Washington, D.C. (March 30, 2022) — In a recent survey of more than 900 small business owners, the Institute for Local Self-Reliance (ILSR) found that market concentration and monopolistic practices by big companies are at the root of the most significant challenges faced by America’s independent businesses. Survey respondents were located across the country and represented a wide range of sectors, including retailers, service providers, manufacturers, farms, banks, restaurants, and more.
When asked about the challenges they face, topping the list were three issues that all have to do with the unchecked exercise of market power by dominant corporations:
- Nearly two-thirds of respondents rated as a major challenge the fact that their big competitors receive special discounts and terms from suppliers. By strong-arming suppliers, dominant corporations can tilt the playing field and compel suppliers to raise prices to independent businesses.
- 62 percent of businesses said Amazon’s control over the online market was a very or extremely significant challenge.
- More than half of businesses reported that a major challenge is that their big competitors sell goods and services below cost, which is a predatory tactic well-heeled corporations can use to take market share from small rivals without having to compete for it.
When asked about potential policy solutions, a majority of respondents supported the following:
- Ending subsidies and tax breaks for big businesses.
- Breaking up and/or regulating Amazon.
- Investing in downtowns and neighborhood business districts.
- Strengthening antitrust policy and enforcement.
- Capping credit card swipe fees.
An additional set of survey questions was given to independent businesses who identified as third-party sellers on Amazon’s Marketplace. While almost all of them reported that they have their own e-commerce sites and sell on platforms other than Amazon, most depend on Amazon’s Marketplace for the bulk of their online sales. More than two-thirds of respondents said that it has become harder to succeed on Amazon’s Marketplace, and a majority reported believing that Amazon’s algorithms are unfairly biased. More than half said that they would not feel comfortable speaking out about Amazon’s treatment of sellers.
ILSR also received thousands of written comments from respondents that illustrate the experiences of independent businesses. A bookstore in Brockport, New York, said, “It is atrocious that Amazon can sell items to anyone for less than I can get them from the actual company that makes the product. Even at wholesale.” A sporting goods store in California pointed to Nike as a worst-case example of outsized market power: “They are… eliminating competition by closing accounts [of independent stores].” A small business in rural New Hampshire said, “Hard to understand how the growth and survival of small businesses has taken such a back seat in both political parties over the years.”
Read the full independent business survey results here and find the snapshot of Amazon Marketplace sellers’ experiences here.