Amazon is in a unique position during the current U.S. House of Representatives’ antitrust hearings. Among the five tech giants testifying and trying to set a defense against any future actions over being a monopoly, Amazon is the only one who sells its own products alongside products from partners.
We like to think about Amazon’s other tech interests. Amazon produces and distributes movies and shows, its cloud infrastructure is one of the world’s biggest, and the company’s consumer goods like the Echo or a Fire TV device are in millions of homes across the world. But the main focus of any antitrust investigation into Amazon will be focused on how it treats its third-party sellers on Amazon.com.
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Jeff Bezos knows this, too, and it’s why he opened his testimony to the House Judiciary by reminding us all how much money small companies make because of Amazon.
Amazon is a profitable business but also empowers other smaller competitors.
That’s also something most of us never think about. Amazon spends billions every year on its giant online marketplace and presumably turns a profit regardless of how fancy accounting makes it look like Amazon.com may be a loss leader. Amazon also opens that same market to just about anyone who wants to sell a product, new or used. Bezos claims that over 60% of all items sold at Amazon come from third-party sellers.
There are plenty of businesses that exist only because of this practice. To be clear, it benefits Amazon, too, because the more items in its market the more apt we are to use it. But you can’t dismiss the millions of dollars that don’t go directly into Amazon and instead are distributed through small businesses across the U.S. and the world.
One of those sellers is Sherri Yukel, who wanted to change careers to be home more for her children. She started handcrafting gifts and party supplies for friends as a hobby, and eventually began selling her products on Amazon. Today, Sherri’s company employs nearly 80 people and has a global customer base.
This goes even further when you understand that products like an Amazon Echo are loss-leading products designed to get you to spend more money at Amazon.com. You can tell Alexa to order socks or cucumbers or even auto parts and often times the order isn’t placed directly through Amazon and instead goes to a third-party seller.
Speaking on how your company helps the U.S. economy is a powerful message to give to congress.
By reminding the members of the House subcommittee that Amazon was founded in a garage and that he drove the first packages to the post office himself, Bezos is reinforcing that because of Amazon other small businesses don’t have to do the same. When a small business is launched with an instant leg up, it increases its chance of success.
Amazon and Mr. Bezos only exist to turn a profit. Any idea otherwise is simply false. But that doesn’t mean that Amazon can — and maybe even does — use its market position to help small businesses stay afloat or possibly even become a true competitor. That’s a powerful idea to put in front of the House and shows that Bezos is more than capable of maneuvering his way through his first time in front of the U.S. Congress.
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