Amazon Good Or Bad For Small Business?

Amazon killing small business or saving it? The answer, of course, is yes. To be sure, Amazon, with relatively low prices and speedy home delivery made possible by its enormous scale, has changed the way many Americans shop. My wife, for example, would be content to never set foot in a store again. Every week, a parade of boxes from Amazon, Target, and elsewhere arrive at our door. I'm sure that if she did the grocery shopping, our food would come delivered as well.

And yet, Amazon's Marketplace hosts millions of small-business sellers. Others rely on the colossus to fulfill their orders. Last year, merchandise sold by those third-party retailers exceeded sales by Amazon itself (as measured by the number of "paid units" sold) for the first time. According to the New York Times, the smart pressure cooker known as the Instant Pot owes its status as the latest kitchen gadget craze to Amazon — for a time, 90 percent of its sales came through the site. "Without Amazon, we wouldn’t be here," the Instant Pot's inventor told the newspaper. One survey found that 73 percent of small-business merchants are considering joining marketplaces at Amazon or eBay. Another found that working with Amazon makes business owners more confident.

The fact is, "small business" is hardly one thing, any more than "business" is all one thing. In the arena of creative destruction, there are winners and losers, among both big and small businesses. Indeed, while it's difficult to find good statistical evidence on the effect of Amazon and other online retailers on small companies, it is easy to see what devastation online shopping has brought to the large national chains. In the first eight months of 2017 alone, just over 6,400 retail chain stores closed their doors. In March, bankrupt Toys R Us began liquidating its 735 stores, and Mattress Firm announced it would close 175 stores, in addition to the 99 it has already closed so far this year.

In any event, online retail is hardly the first existential threat to face Main Street businesses, as a recent report on NPR about the resurgence of independent bookstores reminds us. Fifteen years before Amazon came along, mall chain bookstores like Waldenbooks and B. Dalton Bookseller decimated the independent sector. Then, beginning in the late '80s, big box chains like Borders and Barnes Noble came to town with an enormous inventory and wreaked further havoc on what was left of the independents. Only then did Amazon enter the picture, and decimate what was left of what was left of the independent bookstores — along with the mall outlets and Borders. Between 1999 and 2000, the number of independent bookstores fell by 40 percent.

But here's the thing: they're back. Since 2009, the number of independent bookstores has increased by 40 percent again. Now mall developers are luring independent bookstores, according to Harvard Business School professor Ryan Raffaelli, whose forthcoming study on the industry occasioned the NPR story. "Real estate developers are actually willing to give deals to some of the independent bookstores," he says, "because the independent bookstore is a mark of authenticity."

Donald Trump appears eager to take on a juggernaut. But whatever happens, for small business, there will be life after Amazon.