TORONTO – A union representing Canada’s 97,000 small businesses is suing Amazon.com Inc. from Ottawa. Is calling for more efforts to address the dominance of.
The Canadian Federation of Independent Business said in a report Thursday it wants the federal government to tackle e-commerce giants by modernizing competition laws to provide a level playing field for small businesses.
“E-commerce offers small businesses a lot of opportunities to expand and reach more customers, but they face an uphill battle when trying to compete with the online giants,” said Corinne Pohlman, executive vice president of advocacy at CFIB. have to do.” News release.
“Many small businesses looking to gain a foothold online will sign up for Amazon’s Marketplace, but many of them report that Amazon’s business practices can make it more challenging for them to compete.”
As a result, the CFIB thinks the federal government should use its ongoing review of the Competition Act to stand up for small businesses.
Its recommendation comes after Finance Minister Chrystia Freeland put forward amendments in September, including giving the Competition Bureau more powers to investigate price-fixing and manipulation and empowering the watchdog to prevent mergers that stifle competition. is proposed.
A final proposal calls for eliminating the efficiency defense – a provision that allows anti-competitive mergers to proceed as long as they generate efficiency gains that outweigh and offset the deal’s anti-competitive effects. .
Amazon spokeswoman Barbara Egret alleged that the data in the report was “selected to fit a false narrative.”
He said approximately 41,000 Canadian small and medium-sized businesses sold more than 100 million products through Amazon Canada’s online store in 2021 – more than 200 every minute. During the same year, these businesses averaged more than US$85,000 in sales.
“These numbers demonstrate that our partners are succeeding when they choose to use our powerful, cost-effective services,” Egret said.
He said Amazon is cooperating with the Competition Bureau, which began investigating the company for abuse of dominance in August 2020.
The bureau had asked the public to provide information on Amazon policies that may affect the willingness of third-party sellers to sell their products at lower prices on other retail channels and the incentives for customers to purchase products from Amazon rather than other sellers. Can affect. No action has been taken against the company yet.
“We know small businesses are facing challenges,” Nadine Ramadan, spokeswoman for Small Business Minister Rachie Valdez, said in an email. He said the government has worked to reduce credit card fees and taxes for small businesses.
“We will continue to be there to listen to small businesses, and we encourage Canadians to shop local this holiday season.”
The CFIB considers the Competition Act reforms important because Statistics Canada data shows that the growth rate of small businesses is declining, and fewer Canadians are choosing to start their own businesses each year.
Meanwhile, nearly 90 per cent of 3,607 small and medium businesses surveyed by the CFIB in October 2020 reported that Canadian small businesses are threatened by the dominance of large e-commerce companies like Amazon, Walmart and eBay.
By January 2023, 48 percent of the 2,423 small businesses surveyed said they were finding it harder to compete with the rise of digital competitors.
The report concluded that small businesses are “no match” for large corporations, which have greater negotiating power with suppliers and can offer more products at lower prices.
Tracy Rogers, who owns White Feather Holistic Arts in Windsor, Ontario, said she can compete with Amazon on price for items like crystals, jewelry and bath and body products, but not when it comes to Amazon’s lower shipping costs. If it comes to that then no.
“The reality is it’s an extremely difficult market for us to compete in because it eats up a huge portion of my profits to ship stuff across Canada,” he said.
“I don’t even bother with international because if I quote someone an international shipping quote, they get annoyed.”
The CFIB report said Amazon is the most popular e-commerce company in Canada, giving small businesses “no other option” but to set up a business profile on the company’s platform to compete and survive.
When they join the platform, the company’s strength becomes immediately apparent, CFIB said.
“Many members said Amazon encourages consumers to purchase its own products over similar products from other businesses,” the report said.
“Small businesses have reported that when a product they sell on the Amazon Marketplace becomes popular, Amazon will often start selling that product as well.”
According to the CFIB report, when Amazon starts selling similar products, small businesses find it harder to get inventory or materials from their suppliers.
The organization also described a slow complaint resolution process that favors small businesses and customers over the company’s collection and control of significant amounts of customer data.
“Amazon could be more transparent about its search algorithms and provide clearer guidelines to small businesses on how to optimize their listings for better visibility,” the CFIB said in a list of recommendations.
“Amazon can refine its marketplace policies to include more transparent and consistent terms of doing business, clarify fees, provide more options for recourse, reduce the number of disputed returns, etc. “
This report by The Canadian Press was first published Nov. 16, 2023.
Tara Deschamps, The Canadian Press