Amazon says most of the items sold on its platform come from small and medium-sized businesses (SMBs), leading to big business for the retail giant.
Reports in CNBC on Wednesday (Dec. 27) said Amazon's collaborative efforts with SMBs are a win-win for both parties. Most of the business seen by small firms stems from Amazon's B2B service Fulfillment by Amazon (FBA), which allows SMBs to sell goods on the platform and outsource logistics like packaging, shipping and customer service to Amazon.
According to Amazon, 2 billion items were sold via SMBs' use of Fulfillment by Amazon, accounting for more than half of the products it sells online, reports said. FBA also allows smaller companies to offer Prime two-day shipping, and Amazon charges the small businesses fees for storage and shipping. One SMB owner told CNBC the fees could be as high as 30 percent, but it's worth it for the company to gain exposure to customers on a major eRetail platform.
“People trust it — they know Amazon is going to take care of them and so they use Prime all the time now,” said Steve Grubbs, owner of greeting card and signage business VictoryStore.com. “There are so many challenges with online retail and we've battled them for 20 years. Amazon takes a lot of those away — credit card security, marketing and sales, shipping and fulfillment.”
For some small businesses, the benefits of FBA mean they can't afford not to work with Amazon.
Another entrepreneur, Jack Brecher, owner of luxury goods retailer JR William, told CNBC that if his company chooses not to work with Amazon via FBA, it stands to face lower rankings on the platform.
“If your listing is fulfilled by merchant on Amazon, then the chances of you becoming a hot seller are slim to none,” Brecher said. “The positive aspects of using FBA can't be underestimated — not having to deal with shipments, specific issues with fulfillment. These are things that could take up all day for business owners like myself. Time is our biggest resource and freeing up time is absolutely a huge value.”
