E-commerce has certainly come a long way since the days of purchasing a product online and hoping they’ll arrive by mail the next day. For the last couple of years, Amazon has been king of the hill. 

With just a tap on your phone or a click on your laptop, you can conveniently order from Amazon Prime and receive your items within a day. The abundance of products available seems like a boon for consumers. Yet Amazon’s dominance is affecting the ability of small businesses to connect with customers, leading to a skewed e-commerce environment.

It’s been reported that Amazon accounts for 38% of all internet sales in the U.S., which is 32% higher than its closest competitor, Walmart. The price, quality, and general supply of products as well as the ability for small businesses to compete in a rapidly expanding landscape are all being hugely impacted by Amazon’s dominating share.

How It’s Affecting Sellers and Consumers

As a massive manufacturer, Amazon holds the power to set new rules for online retail that no other company can. High refund and shipping fees can equal a third of the price of a product, even if it doesn’t successfully sell. This is a huge issue for the almost 2 million small businesses utilizing Amazon as a platform to connect with customers.

And if there’s still doubt that Amazon is, in fact, monopolizing the market, the numbers speak for themselves. It’s reported that 95% of third-party sellers fail in their first year of selling on Amazon. It’s almost impossible for a small business to thrive on Amazon unless they can navigate these expensive fees.

Amazon’s enormous data pools containing customer purchasing habits provide a huge advantage for them over other retailers trying to reach their customer base. Because of this, Amazon can fluctuate prices hundreds of times a day, often decreasing to undercut smaller sellers and ultimately putting these smaller sellers out of business.

The recent Federal Trade Commission (FTC) lawsuit against Amazon for anti-competitive practices is just the tip of the iceberg in terms of rethinking the way online retail operates. For example, Open Commerce is an alternative retail model that benefits both the small business and the consumer alike.

How Data-Driven Open Commerce Can Help

Open Commerce aligns sellers with consumers to create a digital marketplace that simplifies the buying process. By aligning themselves with AI, this new model can be powered with streamlined processes and greater efficiencies. For example:

1. Better Inventory Management: Data-driven algorithms can determine optimal stock levels for stores – which helps organizations maintain appropriate inventory levels. This leads to reduced stock-outs and reduced inventory obsolescence.
2. Product Authenticity: Approximately $4.5 trillion in counterfeit goods are sold each year, creating uncertainty for customers regarding the authenticity of the products they purchase. AI applications using machine learning are becoming more adept at spotting inconsistencies and defects in pricing and inventory. This can be used to confirm the authenticity of products, safeguard customers against counterfeit products and prevent reputational harm to honest businesses.
3. Reducing Counterfeit Risks: Utilizing AI, Open Commerce platforms can effectively monitor product origins and seller behaviors by managing the relationships between brands, distributors, and retailers. By reviewing the flow of products, AI can easily identify suspicious activities, such as counterfeits, and facilitate their removal from the platform. Additionally, AI is becoming increasingly adept at spotting inconsistencies and defects in pricing and inventory, enhancing the overall integrity of the marketplace.
4. New Payment Solutions: This technology facilitates emerging peer-to-peer payment options with reduced transaction fees, enabling small businesses to retain more of their proceeds and strengthen relationships among all members of the supply chain.

Creating a Fair and Transparent Market

Open Commerce platforms can help create a more level playing field for small and medium businesses by using AI. Reduced costs, improved efficiencies, and product authenticity can enable these businesses to compete more effectively against the Amazons of the world. This promotes a healthier market environment and builds customer trust and satisfaction.

As Amazon continues to use its share of the market to further dominate the retail industry, it’s evident that we need different options that promote fairness, transparency, and innovation. Open Commerce platforms, with the capabilities of AI, represent such a solution that holds the entire retail ecommerce space accountable. It establishes a system of checks and balances that prevents any one entity from achieving unfair dominance.

How This Impacts the Consumer

For sellers, particularly small businesses, Open Commerce provides a fair opportunity to compete. They are not as heavily impacted by excessive fees or unfair practices and can instead focus on offering good products and excellent customer service. For consumers, this means lower prices, authentic products, and a more trustworthy customer experience.

About RedCloud   
RedCloud Technology, founded in 2012, stands as a “Rebel Alliance,” leading a bold, second-generation e-commerce transformation. Rejecting the high fees of tech giants, RedCloud leverages AI-driven supply chain solutions to empower smaller businesses, giving them the tools to compete with major corporations. Their democratized, cloud-based platform provides real-time financial visibility, offering a level playing field that breaks free from the dominance of conventional marketplaces. RedCloud embodies a fairer, more inclusive digital commerce future where Davids can stand tall against Goliaths. For more about RedCloud Technology visit their website at https://redcloudtechnology.com/. 

About the author

Justin Floyd is an award-winning entrepreneur with a 25-year track record of founding and investing in pioneering technology companies solving the world’s biggest economic and social challenges. He founded RedCloud to address fundamental issues with the global supply of consumer goods that prevent brands, distributors and retailers in fast-growth economies from trading efficiently, transparently and cost-effectively with one another. Floyd’s previous experience includes founding and running cloud intelligence company Vecta and co-founding transatlantic fintech company CC. He is twice a regional Ernst and Young Entrepreneur of the Year finalist, four times a Red Herring 100 winner, a Finalist Codie award winner, and a Fast Track 100 finalist.