Amazon Tries to Help Small Businesses With Prime Day

Too little, too late for mom and pops?

Key Takeaways

  • Small businesses are getting sales help during Amazon’s Upcoming Prime Day.
  • Customers can choose from Black-owned and women-owned businesses, among other categories.
  • Some experts say Prime Day can be a money-losing proposition for small businesses.
Close-up of packaging advertising Amazon Prime Day 2018
Smith Collection / Gado / Getty Images 

Amazon is trying to give small businesses a boost during its upcoming Prime Day sales event, but is it enough?

The online retailer is steering customers towards small businesses during its annual event October 13-14. Amazon is offering incentives and has created "curated" collections of items sold by small businesses. But some experts say the effort is only a small step for mom and pop operations that have been dominated by years of growth by the online giant.

"Amazon’s business is e-commerce and that can be a factor that kills small business," Alex Perkins, co-founder of All the Stuff, a site which analyzes online shopping, said in an email interview. 

Giving Faces to Sellers

Perhaps mindful of such criticism, Amazon is trying to put the focus on small businesses. Prime members who spend $10 on select small businesses Sept. 28 through October 12 will get a $10 voucher to spend on Prime Day. Amazon is also trying to publicize the small business owners who are often faceless behind the website’s giant facade.

"Amazon’s business is e-commerce and that can be a factor that kills small business."

In Amazon’s meet the business owners section, shoppers are introduced to vignettes about the owners of small businesses. Shoppers can choose from categories including Black-owned, family-owned, and women-owned businesses. For example, it introduces Toyin Kolawole, founder and CEO of Iya Foods. "I love creating exciting new ways for my family to eat healthy meals that are inspired by our African heritage," she writes on Amazon’s web page.

Amazon's prompt to support small businesses

The Prime Day promotion is part of a larger effort by Amazon to help smaller retailers. The company has said it will spend $18 billion this year to help independent businesses with investments in logistics, tools, and services, and has launched over 135 free tools and services to help sellers boost their sales.

"At Amazon, our mission is to be Earth’s most customer-centric company, and part of fulfilling that mission is connecting small businesses with customers," Jeff Wilke, CEO Worldwide Consumer at Amazon, said in a news release.

Thousands of small businesses have closed in recent months due to the economic downturn caused by the coronavirus recession. Can events like Amazon’s Prime Day save them? 

"Probably not," George Pitchkhadze, CMO at online retailer Thrive Cuisine, said in an email interview. "What it will do, though, is give them some short-term cash and some long-term resources. Specifically, brands can use Prime Day to get positive customer feedback; raise brand awareness; target long-term customers." 

Retailers Blame Amazon for Sales Slowdown

Many retailers blame Amazon for slowing sales even before the pandemic. Amazon claims it’s good for entrepreneurs, but in fact, "the company’s increasing dominance of the consumer goods market is having a profoundly negative impact on the nation’s small and mid-sized businesses," said Stacy Mitchell, co-director of the Institute for Local Self-Reliance in a news release

Tens of thousands of small businesses have closed their doors in recent years, and many blame Amazon’s growing market dominance as a big factor in the decline, she added.

Boon or Money Loser?

Meanwhile, Amazon’s own business is booming. The company said it expects third quarter net sales to come in between $87 billion and $93 billion, representing year-over-year growth between 24% and 33%.

Cardboard package delivery at front door during the holiday season.
Jorge Villalba / Getty Images

Despite Amazon’s efforts, some experts say Prime Day can be a money-losing proposition for small businesses.

"For those who have not prepared for this shopping event by beefing up their inventory, time is quickly running out," said Patrick Connelly, co-founder of the Brooklyn, New York-based online art store Stellar Villa, in an email interview. 

"It's also important to carefully plan your advertising and any promotions you are running for this event. Many sellers overspend on advertising and run steep discounts resulting in lower margins," continued Connelly. "It's very easy to end up with record breaking sales, but very little profit, or worse, losing money. Therefore, it's crucial to keep an eye on your numbers, create financial projections, and set a reasonable budget."