Supply chain · 21 June 2016

Does Amazon Prime Now pose a threat to small business owners?

Amazon Prime Now
Amazon is offering free delivery within a two-hour window

The retail giant’s expansion into rapid delivery has been welcomed in the UK, but as it expands into France, the mayor of Paris has raised serious concerns about the company’s impact on the small business ecosystem.

Amazon’s Prime Now service launched in the French capital in June 2016 – and the city’s authorities were irked not to be warned in advance of its roll out. Free for Prime members, the service offers same-day delivery within a two-hour window in central areas of the city.

In a statement released by mayor Anne Hidalgo and translated by France 24, she said: “This operation is likely to seriously destabilise the balance of Parisian businesses.”

The mayor also called on Amazon to “guarantee that its approach fully respects local Parisian businesses and takes into account the absolute necessity of preserving their diversity”.

While third-party items from sellers using Fulfilled by Amazon (FBA) are sometimes on offer for Prime Now buyers, the vast majority are provided by the giant company itself – and Hidalgo expressed concerns that this will damage small local suppliers, as well as increasing pollution.

When Prime Now launched in parts of London in June 2015, it was met with a more enthusiastic response, with testers applauding the speed of delivery and selection of products.

In the US, where  the service has been in place for over a year and is used by 25 per cent of Prime users, small business owners have complained about the barriers to entry posed by its free delivery and hard-to-compete-with speed.

“Volume is everything in the retail business,” Patrick Donoho, president of the Maryland Retailers Association, told The Baltimore Sun. “Every time somebody clicks for Amazon, that’s a lost sale for a brick-and-mortar store. I call it death by a thousand clicks.”

When it was expanded to the North of England in December 2015, Prime Now also came under fire for making it easier for consumers to purchase alcohol. “We already suffer from some of the worst levels of alcohol harm in the country,” said Colin Shevills, director of regional charity Balance. “A doorstep delivery service can only add to the problem.”

For small business owners in London, however, it’s not all doom and gloom – at the beginning of June, a new AmazonFresh service saw the brand partner with independent food retailers to allow Prime members to do their weekly shop using the site.

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ABOUT THE EXPERT

Hannah Wilkinson is a reporter for Business Advice. She studied economics and management at Oxford University and prior to joining Business Advice wrote for Kensington and Chelsea Today about business and economics – as well as running a tutoring company.

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