SMBs are struggling to sell… even on Amazon

The Canadian Federation of Independent Business (CFIB) is concerned about the questionable practices of Amazon, which offers Marketplace, a portal that allows independent retailers to sell on the online retail giant’s website.

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According to a CFIB report, certain Amazon practices in the marketplace are only exacerbating the problem of online retail competitiveness, even more so as the holidays approach.

“The majority of consumers make the majority of their purchases from multinational companies, in-store or online,” says another recent CFIB report.

“E-commerce allows SMEs to reach a broader customer base, but they struggle to compete with online sales giants. “Many small and medium-sized businesses looking to carve out a place for themselves online have no choice but to list their products on the Amazon Marketplace, but many say Amazon’s business practices make it even more difficult,” said Michelle Auger, Senior Policy Analyst, National Affairs at CFIB.

Just over half of small business owners who used Amazon Marketplace said they were dissatisfied with the platform.

Problems at Amazon

They believe pricing is complex to access and customer service support is lacking.

Canadian retailers in particular have found that their products are often found at the bottom of the search results list and they have no influence on refund decisions.

“In addition to the various obstacles that SMEs have to overcome to generate online sales, those who use Amazon Marketplace say they have no choice but to agree to a reduction in their profits,” regrets the CFIB in the published on Thursday Press release.

Additionally, “delivery costs also prevent some SMEs (e.g. independent bookstores) from remaining competitive in the digital marketplace as they typically do not have the shipping volume of large retailers.”

The CFIB wants the federal government to ensure more justice in the digital market and promote the growth of SMEs.

Here are the CFIB’s recommendations to Ottawa:

-use the ongoing review of the Competition Act to propose measures that would protect SMEs from unfair or even anti-competitive behavior;

-Improve the accessibility of programs such as the Canadian Digital Adoption Program (PCAN) to facilitate the transition of SMEs to digital technologies;

-implement measures that would reduce the excessive regulatory burden on SMEs in order to restore balance;

– Work with Canada Post to offer SMEs more pricing options so they can compete in the digital marketplace.

In addition, Amazon, which presents itself as an “ally of SMEs”, could take the following measures to help SMEs compete fairly on its platform.

-Be transparent about search algorithms and clearly advise SMEs on how they can optimize the visibility of their products.

-Reduce service fees and improve seller support services.

-Actively promote and highlight SME products.

-Improving SMEs’ access to their own data and analytics to help them understand market trends, customer preferences and the competitive landscape;

-Create an ombudsman body or a body such as a commission to simplify and improve the resolution of complaints from customers/owners of SMEs.

“You should know that every dollar spent in an SMB generates $0.66 in the local economy, compared to $0.08 for every dollar spent on Amazon. The difference is huge and shows that buying locally is beneficial for everyone. That’s why we encourage consumers to shop local during the holidays and throughout the year. This is good for our communities,” said Michelle Auger, senior policy analyst at CFIB and author of the report.

To view the full report, click here.