June 18, 2024

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Building an online sales success story is getting complex and costly

2 min read

Products in a loading bay at an Amazon fulfillment center on Prime Day in Melville, New York, US, on Tuesday, July 11, 2023. Amazon.com Inc.’s annual Prime Day shows that e-commerce isn’t the driver it once was for the stock, as investor focus shifts to the company’s faster-growing and profitable cloud-computing unit. Photographer: Johnny Milano/Bloomberg via Getty Images

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Amazon may be the epitome of big business, but more than 60% of the behemoth’s sales last year came from small- and medium-sized businesses. Small businesses rely on Amazon for its reach and breadth, while Amazon needs independent sellers to fill its site with products.

But the relationship can be uneasy. Sellers have complained about rising costs to sell on the site. The Federal Trade Commission antitrust lawsuit against Amazon, meanwhile, accusing the e-commerce giant of wielding its “monopoly power” to raise prices, stifle competition and leave shoppers with worse service. The lawsuit also accuses Amazon of forcing sellers to pay expensive fulfillment and advertising fees, with little choice but to rely on the e-commerce giant to stay in business.

“It’s the same playbook again and again,” said Scott Lieberman, an e-commerce consultant and founder of TouchdownMoney.com. Companies are “super friendly” to small businesses in the beginning to attract traffic. Then the rules change, and it becomes increasingly expensive for businesses to operate on the platform, he said.

Nevertheless, many small businesses rely on Amazon as a vital part of an e-commerce strategy. While among sellers recently interviewed by CNBC there was a feeling that the FTC case is “long overdue,” they don’t necessarily agree with all of the FTC allegations. And they aren’t sure much will change in the relationship.

“I think that the power that Amazon wields over sellers is considerable and absolutely worth looking into,” Scott Needham, who both sells on Amazon and provides tools to other…

2023-11-11 09:30:00

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