Amazon Wants You to Know It's Not The Enemy

If you think Amazon is leaving behind small business in its rise to the top, think again.

Jan 10, 2014 at 10:00AM

Amazon, Wal-Mart, eBay

Amazon's Marketplace Seller program is growing quickly, Image source: Amazon.com

If you've ever criticized big-box retailers for their propensity to put smaller competitors out of business, Amazon.com (NASDAQ:AMZN) has some news for you.

In a press release Thursday, the online retail behemoth praised 2013 as a record-setting year for Marketplace Sellers, its community of more than two million businesses of all sizes selling products on Amazon.com.

In fact, when all was said and done last year, Amazon's number of active Marketplace Sellers increased by more than 65% year-over-year, selling more than a billion units through its namesake website worldwide with a cumulative worth of "tens of billions of dollars." What's more, without providing specific numbers, Amazon asserted Marketplace Sellers have also "continued rapid adoption of Fulfillment by Amazon."

And why not? Amazon's Fulfillment service not only shifts the burden of handling shipping and returns from Sellers to Amazon, but also enables them to offer Amazon Prime benefits, free shipping options, and simplify otherwise complicated export processes.

Of course, it's not an entirely selfless platform; Amazon does receive a small cut of those purchases, the amount of which depends on the pricing plan selected by each seller. But given the staggering growth of the Amazon Marketplace, it seems apparent its value proposition is more than worthwhile.

Don't believe them? Consider the dozens of case studies offered by Amazon, in which locally run businesses gush about increased sales, higher conversion rates, reduced fraud, and the relative simplicity of Amazon's solution.

The other side of the coin
Then again, I'll admit there's an argument to be made for the fact high-volume, low-margin e-commerce giants and big-box retailers have largely squashed smaller local business in the first place.

But at least Amazon is enabling those smaller businesses to not only partake in its success, but to also potentially thrive while taking advantage of its world-class infrastructure.

And it's not exactly as though Amazon's brick-and-mortar peers are going out of their way to bolster the little guys. While Wal-Mart's (NYSE:WMT) website, for example, does claim to offer "hundreds of thousands of additional products" available through the Walmart Marketplace Retailers program, its approved list is currently comprised of just six relatively large businesses. Meanwhile, Walmart unapologetically places the onus of shipping, customer service, and returns on those retailers.

But that's not to say the folks at online auction and payment extraordinaire eBay (NASDAQ:EBAY) haven't done their part enabling smaller sellers. That's also why, in eBay's most recent quarter, consumers drove the net total payment volume for its PayPal service up 25% year-over-year to a whopping $44 billion.

In addition, it's also worth noting eBay has attempted to close the retail gap in recent months by testing a new Prime-esque program of its own, which in effect uses PayPal to provide "free" shipping (for an annual fee) with select participating retailers.

If you can't beat 'em...
If one thing's clear, though, it's that Amazon is working hard to dispel the notion it wants to leave small business behind in its march toward global retail domination. In the end, like it or not, joining the ranks of Amazon's Marketplace Retailers may be their best shot at long-term survival.

Amazon's not the only fast-grower out there
Amazon grew revenue by an incredible 24% to $17.09 billion last quarter, driving the stock to recently become a 100-bagger for Motley Fool co-founder David Gardner.

And no matter how many times they said it couldn't be done, David Gardner has proved skeptics wrong time, and time, and time again with other incredible stock returns like 926%, 2,239%, and 4,371%. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen 6 picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and eBay. The Motley Fool owns shares of Amazon.com and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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