7,800 products sold per minute.
That figure is the average rate at which independent American sellers move product on Amazon’s marketplace. These sellers, most of whom are small and mid-sized businesses, tallied 4.1 billion items sold in 2022, according to the company’s data.
Since incorporating third-party sellers in 2000, Amazon has revolutionized the retail industry. It leads among online marketplaces and has forced incumbent brick-and-mortar competitors to expand their operations online.
But the platform faces rising scrutiny from politicians, bureaucrats, and pundits. A recent Federal Trade Commission (FTC) antitrust suit, one of the most significant antitrust cases brought in decades, alleges the company strongarms and gouges third-party sellers to raise profits, maintain market share, and squash competing platforms.
Many elected officials also object to Amazon’s business practices. For instance, a twice-introduced bill in Congress, the American Innovation and Choice Online Act, would change Amazon’s marketplace fundamentally, reshaping its search function and its data practices.
But the entrepreneurs who sell on the platforms contest these narratives.
In recent weeks, I interviewed several small businesses selling products on Amazon’s marketplace. While they came from wildly diverse professional backgrounds, and run very different businesses, they all told the same basic story.
The sellers I spoke with say critics’ arguments badly misrepresent reality. They argue that Amazon — to a degree unlike any other marketplace or retail outlet, online or off — puts brand-new small businesses in direct competition with the biggest corporate giants, ratcheting up competition and expanding consumer choice.
Regulators’ myopic focus on Amazon makes little sense, I was told, since it places far fewer constraints on entrepreneurs than legacy retail does.
“It’s the only marketplace that everybody has equal access to,”Andy Horrow argues. “Can you imagine the government coming after Kroger and saying, ‘Hey Kroger, you need to do a better job selling small businesses’?”
Horrow understands the legacy retail space and upstart e-commerce better than almost anybody. He spent more than a decade at PepsiCo, where he worked on brands including Gatorade and Tropicana. The company’s name recognition and vast resources ensure its products always find space on supermarket shelves, bar and restaurant menus, and wherever else customers look for a beverage.
Today, Horrow serves as president of Protein2o, a 12-employee company that produces high-protein health drinks. Protein2o lacks the resources of his former employer, but armed with the tools of the digital economy, he can compete directly with the biggest players in his industry.
Horrow says Amazon’s marketplace gives small businesses the opportunity to circumnavigate the retail industry’s traditional gatekeepers. Supermarkets and big-box stores — which have finite shelf space — generally require new brands to demonstrate pre-existing financial success and further charge exorbitant “slotting fees” for prime display placement. Charting the brick-and-mortar retail world often proves a challenge too complex and too costly for inexperienced, cash-poor startups to surmount. In contrast, Horrow says Amazon’s marketplace has empowered him to compete with giant brands like Gatorade, Vitaminwater, and BODYARMOR.
“I call Amazon ‘the great equalizer,’” Horrow says. “As long as I can spend effectively in a search-and-display environment, and target effectively, I’ve got just as much of a chance to succeed as [giant brands] do,” he adds.
“If not for Amazon,” Horrow explains, “businesses like us really do struggle to ever see the light of day.”
Horrow and the other sellers I spoke to argue that the costs and terms Amazon places on sellers generally benefit customers, promote good business practices, and have clear analogues to restrictions in brick-and-mortar retail. The difference: Amazon is far more permissive than any offline retailer.
The sellers say the cash investments required to sell on Amazon provide far higher returns than equivalent spending made elsewhere. These profits are largely due to Amazon’s seller resources, analytics, and search algorithms, which keep the Davids competitive with the Goliaths.
Scott Moller has worked in e-commerce for decades; he first ventured on eBay in 1996. Selling online enabled him to leave an itinerant consulting gig and remain present for his family. Besides making grilling tools through his brand Grill Sergeant, Moller now runs another consulting outfit, Year 5, which helps steer other sellers to success on Amazon’s marketplace.
Moller explains that Amazon’s algorithms promote meritocratic competition above all else. With a good product, attentive customer service, and marketplace know-how, he says anybody can build a successful brand on Amazon. “It’s not if you’re going to be successful,” he says, “it’s when you’ll be successful.”
Although retail success on Amazon requires paid advertising — as it does anywhere else — Amazon promotes sellers who receive stirling reviews and have lower return rates, Moller tells me. If the platform simply gave sales to sellers with the largest advertising budgets, and directed customers to mediocre products, the platform would lose revenue from unconverted sales and returns and, ultimately, destroy credibility with customers. Aside from providing immediate consumer benefits, this policy incentivizes new, undisciplined sellers to form good business habits, Moller says.
Sellers flock to Amazon for its massive customer base. However, small and mid-sized brands’ success often hinges just as much on Amazon’s suite of seller tools. These help lean-and-mean startups locate the shoppers most likely to want their product and maximize the impact of scant resources.
The suite of seller tools is “incomparable to anywhere else,” Moller says. Advanced analytics, for instance, tell sellers what tags and advertisement placements generate success. “You don’t get better customer feedback than the Amazon customer,” Moller says. “The sheer massive amount of customers and feedback and data that you’re getting is incredible.”
Horrow agrees. “The beauty of Amazon is that we know what the ROI is,” he says. “We know what keywords work for us, we know what competitive targets work for us, we know the percentage of people who could be buying our product … but have not discovered us.”
Amazon has played a different role in the professional and personal lives of each of the sellers I spoke to. But they all say that the platform has provided them a unique opportunity to pursue their own individual conceptions of professional and personal success.
Years ago, burned out from an unrelenting real-estate job, Kennedy Lowry began her now-booming line of boutique skincare products, BEING, as a modest self-care routine, she tells me. Soon after she began selling on Amazon, she says, she doubled her year-over-year revenues. And thanks to stirling reviews and a very low return rate, her products have in the ensuing years repeatedly outperformed those of massive beauty brands.
Kristin Rae, a stay-at-home mother, founded Inspire Travel Luggage in 2012 to begin earning an income again. She says she tried vainly to market her products to traditional retail outlets but found her break selling on Amazon. Since then, she has expanded to create other lifestyle brands, and she works with a nonprofit that helps small businesses access digital technologies. Rae says the opportunities of e-commerce have special potential for women who, like her, want to pursue both their career aspirations and involved motherhood.
The sellers also say the success they’ve built on Amazon reverberates far beyond the marketplace — indeed, far past e-commerce.
Protein2o hopes soon to stock its drinks at gyms. “When we are able to go talk to those corporate entities at those gyms,” Horrow says, “for us to say that we have 4.5 stars at Amazon, 20,000 reviews on Amazon, double-digit growth on Amazon…it’s incredible.”
Moller’s Grill Sergeant was built on, and exclusive to, Amazon. But now, armed with its e-commerce success, Grill Sergeant is now expanding into wholesaling.
But many sellers worry that policy makers’ failure to understand their industry will endanger their — and countless others’ — livelihoods. Ill-conceived antitrust enforcement or regulatory micromanagement could end many of the opportunities around which sellers have built their lives and careers.
Amazon critics such as those at the FTC seem to believe that sweeping new regulations and seismic antitrust suits will not degrade the opportunities Amazon offers small entrepreneurs. Instead, they think federal micromanagement will force the platform to provide further benefits to third parties.
“The FTC’s lawsuit clearly lays out how Amazon is hurting sellers,” an FTC spokesperson told me when asked about the sellers’ concerns.
“The FTC’s lawsuit aims to help third-party sellers, not hurt them, by stopping Amazon’s illegal conduct and prying loose Amazon’s monopolistic control to restore competition,” the spokesperson added.
But the sellers I spoke to say the government’s meddling would trigger consequences unforeseen by politicians and bureaucrats. They also explained that much of the FTC’s complaint fundamentally misunderstands the platform–seller dynamics and portrays benign or beneficial policies as nefarious.
“Sellers are the collateral damage” of bad tech policy, Rae says. “We’re the first ones to lose when government policy goes awry,” she adds.
“Why is everybody picking on Amazon?” Horrow asks. “They’re the ones that are opening the door to entrepreneurship.”
