Amazon and Small Business Collaboration Accelerate Growth and Success

By at 25 September, 2023, 11:27 am


by Raymond J. Keating –

Too many people in government fail to grasp that free enterprise is just as much about cooperation as it is about competition. Indeed, one could say that cooperation is part of the competitive process itself.

With exceptions here and there (such as when a large, established business might use government regulation to impede existing, emerging or future competitors), large businesses and small businesses not only compete, but just as often, they cooperate. That is, they partner and work together to their mutual benefit.

This economic reality was on full display at Amazon Accelerate, a convention I recently attended in Seattle. For those unaware, Amazon Accelerate is an annual conference hosted by Amazon for its “selling partners,” and for those who would like to sell in Amazon’s store. Sellers attend both in person and online.

Small “Selling Partners” Dominate the Amazon Platform

“Selling partner” is not just a public relations phrase, but instead captures the notable reality that more than 60 percent of the products sold in Amazon’s store are sold by independent sellers, that is, mostly small businesses. By the way, this 60 percent of sales from small businesses is up from 40 percent on Amazon a decade ago.

Therefore, it makes sense that Amazon works with – that is, partners or cooperates with – small businesses. And in turn, assorted announcements were made at Accelerate by Amazon, which can use its resources to provide expanded and improved services for its small business partners.

Supply Chain Solutions

For example, supply chain issues came to the forefront of challenges during and after the pandemic for businesses of all types and sizes. At Accelerate, Amazon announced “Supply Chain by Amazon” to aid small businesses with automated supply chain services.

As Amazon pointed out in an accompanying statement:

“With Supply Chain by Amazon, Amazon will pick up inventory from manufacturing facilities around the world, ship it across borders, handle customs clearance and ground transportation, store inventory in bulk, manage replenishment across Amazon and other sales channels, and deliver directly to customers. Sellers can now focus on building great products for their customers and growing their business, while Amazon handles the logistics, reduces costs, and improves delivery speed.” More information on Supply Chain by Amazon is here.

Expanded Shipping Options

Amazon also announced that it was expanding its Amazon Shipping services to small businesses – beyond the products sold in the Amazon store to goods sold from the websites of small businesses.

As most small business owners that ship their products know, shipping is costly, and reliability can be an enormous challenge. Amazon opening up its shipping services further to small businesses is another welcome option for small businesses. I expect this to be a big plus in terms of both reliability and savings for small firms. More information is here.

Small Seller Centric

An entire, massive floor at the Accelerate convention was dedicated to services offered to small businesses.

For good measure, a tour of the local Amazon Fulfillment Center drove home that Amazon increasingly is in the business of partnering with small businesses. That is, they work at getting small business products before the millions of customer eyes that visit, and regularly make vast investments in technology and personnel to make sure that the orders of small sellers get to customers as efficiently as possible. The fulfillment center was impressive in so many ways, from the technology to its size to its personnel.

Finally, as an economist and policy person, I was able, along with other small business representatives, to talk with assorted Amazon personnel about how the company might be able to assist  on the policy front to ease challenges and expand opportunities for small businesses. These discussions were serious and wide-ranging.

Critics of “big business,” or of business and free enterprise in general, might choose to think of this entire undertaking as some kind of cynical ploy. But that, again, misses the business and economic realities. When more than 60 percent (and growing) of sales for a market leading firm is about small businesses, then that market leader, such as Amazon, is fully incentivized to serve and cooperate with small businesses. Indeed, it’s mutually beneficial and sound for business.

For those in Washington and in state capitals across the nation who doubt this, check in with the Amazon public policy people. They made it clear that they want to show off the investments they’ve made to aid their small business partners.

By the way, this entire process ranked as a great lesson in free enterprise economics.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.



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