Small merchants are raising concerns about Amazon’s business practices as holiday shopping season approaches
Toronto, November 16, 2023 – Small businesses are already struggling to compete in an e-commerce space dominated by large multinationals, and some of the business practices by Amazon on its Marketplace platform are exacerbating the problem, finds a new report by the Canadian Federation of Independent Business (CFIB). This situation may worsen during the upcoming holiday shopping season as a majority of Canadians report doing the bulk of their shopping at large multinational retailers, either in-store or online, according to another recent CFIB report.
“E-commerce offers a lot of opportunity for small businesses to expand and reach more customers, but they’re facing an uphill battle trying to compete with online giants. Many small businesses looking to get a foothold online will sign up for Amazon's Marketplace but a number of them report that Amazon's business practices can make it more challenging for them to compete,” said Corinne Pohlmann, Executive Vice-President of Advocacy at CFIB.
About one in two (55%) of the small businesses that have used Amazon’s Marketplace were dissatisfied with their experience. Top complaints ranged from small businesses experiencing confusing fees for accessing the platform to Amazon providing little customer support.
Business owners using Amazon said their listings often appear lower in the search results, and that they don’t have any control over refund decisions. Small businesses face various obstacles when it comes to generating online sales, and those using Amazon Marketplace have reported taking a hit to their bottom line.
Small businesses calling for more fairness in the e-commerce space
About half (48%) of small businesses say it has become harder to compete with the rise of e-commerce giants. Shipping costs also prevent some businesses, such as independent bookstores, from competing online as they often don’t have the shipping volume of larger retailers.
The federal government should do more to ensure fairness in the digital economy so that small businesses can thrive and drive innovation. CFIB recommends Ottawa:
- Use the ongoing Competition Act review to stand up for Canada’s small businesses against behaviour that could be seen as unfair or even anti-competitive
- Make programs such as the Canada Digital Adoption Program (CDAP) more accessible to help small businesses with their digital transformation
- Implement policies that will reduce the heavier regulatory burden placed on small businesses to help level the playing field
- Work with Canada Post to provide small businesses with more pricing options for shipping costs so that they can better compete within the digital economy
As Amazon describes itself as “committed to small business success,” it should consider taking the following steps to truly help small businesses succeed on their platform:
- Be more transparent about its search algorithms and provide clear guidelines to small businesses on how to optimize their listings for better visibility
- Reduce service fees and consider improving the seller support services
- Actively promote and highlight products from small businesses
- Provide better access to small businesses’ own data and analytics to help them understand certain market trends, customer preferences, and competitive insights
- Consider establishing an ombudsperson or a commission-like entity to streamline and enhance the resolution of customer/small business complaints
“This holiday season and whenever possible, Canadians should make an effort to shop at a small business,” said Michelle Auger, CFIB senior policy analyst and author of the report. “Small businesses reinvest 66 cents of every dollar earned in their communities, while Amazon only keeps 8 cents of every dollar local. That is a staggering difference, and it highlights why we all benefit when we shop local.”
Read The Challenges of Competing in a Digital World report here.
For media enquiries or interviews, please contact:
Dariya Baiguzhiyeva, CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.