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This New Year, Stand Up for Small Businesses

December 27, 2021 5:26 AM | TLC Monadnock (Administrator)

A big thank you to everyone who gave a gift to our community -- by shopping at locally owned businesses this holiday season.  Now, here’s your chance to stand up for our independent businesses this New Year.

Congress is debating six historic anti-monopoly bills aimed primarily at Big Tech corporations. These bills can help level the playing field for small businesses and curb some of the negative impacts these corporations have on our local economy.  Keep reading to learn more and then contact your representatives today.

Online sales affect jobs, taxes, and land-use patterns in local communities.  In terms of jobs, one study found that independent retailers employ 57 people for every $10 million in sales, while Amazon employs only 14 people per $10 million in revenue.  In 2018, Amazon sales in New Hampshire resulted in a net loss of 4,287 retail jobs.

The latter statistic came from a study by Civic Economics called Prime Numbers: Amazon and American Communities.  The study found that Amazon’s sales in 2018 resulted in the loss of over $5.5 billion in tax revenues, 900,000 retail jobs, and 540 million square feet of commercial space nationally.  In New Hampshire, the study calculated that Amazon’s sales displaced 296 retail storefronts in our state. 

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Another way Amazon impacts small businesses is through third-party sales. Here’s an excerpt from a new report called Amazon’s Toll Road by Stacy Mitchell from the Institute for Local Self-Reliance:

One of the most striking measures of Amazon’s monopoly power is the extraordinary amount of money that it’s able to extract from the independent businesses that rely on its site to reach customers. In this report, we find that, over the last two years, Amazon’s revenue from the fees it levies on third-party sellers has more than doubled. In 2019, Amazon pocketed $60 billion in seller fees. This year, its take will soar to $121 billion, our analysis finds.

Amazon’s dominance of online retail means that small businesses have little choice but to rely on its site to reach consumers. This report finds that Amazon is exploiting its gatekeeper power to pocket a growing cut of the revenue earned by these independent sellers. It’s doing this by imposing ever-larger fees on them. These exorbitant fees make it nearly impossible for sellers to sustain a viable business online. Most fail.

Operating an unregulated, monopoly tollbooth that sits between businesses and consumers is wildly lucrative. Amazon’s revenue from the tolls it imposes on sellers has soared, growing much faster than every other major revenue stream, including Amazon Web Services (AWS), its vast cloud division. These fees generate huge profits for Amazon, a fact that the tech giant conceals in its financial reports.

Amazon’s ability to extract such steep tolls from businesses selling online is a striking illustration of its monopoly power. These fees also play a crucial role in how Amazon maintains that power. As this report details, Amazon depends on profits from seller fees to fund massive losses in other areas of its operations — losses that serve to entrench and expand its dominance.

Policymakers must act to end Amazon’s exploitation and create an open, dynamic, and competitive online market.  Read the full report and please stand up for small businesses today!

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