Technology has made it increasingly possible for small businesses operating across the UK to compete evenly with larger firms – despite this, some business owners still see digital as a threat, not an enabling force.
Here Katie McQuaid, UK Director of Amazon Marketplace, talks about the vital role small businesses play in the digital economy and explains how small business owners can join tens of thousands of others to sell through Amazon and reach a global audience.
Why are small businesses important?
Small businesses are the backbone of the UK economy, as well as being at the heart of our business. Half of all sales through Amazon’s global sites are not made by us, but by businesses selling through Amazon Marketplace.
There are more than 250 million distinct products on Amazon, and this vast selection wouldn’t be possible without the ingenuity and entrepreneurship of third-party sellers. This is a great boost to the wider economy too as, in the UK, 74,000 people are employed by businesses to support selling on Amazon Marketplace.
How do we level the playing field between big and small businesses?
Technology and the internet provide real opportunities to level the playing field. It’s democratising the ability to set up your own company. Companies such as Amazon have an important role to play, offering small businesses access to our global digital and physical infrastructure, and worldwide customer base, so they can boost their reach, revenue and productivity in a simple, low-cost way. Indeed, half the products in our UK fulfilment centres are held there on behalf of the third-party businesses that sell on Amazon Marketplace.
It’s also why we launched the Amazon Academy programme last year. We’ve had three so far in London, Manchester and Edinburgh with more than 800 SMEs attending to get practical advice on how to boost revenue, exports and scale their businesses using digital services.
So what is Amazon Marketplace – and how does it specifically help small businesses in the UK?
Amazon Marketplace enables small businesses to grow online by selling products to hundreds of millions of customers through the Amazon website and mobile app.
Another key feature is Fulfilment by Amazon (FBA) – a service that enables small businesses to use Amazon's global network to store, pack and deliver products directly to customers while also offering Amazon Prime benefits, including free delivery, simple streamlined cross-border trade, easy returns and trusted Amazon customer service in local languages.
What are the other benefits?
When Amazon stores, picks, packs and delivers items on behalf of growing businesses, this frees up their time. Now they can concentrate on what they do best – finding and developing new products and marketing them to potential customers. By using FBA, small businesses also benefit from lower costs than if they handled logistics themselves.
These services have real potential for small businesses – particularly for rural businesses. If you have a laptop, internet connection and great product, you can be local and sell globally.
Do bigger retailers get preferential treatment from Amazon?
No. In fact, most Marketplace sellers tend to be microbusinesses or small businesses. An individual selling out of their home has the same opportunity to reach hundreds of millions of Amazon customers across the world as the well-established retailers, many of whom also choose to sell on Amazon Marketplace. But it’s not just Amazon Marketplace where there are opportunities for small businesses. Amazon Web Services is used by start-ups to scale their businesses through cloud computing; Amazon Handmade is used by artisans to reach customers around the world; AmazonFresh is used by local shops and markets to reach customers way beyond their shop windows; and Amazon Alexa (our cloud-based voice service) is used by small businesses to reach customers through voice. Ultimately, it’s about opening up access for small businesses to our global digital and physical infrastructure and innovation, so that they can help raise the bar of the customer experience.
Can you give us an example of how using Amazon has benefited a small business owner?
A good example is Gayle Hunter, founder of lifestyle products company Lifestyle Hunter. She left her career and started selling products on Amazon through FBA.
Her primary reason was to spend more time with her young family. She can now spend much of the school holidays overseas as she can run her business remotely from anywhere in the world, safe in the knowledge that Amazon is taking care of storage and distribution to customers.
There are tens of thousands of other success stories too, up and down the country.
Does working with Marketplace help small businesses overcome other challenges?
Yes, it does. One of the biggest challenges for small businesses is how to scale without investing huge sums in logistical or warehousing operations.
I’ve mentioned FBA and some of the benefits of using this service. Apart from allowing small businesses to forget about logistics and focus on finding and developing products and marketing, FBA also helps them scale at a pace that matches their ambition.
Using FBA, you can also minimise risk and maximise opportunities wherever possible. The best way to do this is by adopting digital services that boost productivity and exports. This reduces costs, broadens your customer base and gives the flexibility to scale up or down depending on customer demand.
How can a small business use Amazon to boost productivity and grow exports?
Making exporting as simple as clicking a button is something we’ve been keen to achieve. Amazon has a suite of support tools to help small businesses export products, including managing currency exchange, local translations and providing global delivery and distribution.
Because of all this support infrastructure, businesses of all sizes can sell globally across Amazon's eleven websites in seven languages to reach hundreds of millions of customers.
That’s why last year UK marketplace sellers achieved £1.8 billion of exports, a 29 per cent year-on-year growth.
Do you have an example of a small business exporting in this way?
A favourite example is Al Shariat, also known as ‘The Coconut Merchant’. Al began selling ethically sourced coconut-based products on Amazon in January 2015. Within a few weeks, he was making 100 sales a day. Initially, Al’s business had its own in-house fulfilment team, but before long it was achieving more sales than they could handle. So they decided to switch to FBA. This has enabled him to export to 27 EU countries and has given him access to hundreds of millions of customers worldwide.
If a business’s staff aren’t tech savvy, how does it make the most of Marketplace?
Selling on Amazon Marketplace is easy and small businesses can get started quickly — just upload images and descriptions of products and set their own pricing. If you know how to register as an Amazon customer, you’ll already know how to register as a business trading through Amazon.
If my business is just two-people strong, is it too small to sell through Marketplace?
Not at all. Businesses of all sizes sell on Amazon Marketplace. If you’re a small company, being able to essentially outsource your customer service marketing and logistics helps you focus on providing the best products you can for your customers.
If I already sell through my website, why would it be useful for me to be on Marketplace?
Many businesses sell on their own website and Amazon Marketplace, as well as other third-party sites. The key benefit of using Amazon is that it enables growing businesses to provide a first-rate customer service while giving businesses the potential to access hundreds of millions of customers worldwide.
Will Amazon sort out the postage and packing fees and that sort of thing – or is that something a small business must take care of?
Sellers on Amazon Marketplace can choose to manage their own inventory, fulfil orders from customers and provide customer service themselves. Or, with our FBA service, sellers can have Amazon warehouse, pick, pack, ship and provide customer service when their product is ordered. Either way, their product can be available and visible to customers locally and globally.