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Almost two million small businesses use Amazon to sell their wares. And right now, a good chunk of them probably have a lot of questions.
On Friday, FedEx announced a "strategic decision" to stop providing express delivery for Amazon packages in the U.S. An Amazon spokesperson told Inc. that the company respects FedEx's decision. On the same day, the chairwoman of the U.S. House Committee on Small Business, Nydia Velazquez (D-N.Y.), wrote to Jeff Bezos about last month's Bloomberg report that Amazon is set to purge thousands of mom-and-pop vendors from the company's wholesale network.
"As Chairwoman of the House Small Business Committee, I find these reports deeply troubling as this change could jeopardize small wholesale businesses from continuing to do business with Amazon and affect millions in sales and hundreds of thousands of jobs," Velazquez wrote, asking for clarity and timelines for Amazon's small-business plans.
The news brings some familiar questions into the spotlight: Is Amazon a collaborator or a competitor for startups? Friend or foe? Both? Neither?
Amazon has long touted its positive relationships with small businesses, which has become a reliable defense whenever the company comes under attack for high-profile issues like counterfeit products or poor factory working conditions. At the same time, Amazon has also steadily expanded into industry after industry--recent examples include grocery stores, high-end apparel, food delivery, and even health care--instantly becoming the biggest fish in any new pond.
The FedEx news is yet another instance: Amazon has been building out its own shipping and delivery network. Not that FedEx is threatened, of course: Amazon accounted for less than 1.3 percent of FedEx's total 2018 revenue. The last time Amazon's in-house delivery network made headlines was in September, when a Business Insider report revealed the abusive conditions under which many drivers worked.
Meanwhile, the vendor purge is a new kind of threat--though Amazon has vigorously denied that such a move is happening. Last month, Bloomberg called it "one of the biggest shifts in Amazon's e-commerce strategy since it opened the site to independent sellers almost 20 years ago." An Amazon spokesperson told Inc., "We informed Bloomberg prior to publication of their article that their sources and story are wrong. We review our selling partner relationships on an individual basis as part of our normal course of business and any speculation of a large scale reduction of vendors is incorrect."
From Amazon's point of view, it's cheaper to buy in bulk from a giant like Procter & Gamble, and cost-cutting is key to staying ahead of competitors like Walmart and Target. The U.S.-China trade war may also play a role: Amazon recently told smaller suppliers that it'll only pay 5 percent more to buy products that are tariffed at 25 percent, according to The Washington Post.
If all of this makes you nervous, it could be time to start distancing yourself from Amazon--as a contingency plan, if nothing else. Diversify your sales strategy, so you're not reliant on a single channel. Put resources into connecting with your customers directly, so that even if they're still buying your products on Amazon, they're doing so with your brand personality in mind.
And, with all the uncertainty, you might want to do it now.
Update: This post has been revised to include comment from Amazon.