Why platforms like Facebook, Amazon and Walmart are trying to play nice with small businesses
On Sept. 18, Facebook announced a partnership with Macy’s to bring small businesses that already advertise with it into a pop-up marketplace coming to the department store this November. The same day, Amazon launched a new initiative called Amazon Storefronts, giving small businesses sellers a dedicated section to showcase their wares online.
These moves position both Facebook and Amazon as friendly corporate giants, as they both have faced controversy around their treatment of small sellers in the past. Amazon has received its fair share of criticism from small sellers claiming the platform is unresponsive and unfairly suspends accounts. Facebook, meanwhile, has appeared in headlines stating that small businesses are quitting the platform as their revenue suffers from policy changes as the platform battled fake news, Russian meddling and revamped algorithms.
But as much as these moves help with public relations, there are strategic businesses decisions behind extending a helping hand to the small businesses on their platforms, especially ahead of the holiday season.
For one thing, chasing big budgets from large companies might be how these platforms grow, but the advertising budgets and revenue small businesses bring in are their bread-and-butter. Out of the six million active advertisers on Facebook, the majority are small and medium-sized businesses, according to a Facebook spokesperson. And, on Amazon, half of all goods sold are from small and medium-sized businesses.
“The most solid long-term play is a diverse portfolio of clients,” said Alice Fournier, vp of e-commerce and digital at Kantar Retail. “The small-businesses play a key role in many ways, especially in keeping shoppers excited about unique, exclusive brands.”
Initiatives targeting small businesses aren’t new for Facebook and Amazon — small sellers are how they built their businesses before securing interest from larger corporations. But today, the competition to attract these small businesses is getting fiercer, and the desire to promote them possibly more pronounced as consumer demand rises.
Facebook’s and Amazon’s moves are the latest examples in the past month of platforms incorporating small businesses into a larger piece of their overall strategy. Some platforms, like Walmart, are jumping into the space for the first time. Last week, the department store made mom-and-pop shops the star attraction of its relaunch of its direct-to-consumer delivery site Jet.com. At the end of August, eBay expanded its Retail Revival program to more cities across the U.S, which educates small businesses about selling on the platform and the opportunity to participate in pop-up shops.
These platforms are now sprinting to gain favor with small businesses ahead of the holiday season, marketers said.
“Platforms like Amazon and Facebook are looking to the holiday season as a way to showcase success stories for small businesses, and to show they’re a viable resource and partner,” said Jesse Math, group director of paid social and display at PMX Agency.
“You could call it a race,” said Fournier. “Platforms understand the value of these brands to shoppers and so they are looking to bring in the best brands to deliver on experience and product.” She added that platforms also want to differentiate their offerings with unique finds that small businesses bring.
Not only are platforms acting like agencies and securing coveted physical and digital real estate for their small businesses, but are extending digital classes for small businesses that express interest. Facebook, for instance, launched its Facebook Community Boost events in November 2017, and continues to add cities to the lineup. In February 2018, Facebook also announced it would be spending $1 billion in small business initiatives this year.
The desire for platforms to promote small businesses today is likely more vital as consumer demand has risen. Studies finding that Gen Zers and millennials want to support small businesses contribute to the desire for platforms to bring more small sellers onboard as well, marketers said. A 2017 AT&T study of 5,000 consumers found that about half of millennials and Gen Zers are willing to pay more to support a small business compared to 38 percent of Gen Xers.
“Both millennials and Gen Zers have lost trust with big business,” said Brooke Tovar, director of client services at experiential agency Making Waves. “They don’t feel like big retailers know them. Small business remember their names and make them feel appreciated.”