Those Who Say Amazon Destroys Small Business, Do Not Understand How It Works

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By Kevin Price, National News Editor, USADC.

Recently I was reading The Economist magazine, which was remembering the 200th anniversary of Karl Marx’s birth, and it had the following assessment of the philosopher’s view of technology and monopolies as it relates to the modern world:

“He (Marx) thought capitalism had a tendency towards monopoly, as successful capitalists drive their weaker rivals out of business in a prelude to extracting monopoly rents. Again this seems to be a reasonable description of the commercial world that is being shaped by globalization and the internet. The world’s biggest companies are not only getting bigger in absolute terms but are also turning huge numbers of smaller companies into mere appendages. New-economy behemoths are exercising a market dominance not seen since America’s robber barons. Facebook and Google suck up two-thirds of America’s online ad revenues. Amazon controls more than 40% of the country’s booming online-shopping market. In some countries Google processes over 90% of web searches. Not only is the medium the message but the platform is also the market.”

This assessment is inaccurate on several levels.  Facebook’s advertising is not merely being done for the social media network.  Many businesses, including the ones I own, use Facebook ads because of the ability to do targeting at a very low cost.  Facebook is making a fortune off ad, but so are the many small business owners that may not have the ability to participate in this form of advertising without them.

As far as Google’s search engine prowess, there are plenty of competitors out there.  They include Bing, which is backed by Microsoft, one of the richest counties in the world.   That’s the case with all these monsters of enterprise.  None of them are monopolies, nor can they ever actually become one — in the proper sense of the world — because if they fail to satisfy customer needs, there are plenty of other players that are willing to go toe to toe against them.

The same is true with Amazon.  In fact, even more so.  For many business owners, they simply could not be in business without the affordable and easy business tools Amazon provides. Amazon is little more than a delivery system for entrepreneurs.  They are like an Internet service, a phone company, or mailing service — just a means of getting business done.  Saying they are the only beneficiary of the “40 percent” of the online activity done through them demonstrates incredible ignorance about basic economics.  Only demagogues would come up with such a conclusion.

Recently, Amazon introduced the Small Business Impact Report, highlighting new details about the millions of companies of all sizes that have chosen to grow their business through Amazon’s platform. Like the larger U.S. economy, small businesses are the backbone of Amazon’s stores, providing customers with millions of unique products – from handmade gifts to electronics they invented with friends. These businesses provide incredible support to the larger economy, including friends, families, local jobs, charities, and local communities in general.

In a statement from Amazon, we learned that “In 2017, Amazon invested billions of dollars in infrastructure and technical services that help small and medium-sized businesses reach customers around the world. According to the report, more than a million U.S.-based small and medium-sized businesses are selling on Amazon, generating hundreds of thousands of jobs across the U.S. To view the report, visit here.”

According to findings in the report:

  • “Millions of small and medium-sized businesses from around the world are selling on Amazon and more than a million of them are based in the U.S.
  • “Small and medium-sized businesses selling on Amazon come from all 50 states and more than 130 countries
  • “More than 20,000 small and medium-sized businesses worldwide on Amazon surpassed $1M in sales in 2017
  • “Amazon estimates that small and medium-sized businesses selling on Amazon have created more than 900,000 jobs worldwide
  • “In 2017, Amazon lent more than $1B to U.S-based small and medium-sized businesses through the Amazon Lending Program
  • “Half the items purchased on Amazon come from small and medium-sized businesses”

One of the reasons the United States has historically low unemployment is because of how easy it has become for small entrepreneurs to become successful through the amazing platform called Amazon.

If you understand Amazon and what it does for small business, you are going to love it.  It is not a vehicle towards monopolization, but a powerful tool that makes it possible for those who could not dream of becoming entrepreneurs to become just that.

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