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Survey Shows Amazon Not Hurting Most Small Businesses

By Daniel B. Kline - Apr 2, 2018 at 7:16AM

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It's easy to blame the online leader, but there's more to the story.

Amazon (AMZN -1.69%) has been blamed for slowing traffic at America's malls, the death of countless retailers, and the weakened state of so many others. Blaming the online giant for retail's overall woes has become sort of a catch-all excuse.

That's why Amazon is getting blamed for the death of Toys R Us, which was actually caused by private equity and a leveraged buyout. It's also why President Donald Trump can blame Amazon for causing the United States Postal Service (USPS) to lose $1.50 per package delivered and a portion of the public finds it plausible.

The reality is that the USPS is legally required to at least cover its costs when setting prices for the delivery of any package. That's a mandate enforced by the Postal Regulatory Commission, but pointing that out doesn't jibe with the overall "Amazon is the big retail boogeyman" story.

Certainly, the online giant has changed how people shop and it has forced major evolution from rivals like Walmart and Target. Small business has been no different, but a new study suggests that Amazon has actually been more beneficial than harmful in that market segment.

An Amazon tractor trailer.

Amazon has certainly changed the retail landscape. Image source: Amazon.

Over two-thirds have been helped

Over two-thirds (68%) of small business owners who sell a product online say that Amazon has positively impacted their sales, according to a poll of more than 2,400 business owners conducted by Insureon and online small business directory Manta. The remaining 32% said the online leader had a negative effect on their sales.

Of the small businesses that sell products online, 24% use Amazon as a sales channel. The only other company that broke double digits was eBay at 22% while the majority of retailers (66%) reported using their own website.

Selling online has clearly become important to small business as 81% of the retailers that do so reported at least a moderate increase in revenue. In fact, 43% of small businesses selling online said they have "experienced significant revenue growth," while 38% experienced a moderate revenue increase. Only 19% said they did not experience any change.

The real enemy is stagnation

Amazon has advantages in pricing and scale. A small business probably can't afford to be a technology innovator when it comes to delivery. It also can't, in many cases, purchase goods from vendors at the same prices its larger rivals do.

That's why small businesses need to differentiate in other ways in order to compete. That may mean offering better customer service or serving a niche that's not well-served by Amazon or any of the bigger players. In some cases, a small business can thrive based on building customer relationships and providing an attention to detail Amazon can't hope to achieve.

What a small business can't do is expect to operate as it always has and be successful. That type of thinking has brought down many large retailers.

It's easy to blame Amazon for the so-called retail apocalypse in the same way malls were blamed for the death of downtown areas. In reality, the online leader is just the current threat to business as usual. Companies that adapt can not just survive, but thrive.

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