are becoming more connected with E-commerce platforms. That's why small and medium-sized businesses are also enrolling in the digital platform as an advanced marketing tool.

There's huge competition in the market among established brands and small businesses. And those who would adapt to the changes that come to them will be known as being the biggest.

Modifications by Amazon for Success of Businesses

Amazon has taken the retail industry to an advanced level. And with its popularity and services, it has brought absolute convenience for the sellers to reach out to more customers and suppliers. Many concluded this as contraction to the claim made on Amazon.

It is entirely undeniable that Amazon has basically lifted up the performance level in the retail industry. Due to this only, dozens of independent brands and small businesses are holding the potential to compete with large corporations and established brands.

As the consumers on the global level are increasing rapidly and so as the digital marketing platforms. People are preferring online shopping more promptly. On that note, small and medium-sized businesses must acknowledge this advancement and work accordingly. This would help them to embrace the changes that come on the way, instead of complaining.

Conclusion

Amazon has worked tremendously to gain the customer's support and its success. In order to do so, it has widely increased the competition in the retail industry which has not been well received by the small and medium-sized businesses.

Various claims have been made on Amazon, accusing it of killing the small business. But as it has raised the competition, it has also brought several opportunities for sellers (including small and medium-sized businesses) to reach the customers more frequently and with good services in hand.

The whole world is digitizing and as people are becoming more reliant on digital sources for any purchase, it's a great opportunity for small businesses to modify their services and take up the stand with the E-commerce platforms. This would bring immense advantage for the small businesses. Just that, Amazon has accepted the changes that came for it and adapted it as well. That's why it has grown to be the biggest online shopping company.

FAQ