Amazon Is Quietly Testing a New Feature That Is Going to Be a Game-Changer for Small Businesses

When they  think of Amazon, most people probably think of a massive, faceless company that will deliver just about anything to their home in a day or two. It’s hard to beat the convenience of Amazon, but it’s also hard not to think about whether that money would be better spent with a small business instead. 

Of course, for most people, most of the time, convenience wins. A lot of people will tell you they care very much about supporting local businesses, but if the local business doesn’t have a website or an app, or if it’s raining out, or if they’re just too busy, it’s hard to beat ordering from Amazon and having it delivered to your door for free if you’re a Prime member. 

It makes sense then, that one of the big criticisms of Amazon is that it makes it harder for small businesses to compete. That’s certainly a valid critique, and there is no question that many of Amazon’s business practices are hyper-competitive, to say the least. 

Except many people would be surprised to know that more than half of all sales on Amazon.com are with third-party sellers, many of which are small businesses. Those people would be surprised because it isn’t always clear whom you’re buying from when you order something on Amazon’s website. 

Not only is it Amazon’s website, but the transaction shows up as Amazon on your credit card, the product is shipped to you from an Amazon fulfillment center, and there’s a good chance it will be delivered by someone driving a van with a giant Amazon logo on the side. It’s easy to see where there is confusion. 

Now, however, Amazon is trying to make it easier for you to tell when you’re buying from a small business. Yesterday, Amazon began quietly testing a “Small Business” badge to identify products sold from third-party sellers that meet its definition of a small business. The idea is that it lets buyers know when they’re making a purchase not from giant, mega-corporation Amazon but from a small business. 

Here’s how the company described it in a statement to me from Keri Cusick, Amazon’s director of small-business empowerment:

Products from small and medium-size businesses account for more than half of everything sold in Amazon’s store. While we’ve hosted a dedicated Support Small storefront for many years, and continuously celebrate the stories of our small-business partners, customers often don’t realize they’re supporting one of nearly two million independent businesses when shopping on Amazon. That’s why we’re excited to share we’re testing a Small Business badge–to make it easier than ever for customers who want to identify products from small-business brands and artisans in our store. We’re starting first by testing the Small Business badge on a subset of eligible product detail pages in the U.S., and plan to expand further as we learn how the badge can best help customers discover small-business products they love.

For now, it’s just a test, meaning Amazon might change its mind altogether. Or you might see badges on different items at different times. Right now, Amazon is deciding which items to show the badge, and small businesses can’t request it be added. Amazon does say it plans to add additional discoverability features in the future. Like, for example, the ability to search specifically for those sellers. 

There have been plenty of articles written about Amazon’s relationship with its third-party sellers that don’t make the company look good. It also hasn’t always made it easy for small businesses to compete on its platform. 

For example, the company announced it would add a 5 percent surcharge for sellers that use its fulfillment service in order to cover the increase in fuel prices. That’s despite the fact that gas prices have fallen from their high in early March. 

Small businesses that depend on Amazon’s fulfillment service don’t have a choice. It’s not like they can suddenly build their own warehouse and shift that part of the business to a third-party shipping service like FedEx. They just have to take it out of their profit or pass it along to their customers–neither of which is a great option. 

In addition, the Securities and Exchange Commission is reportedly investigating Amazon over the way it handles third-party-seller data. Two years ago, The Wall Street Journal reported that the company was collecting data from sellers on its website and using it to undercut them by launching competing products of its own. 

Those are valid critiques, and Amazon should do better. At the same time, I think it’s worth highlighting the fact that Amazon is making it easier for people who want to support small businesses to do just that. For those small businesses, it could be a game-changer. When faced with two products, one of them from a small business, some number of people are going to choose to support the small business.

Those are sales a company may not have made otherwise. Amazon doesn’t necessarily make more money when people support small businesses–it’s not charging businesses to carry the badge–but it’s still the right thing to do.