A new report on Amazon’s third-party buyers argues that, rather than merely helping or hurting small businesses, the company has reshaped them in its own image, enlisting them as agents in its global expansion.
Third-party sellers account for the majority of Amazon sales, with 40 percent of those selling to US customers based in China. (VCG/VCG via Getty Images)
As Amazon has rapidly expanded, those who write about the company have struggled to find the words to convey both the scale and scope of the company’s operations. I often find myself describing Amazon as a country unto itself — or, more precisely, an empire, governed by its own Byzantine standards and laws while evading the laws of the actual countries in which it operates.
There is a ruler — Jeff Bezos, even though he has stepped down as CEO — and there are lesser officials, not just senior vice presidents but fulfillment center managers, human resources employees, and the heads of Amazon’s delivery service partners, which, while legally separate entities, pop up in Amazon’s wake and often exist solely to carry out its delivery needs, the separation so fictitious that many of their drivers wear Amazon-branded uniforms and drive Amazon-branded vans. Whether as employees (“Amazonians,” as the company calls its workers) or customers or somewhere in between, a growing number of us are changed by its rule.
A new report published by the independent research nonprofit Data & Society extends the metaphor. The report concerns Amazon’s third-party seller network, which accounts for the majority of sales that happen on Amazon. Exact numbers are hard to come by, but one analyst estimated that there were roughly six million unique sellers active on Amazon in 2021 and that nearly two thousand new sellers opened accounts every day. Moira Weigel, a professor at Northeastern University, conducted forty interviews with current and former Amazon sellers based in the United States, Singapore, Hong Kong, and China. (While the company has failed to make direct inroads in China, the number of third-party sellers based there has skyrocketed in recent years: roughly 40 percent of the businesses selling to US customers through Amazon are based in China.)
Amazon often touts the numbers of third parties that sell through the site in response to critics who describe the company as a monopoly that has had a deleterious effect on the mom-and-pop businesses that are so esteemed in US political discourse. As Bezos told the US House of Representatives in July 2020 when he was called to defend Amazon against charges of anticompetitive behavior, “Amazon’s success depends overwhelmingly on the success of the thousands of small and medium-sized businesses that also sell their products in Amazon’s stores.” But rather than merely refuting Amazon’s claims regarding its effect on corporate consolidation, the report argues that the problem goes well beyond the scope of the standard story.
According to Weigel, merely viewing Amazon as an anticompetitive monopoly understates the transformation that has taken place among small businesses on the site itself. In reality, sellers on Amazon are less like independent entities and more like a hybrid of gig workers and day traders.
They’re gig workers in that Amazon shifts risk onto them, much like Uber and Lyft do to their legions of drivers. Yet these sellers are also denied the freedom entrepreneurship can entail, instead subject to the toll Amazon charges for the use of its platform; studies find that sellers pay Amazon an average of 34 percent of each sale (though, unlike gig workers, they still retain the possibility of striking retail gold, however faint it may be). As for the day trader comparison, it comes from sellers’ speculation on the global marketplace based “on their location — physical and social — relative to Amazon systems.” For a third-party seller, the imperative is to take advantage of market inefficiencies before another shift in those systems takes place.
Sellers on Amazon are less like independent entities and more like a hybrid of gig workers and day traders.
In other words, third-party sellers are not only dependent on Amazon but made in its image and beholden to the vagaries of company policy to stay afloat. At times, they compare the combination of instability and demands that their position entails to addiction: “Several shared that they were in recovery from addictions to drugs or alcohol and considered Amazon a substitute.” They express pleasure in the “hustle,” but it is inextricable from anxiety.
Many sellers joined the marketplace in the wake of the 2008 recession, and the majority had no prior retail experience. They turn their homes into mini–fulfillment centers and their cars into delivery vehicles. They take on debt to purchase ads on the platform and price items below what would constitute a profit so as to gain prominence in Amazon’s rankings. While a seller used to be able to get a human being on the phone to help with any account issues, Amazon automated its support team for US sellers in 2018 — one seller in the report spent $60,000 a year to retain Amazon support staff who otherwise are nearly impossible to reach. They are, as their own words evince, agents of Amazon, not so different from officials in the far-flung outposts of empire in eras past.
Colonial metaphors abound in Weigel’s interviews. As she told Motherboard, Amazon is a “sort of para-state that’s effectively governing global trade and global commerce in different ways.” Sellers demarcate the eras of Amazon’s marketplace into the Old Days, the Wild West, and the Jungle. They are exploring the frontier, settling new land, delving into wild, lawless, sometimes dangerous outposts. They grant Amazon access to new territories and state resources, ambassadors of a project much larger than themselves.
One interviewee jokes about Amazon exposing them to “the law of the jungle.” It’s agency, but of a certain kind: derivative, constrained, predicated on accepting Amazon’s rules and subject to the volatile dictates of a distant crown that can either aid or abandon its functionaries.
On the one hand, my interviewees were suggesting that Amazon’s marketplace itself was a frontier. These analogies cast the speaker as a conquistador, homesteader, or 49er, racing competitors from around the world to claim their piece of the terrain that Amazon had made it possible to seize from brick-and-mortar retailers. Yet, if sellers were imagining Amazon as a territory, they frequently spoke of its state-like authority, too. Amazon created programs that sent aspiring sellers all over the world — to struggling Big Lots stores in Missouri, sourcing fairs in New Delhi, and factories in Guangdong — to claim ever more resources for the company. In this respect, my interviewees seemed to imagine Amazon not only as the ground that they were trying to claim but also as the distant crown or state on behalf of which they claimed it.
But rather than a contradiction, these descriptions reflect an ambivalence among Amazon’s sellers. They have agency, sure, but are reliant on Amazon, hitching themselves to a largely opaque institution in hopes of gaining hold of some of its terrain. “You’re playing in their sandbox,” as several interviewees tell Weigel. Mandates from on high and algorithmic tweaks can determine sellers’ choice of products, their marketing strategy, and even their geographic location. Weigel calls the dynamic “trickle-down monopoly.”
While one might assume sellers largely consist of people who had preexisting businesses that they then brought onto Amazon’s marketplace to grow their customer base, almost every success story of which Weigel hears concerns an Amazon-native business; those who invented or designed a product in a context outside of Amazon struggled to compete and protect their products from counterfeits. Such Amazon-native businesses can be divided into three categories: arbitrageurs, who buy products in order to resell them through Amazon; brand owners, who develop and trademark or patent new products to sell through Amazon; and global sellers, who use Amazon’s services in order to develop or brand products for sale in foreign markets.
A sense of conquering abounds. But the interviewees have more than only colonial metaphors on hand. After all, while Amazon’s founder has global ambitions, he also has extraterrestrial ones: Bezos stepped down as CEO in part to devote more time to Blue Origin, his spaceflight company. Fittingly, then, sellers compare the COVID era of startlingly rapid growth to riding a rocket ship. The rocket, writes Weigel, “is a site of exploration by brave and talented individuals who are, nonetheless, acting on behalf of and backed by the power of their distant nation.” It is also a highly risky place to be.Original post