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Mnuchin is wrong: Amazon has done more good than bad for small business

By July 29, 2019No Comments

(This post originally appeared on The Guardian)

Take a walk today down New York City’s Seventh Avenue – or any Main Street in small-town America – and you’ll see that things look a lot different than they did 40 or even 20 years ago.

Back then there were lots of retail stores selling shoes, clothes, sporting equipment and books. Today … not so much. The malls are empty, name-brand chains have shut down and storefronts are more or less occupied by “experience” businesses – restaurants, coffee shops, bars, exercise places or nail salons. Where did retail go? Has it been destroyed? And did Amazon cause all of this?

Yes, Amazon caused a lot of it. In fact, the e-commerce giant changed retail forever. But it’s not all bad news – particularly for small businesses.

Steve Mnuchin doesn’t feel this way. In an interview with CNBC this week, the treasury secretary (and former Sears board member) said that Amazon has “destroyed the retail industry across the United States”. He also said that “no question they’ve limited competition. People had those concerns about Walmart, but Walmart developed a business where small business could continue to compete with them.”

Mnuchin knows a lot more about a lot of things than me. I would never debate him on tax policy, the federal debt ceiling or anything to do with the US government’s finances. But, with all due respect, small business is my turf, not his. And when it comes to small business I do feel comfortable saying this: Amazon is not hurting small businesses. It is actually quite the opposite.

I’m not an employee at Amazon, and although my firm has done some marketing work for the company over the past few years I am not an Amazon merchant or partner. I just know a lot about small businesses because I run one and I write about them. And when it comes to small businesses, Amazon has done way more good than bad.

The company has created businesses, side hustles, development and content design opportunities for more than 1.9m small businesses and entrepreneurs around the world who, in turn, have created more than 1.6m jobs in the process. The company has created a special site just for people to buy from small businesses and another one to help aspiring entrepreneurs become partners and merchants. More than half the items sold on their site is sold by a small- or medium-sized company, and countless other consultants, technology companies, logistics firms, warehousing landlords and other small businesses have created their livelihoods on Amazon’s back.

You’re not seeing these people on Main Street anymore, but trust me, they’re still out there … and in droves. They’re selling to customers they could never dreamed of, reaching and sourcing products from suppliers in faraway places, and doing this all from the comfort of their homes or from spaces that cost a helluva lot less than rent on Seventh Avenue.

“Amazon is the first partner that offers small businesses a legitimate way to compete with the big retailers – which is why they are scared, and why they are sounding the alarm that it’s ‘killing retail’,” Jerry Kozak, the owner of Ann Arbor T-shirt Company and an Amazon merchant, told me. “Amazon is changing retail by offering more products from more merchants, at greater convenience – and people are voting with their wallets.”

Kozak, who employs 75 people at his $20m a year business, isn’t alone in his support of the online platform. Many other business owners I know agree with him.

And by the way, Amazon isn’t the only game in town. E-commerce applications that allow small businesses to sell from their own websites such as ShopifyBigCommerce and Magento have exploded in popularity over the past few years. Etsy, eBay and other online marketplaces have attracted countless small businesses to sell and Chinese giant Alibaba just announced this week new tools particularly for small businesses that make up part of its strategy to grow in the American market. Small businesses have plenty of choices to sell their wares other than Amazon.

And sell they do. On Amazon’s Prime Day alone, small- and medium-sized companies sold more than $2bn of products, a 33% increase over last year. The other platforms have also helped small businesses generate billions in revenues.

“What Amazon has actually done is democratize retail and leveled the playing field so that independent brands and small businesses can enter the market and thrive,” Kristin Rae, an Amazon merchant who owns Inspire Travel Luggage, said. “Truly, I wouldn’t be able to be a business without Amazon.”

Yes, retail has undergone an enormous change, and Amazon has been a big part of that. But the smart entrepreneurs I know – like Kozak and Rae – understand something that some slow-reacting retailers, disconnected politicians and yes, even a treasury secretary hasn’t: it’s 2019 and not 1979. They’re profiting, and good for them.

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