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Are Amazon and SMEs incompatible?

December 6, 2019

Why small businesses shouldn't be intimidated by e-commerce.

We have to bring customers back to town, that is the priority, and not encourage them to order online.

These words are those of Fabrice Antoncic, president of the association of Rouen merchants. Like him, it is clear that the world of small business and national entrepreneurship is wary of e-commerce ... and more particularly of Amazon. The sentence we are quoting, Fabrice Antoncic addressed it to the CCI of Rouen which decided to host the Amazon Tour in the city. Workshops led by a representative of the Amazon Marketplace, with the aim of training merchants interested in the subject of online sales. The reception of this initiative has been more than mixed. The traders pointing an unwelcome event, irrelevant and outside the interests of the city. Amazon and PME would be incompatible?

On the contrary, we know at Bizon that it is in the interest of local SMEs to train in Amazon and in e-commerce precisely because they place themselves in a context where online sales can represent for they a viable solution… and secure their future.

At Bizon we think it is a mistake to think that e-commerce and SMEs are incompatible. On the contrary, the first is a huge springboard for the second. Let's talk about it.

Why the Rouen CCI initiative between SMEs and Amazon should be welcomed

The fact is rare: public establishments which encourage and seek to sprinkle a little innovation within their local ecosystem, that does not happen every day. Here, what makes your teeth cringe is the presence of Amazon in the equation. Like a witch hunt, local merchants are worried about their profits suddenly being wiped out, so they point the finger at the American giant. As if the local coexistence of these two modes of distribution (from which they can take advantage) was definitely impossible. For that, we support this position!

Like YouTube and television, Amazon and the physical store do not directly reach the same audience. The two share an audience that will potentially opt for the two instead of making a choice. A study by the FIFG indicates that in certain segments consumers n have no preference between buying online or in store. The necessities are even ultra dominated by physical stores. Also, e-commerce represents a small 9% of the amount of expenditure made in store.

Let's put the weight of e-commerce in relation to traditional retail. Its growth is impressive, of course, but there is no risk of one sector being destroyed by another. This is even an opportunity for French companies! What is certain, however, is that as YouTube has led television to rethink its model. Amazon will cause commerce to change in much the same way.

Another point: imagine that Amazon suddenly ceased its activity. It should not be assumed that all of its turnover would go to physical stores! Internet users would turn to other e-commerce offers, perhaps French, but the problem would be the same.

Because yes, consumers are very fond of the Amazon offer and online sales, it is a fact. FEVAD estimates that 8 out of 10 internet buyers intend to buy on the Internet for the Christmas holidays. There is a real niche to invest! People are looking for services like those offered by Amazon, with choice, faster deliveries, and certain benefits that physical stores don't have. For that, depriving yourself of a presence with the tenor of online sales is a shortfall. The solution is to combine digital and physical channels… and on the web, it's Amazon the most powerful.

For French entrepreneurs, it is a chance to seek two different targets who consume differently. An opportunity to increase the points of contact with their buyers. Let’s give added value to trade “in real life”, offer the consumer experience, give even more interest to the sales profession. And more than that, let the channels coexist: they complement each other!

The eternal debate on job destruction

Even more recently, these apprehensions have been seen in another position, that of Mounir Mahjoubi. In a long note published on his site, the former Secretary of State for Digital reviews the opening of Amazon warehouses. He judges that the latter cause more jobs to be lost than they allow to be created.

At Bizon, we believe the debate is not there. Whether in France or elsewhere, Amazon warehouses will be inaugurated and online orders will be made. The question is rather: do we want to let the niche pass on the largest Marketplace in the world? The FEVAD figures are formal, it is Amazon which dominates the e-commerce sector in number of visitors. In the fourth quarter of 2018, Amazon represented 72 billion in sales in the world. To give an element of comparison, CDiscount, does almost 30 times less over the year.

So yes, like Mr. Mahjoubi, we can encourage French companies to favor “national” channels like CDiscount or Fnac. We are obviously for this idea, the point is not there. What we are suggesting is that in terms of development, it would be a shame to do without platform number 1: not sure that sulking Amazon is good for French SMEs or for their jobs.

Amazon is a medium, let's make it a showcase of French quality… and reconcile Amazon and SMEs

Admittedly, this is new, it requires rethinking the ways of selling and it can be scary, but it is necessary. If a French brand wants to develop its activity and reach a maximum of people, being present on Amazon is almost inevitable. More than that, it is a real act in favor of French quality in the face of products that are often too low in quality that can be found online. Let us defend French companies which have quality products at heart. Let’s make their offer accessible to as many people as possible, throughout France, Europe and more!

Amazon is a distribution network, of course, but also where the reputation of brands and products begins. Whether businesses avoid the site or not, consumers will still go there to find out. In 2016, BloomReach claimed that 55% of consumers started their search products on Amazon: it's more than on Google. (Update 2020: eMarketer estimates this figure at 49%)

Source : BloomReach

For this reason, a business has every interest in shaping its image itself rather than being dependent on resellers. And it is clear, as we mentioned on this blog, that a majority share of sellers of the Marketplace are Chinese. At a time when these shops prempt global e-commerce, French companies should not miss the boat. With this encouragement to flee Amazon, that is what could happen. Valuing the know-how of French companies also means ensuring their presence on the first media consulted by Internet users when they inquire to buy. We have so much to put forward in France so let's do it!

Encourage innovation rather than fear it

French SMEs offering an innovative concept that are breaking online, there are many. Today, we are no longer wondering if launching out on the web and a fortiori on Amazon is a development opportunity: we know it. Even more so when the French territory is full of entrepreneurs with brilliant ideas.

Enterprises like Alan or Payfit, whose concepts sometimes seem obvious, shake their respective industries. This is also perhaps what is involved in this distrust, of fears of not succeeding in following the movement and being replaced.

We saw earlier that this was not automatically true. We prefer daring to these fears: at Bizon, we have been fortunate on our side to accompany clients on Amazon and to see them deploy there. Jeff Bezos’s business is unlikely to collapse by tomorrow. In the meantime, we must use it in the best possible way. It is our job today and the mission that drives us.

We consider that it is more productive to push companies towards additional turnover on the digital rather than to maintain an apprehension which does not have to be and which will make them miss the train of innovation. Rather than being afraid of Amazon, let us rejoice in the opportunities it brings to French companies and make Amazon the engine of SMEs!

Guillaume Rigallaud


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