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The Impact of Amazon on the Local Economy

The name, Amazon, has become a household name in most parts of the world, especially in the United States. It has gradually grown over the years to become a strong retail powerhouse. The usage of the internet further boosted its popularity as almost everyone now has access to the internet.

Four Specific Impacts of Amazon on the Local Economy

All new inventions or ideas always have significant effects on different sectors of the economy. The impact could be positive or negative, and it could be long term or otherwise. From studies and observations, Amazon has had its share of impact on the economy. Some of which are:

Easy Marketing

It is quite easy for retailers to sell their products without necessarily having a store because of the way Amazon functions. It saves them the cost of renting a shop or transporting their products.

A lot of uneducated and unskilled locals have used this platform to build their stores and increase sales. Other people also sell goods in great shape that they are no longer using. It has undoubtedly helped many make extra income.

Job Reduction

The ideal local economy thrives on retail marketing and physical manpower. Retail businesses provide more jobs than corporate companies. When these retail businesses are forced to close shop because of bigger competition, job employment reduces.

As unbelievable as it might sound, about 150,000 more jobs have been canceled as against the number created by Amazon. Amazon is becoming more digitalized. Machines have taken over the bulk of the job people previously did. There is less need for the workforce.

There are various arguments that companies like Amazon help with unemployment in the country. Research has shown that Amazon only employs 14 per 10 million people. At the same time, the number of jobs created by chain retailers ranges from 50 to 100 per 10million.

Death of Small Businesses

Small retail businesses are finding it challenging to thrive with such a high level of competition because of the massive growth of the company. Amazon gradually invaded the market and disrupted the standard workflow.

The small businesses lacked the human resources and material resources to compete with such a powerhouse. The situation in certain cities is starting to look more like a monopoly. The research found that $1 out of every $2 spent by Americans online goes to Amazon.

How do you compete with that? Although the company seems to contribute to the increase in tax revenue in the country’s economy. It has significantly affected the economy of the smaller sections in the country.

Reduced Customer Choice

Every seller wants his or her item to be on Amazon as it is one of the best online retail marketing platforms. This need means some goods will be found only on Amazon and nowhere else. It limits the options of customers, and they have to buy from where they find such products and at whatever price is stipulated.

What is Amazon FBA?

Picture of what you can do with Amazon FBA

With millions of people using Amazon to do their businesses, it is only reasonable that more people are interested in the platform. There are several programs available on how to trade with the platform successfully. One of such programs is Amazon FBA.

A lot of people don’t know about it, except for those who are actively involved in the business. FBA means Fulfilment by Amazon. This platform has made it possible for anyone and everyone to be able to sell an item on Amazon.

It could be a product you made yourself, or you are acting as a retailer. You don’t necessarily have to own a shop or patent right to sell a product online. The whole idea is, you do the selling, and Amazon does the shipping.

What you can do with Amazon is dependent on you. You can choose to employ all of the services provided or limit it. When you enroll with them, the first thing you do is to send your products to them.

They help you to store them in their massive warehouse, depending on your location. Upon orders from customers, the products are picked from the warehouse, packaged, and shipped to the customer’s destination.

They do the transactions for you, putting your products out there, accepting payments on your behalf, settling refunds and complaints. They do all these functions with the help of their customer care service.

After every two weeks, they collate your total sales less their seller fees and send it directly to your bank account. It is noteworthy that all of these services come with a small fee. Apart from the help the platform offers, there are specific duties you have to do as a seller.

You are responsible for checking your inventory level at Amazon. It would be best if you made sure that your products stay in stock always. You might also need to advertise your products yourself, especially if they are not such popular brands.

Online Marketing with Amazon

There are a lot of advantages attached to using Amazon for your online trading. Some of which are obvious, others not so much. Amazon is not limited to local markets. The online leverage gives it access to any country in the world.

This factor makes your products accessible and visible to almost everyone. You also do not have to worry about getting your products to your customers. Amazon does the shipping and movement for you.

The company covers all the perils that your goods might face in the course of transit. They also help to store your goods before selling them. Your products are also tracked during movement. You don’t have to worry about it getting missing or stolen.

Conclusion

Amazon has no doubt impacted retail marketing in more ways than one, but at what expense? There is a need to take note of the impact it is having on small businesses. We need to look for ways to regulate certain excesses and encourage local start-ups as well.