Amazon Stealing Own Merchants’ Biggest Hits?

Some say dealing with the retail giant is a 'double-edged sword'

   

Is Amazon.com (NASDAQ:AMZN) hurting or helping the small retailers that sell products on the massive site? That’s a tough question to answer.

It’s no secret that the online superstar is rough on the competition. Big-box retailers like Best Buy (NYSE:BBY), Target (NYSE:TGT) and Wal-Mart (NYSE:WMT) have all taken a few blows dealt by Amazon’s low prices. Target has even swung back.

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But partnering with various merchants and offering the Amazon Marketplace — a section of the site where third-party retailers sell merchandise — has benefited the company, so wouldn’t the little guys on Marketplace be protected from Amazon’s competitive bent? A few of the merchants answered that question with a resounding “no,” according to a recent Wall Street Journal report.

Merchant Jeff Peterson, owner of Collectible Supplies, told WSJ that Amazon is stealing big hits from small, third-party vendors like him. Peterson sells sports merchandise, including the popular NFL-branded Pillow Pets — think of your favorite NFL mascot and imagine it as a stuffed animal that converts to a pillow … that’s a Pillow Pet. Peterson said that when his sales increased, Amazon began selling the same Pillow Pets at much lower prices. The company even threw in free shipping.

Peterson isn’t alone.

“Amazon is a double-edged sword,” Tabcom CEO Thomas Frenchu told WSJ. “You have to deal with them, you have to be on their site, but we also have to fight harder and harder every day to compete with them.”

If Amazon’s such a meanie, why do many retailers feel they “have to deal” with the retail giant?

Online traffic, of course. Many small shops would be obsolete without connecting with a behemoth like Amazon. Aside from allowing merchants to choose their own product prices and shipping rates, the company also guarantees all purchases made within the Amazon.com Marketplace, which makes customers more likely to buy from a business they may have never heard of before.


Article printed from InvestorPlace Media, http://investorplace.com/2012/06/amazon-stealing-own-merchants-biggest-hits/.

©2014 InvestorPlace Media, LLC

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