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What do ex-US Marines, stay-at-home moms, retirees, and Chinese business veterans have in common? You may have purchased something from them on Amazon.
Third-party sellers, people from all walks of life who sell their products on Amazon’s marketplace, make up an increasingly large online sales force. Amazon launched a third-party marketplace in 2000, allowing small business owners to offer their products on Amazon (for a price). There are now millions of third-party sellers on the site, and third-party sales account for about 60% of Amazon’s physical product sales, Jeff Bezos told the House of Representatives in 2020.
Third-party sellers at the center of Amazon’s ecosystem––and the company’s complex global debate. Is Amazon Exploiting These Small Businesses or Taking Them Away?
Moira Weigel, assistant professor of communication studies at Northeastern University, says it’s not that simple.
“What small business is is changing,” says Weigel.
Weigel and her graduate assistant, Zhaozu Dai, have spent the past two years talking with third-party sellers in the global e-commerce market, demonstrating Amazon’s influence on “a subtle but real part of the global consumer economy.” Her report, “Amazon’s Trickle Down Monopoly,” published this week in Data & Society, is the culmination of that work.
“Being an Amazon seller is not like running a mom-and-pop corner store that politicians and pundits conjure up when they talk about small business in America,” she added. “As many of my interviewees put it, trying to interpret and visualize the global data flows experienced primarily through screens seems like a day’s business.
The impact of that shift goes beyond Amazon and third-party sellers. Weigel said the U.S., China and the European Union put “a lot of faith” in small businesses and entrepreneurs to fix structural injustices and create opportunities for people.
“Entrepreneurship is a government project,” says Weigel. “We’ve got low-interest loans, we’ve got tax breaks, we’ve got subsidies for small businesses. If Amazon’s market dominance is fundamentally changing what small business is, that’s in the public interest.”
For third-party sellers, the benefits of selling on Amazon are clear: they have access to the world’s largest online marketplace. All they have to do is offer their inventory––and pay Amazon to ship, store, list, and promote it. The whole enterprise is low-risk for Amazon and high-risk and high-reward for sellers.
There are tangible ways that Amazon can harm third-party sellers by using information collected from sellers to intentionally make its own competitive products, or by arbitrarily blocking accounts or products due to algorithmic errors. But Weigel has spoken to many sellers who see Amazon as a “great opportunity” and have built multimillion-dollar businesses selling through the platform.
Beyond whether or not Amazon is harming small businesses, Weigel’s research highlights the ways in which Amazon is changing the world of business and commerce––and making it look more like Amazon.
“[Third-party sellers] It’s an entry point where we see Ground Zero or Amazon reshaping the world in their image,” Weigel says. “To be successful on the Amazon platform, which is completely governed by Amazon’s metrics and algorithms, means building your business Amazon-ready in many ways.”
People are turning their cars and homes into small Amazon fulfillment centers. One Chinese seller told Weigel that Amazon-sponsored training courses require merchants to accept that they must sell at a loss for the first six months — just like Amazon.
Amazon’s transformation strategy is most evident in its approach to China.
After trying to enter the Chinese market in the 2010s, Weigel realized that Amazon could not compete with local e-commerce companies such as Alibaba, PinduDuo and Taobao. Instead, it focused on attracting Chinese small businesses and merchants as third-party vendors.
At the same time, China has been offering initiatives to support entrepreneurs involved in cross-border e-commerce. This is where Amazon comes in.
“Amazon is partnering with regional governments in China to hire and train merchants and manufacturers to sell through the platform,” Weigel says. “I’ve found evidence that Amazon is acting as a consultant to the Chinese state in setting up these new duty-free warehouses, which will allow for easy export of goods. … They create this pipeline across the border to the duty-free zone and then directly to the American customer without any other middlemen.”
Moving forward, Weigel said regulatory and legal changes must be made to ensure Amazon is held accountable for its impact on sellers, warehouse workers and the e-commerce world as a whole. That includes antitrust actions and even potential collusion and joint efforts between third-party sellers and Amazon Logistics employees. Change and action are not impossible, Weigel says, but they must happen quickly.
“Industrialization and the expansion of railroads completely changed how things were done in the 19th century,” Weigel said. “Laws have been passed around that and new standards have been set. It’s important to remember that the forms technology will take are inevitable – these things can change.”
Cody Mello-Kline is a reporter for Northeast Global News. Email him c.mello-klein@northeast.edu. Follow him on Twitter. @Proelecteer.
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