The Death of the Mom and Pop E-Store

Amazon basically uses third-party sellers to outsource product discovery risk. By pressuring / enticing sellers to use Amazon's fulfillment platform they know where those sellers get their products from, and if a given product becomes very popular they can just contact the manufacturer and sell the product themselves, cutting out the third-party seller. It's understandable that sellers love the high reach they can get on Amazon, but by selling on the platform they provide Amazon all the information they need to eventually kill their business (except if they're producing the good they sell, in which case Amazon might have more difficulty cutting them out). In my opinion this is a gross misalignment of incentives, as the platform operator has a direct incentive to put you out of business as soon as you become successful.

A legitimate mom-and-pop is never going to compete with larger retailers for commodity items like PC components. They don't have the buying power, they don't have the economies of scale and they can't offer meaningfully better support or curation. The "mom-and-pop" retailers who can compete are generally doing something shady, from grey imports to outright counterfeiting.

That's far from the case in all verticals. I have bought tons of stuff from small specialised online retailers, because they can meaningfully compete in niche markets. If I want a woodworking tool, my first port of call is Workshop Heaven, because they sell a carefully curated selection of extremely high-quality products. Everything they ship has been QCed by someone who actually knows about tools, so I'll happily pay a premium in the knowledge that I'll never get a dud. I'll buy a tool from a brand that I've never heard of, because I trust their curation. I look forward to seeing their newsletter in my inbox, because it usually highlights cool new tools that I haven't heard of.

IMO, the future of mom-and-pop retailing doesn't look like mom-and-pop retail - it looks like a boutique. A small selection of carefully curated products, a fanatical commitment to quality and genuinely useful pre- and post-sales support. To survive in a post-Amazon world, small retailers need to evolve into niche brands in their own right.

Its amazing how technology has failed at democratizing commerce , and everything really. In the early 2000s it was all about decentralizing, democratizing , empowering the small units. Nowadays, from tech stacks to marketing channels it 's as if there is a conspiracy to keep centralizing.

Consolidation happens in every economic wave, but this feels premature.

I run a small online store, we focus on a particular niche tech, LoRaWAN. It's specific enough (at the moment) that there aren't many other folk in this area.

We started out with Shopify, but that's actually really limited in functionality unless you spend many $100s per month on apps to add basic stuff (like VAT handling). We switched to a self-hosted shop, which feels totally old skool but is working out pretty well. We're happily charging cards and shipping stuff all over the world.

Our thing is knowing the products and providing support, so I think that has some value. If you want a boxes shifted cheap then Amazon's your answer. Anything cleverer, then specialist retailers still have some real value.

Anything related to electronics and photography and supplies I buy at BHPhoto.

Why - because BHPhoto:

- Has excellent support, refund and matching policies.

- Does not charge sales tax (imagine that!) if you use their Payboo card. Actually they officially charge sales tax but it gets immediately refunded so you don't pay it.

- Does not carry counterfeit junk or faked-up crap with fake reviews from shady sellers like Amazon or ebay does.

- Offer free shipping

Smaller e-tailer and retailers cannot compete with BHPhoto refund policies and cannot compete with sales tax compensation policies (thanks government for enforcing sales taxes all over).

Support and guarantee of quality products is more important to me that 2 days shipping.

I'm in this space. There are just so many ways to reach potential customers nowadays each with their own audiences. Although marketplaces still rule, I’m beginning to see the trend that savvy long-term businesses who want to protect their upside and own their customers are beginning to focus more of their efforts on their own properties (à la Shopify, WooCommerce, BigCommerce, Squarespace, etc) while treating the marketplaces they sell on as marketing channels. It’s already becoming commonplace now for a retailer to be on a wholesale platform, a few marketplaces, have their own website, and also sell in a brick & mortar location.

Shameless plug: I work on Trunk [0] which helps businesses sync their inventory in real-time across everywhere they sell. The long-term vision is to make selling on multiple places just as easy as selling on one!

[0] https://www.trunkinventory.com

An amazon business story from Germany. I’ve opened a brand new amazon business account for a brand new company (VAT number present, HRB number present). I wanted to link a bank account to this amazon account, as one would do in Germany. This did not work, for whatever reason.

However, amazon offered my company a €1500 credit line. I had to immediately buy a printer and a couple of 27” screens. I used the credit line. I also used a director’s home address as a delivery address because, you know, why would you sit at an empty office and wait for shipment.

They have shipped the order, the invoices have been paid. One day after the invoices have been paid, I received the email that the business account has been suspended because of “reasons”.

Obviously, they did not say what the reasons were. They asked me to FAX to them director’s personal information (passport scan, proof of address), without giving any info on what are they going to do with info. I contacted them via their support website, because there is obviously no number to call or an actual person to contact. I have no idea how do they run their business in Germany without this kind of info, their business unit has an office in Germany, Regensburg, I believe.

In response to my contact, they sent me just blanket emails repeating their requests.

I just dropped it and stopped buying via Amazon. No more personal or business purchases anymore. Bye amazon.

The best was 6 weeks later, their business manager sent me a request for feedback on what my experience with amazon business is like. Well, they never came back to me after receiving a sour, detailed comment.

I avoid doing any kind of business with amazon AND aws since then. I give money to German businesses. I will never send them any official documents via scans. All the info they need is in commercial register but they are too lazy to figure things out.

Bye amazon, only when the hell freezes.

* Edit: I’ve been a loyal amazon and aws customer for 7 years. Burned thousands of Euro with amazon and aws over the years through different ventures. However, their attitude and behaviour regarding the info which only governmental organisations should be asking for, turned me completely away.

I understand they have a fraud department and what not, and maybe they have a good intent. However, this being amazon “business”, I expected them to know how to do business. Companies have registered addresses, phone numbers, list of shareholders and names of directors are publicly available. There are more suitable channels than blanket emails, faxes and scans.

At least in Europe (I mostly buy from Germany) there still seem to be a high number of these smaller E-Stores.

In fact everything thats more expensive than ~100€, I‘ll search for on my favorite price comparison website. Very rarely Amazon has the best offer and ordering from a small E-Store isn‘t any more effort than ordering from Amazon, when they offer payments via PayPal or Amazon Pay.

When ordered before 18:00, almost all vendors nowadays will ship the same day and the products will arrive on the next one, just as when ordering from Amazon.

I recently purchased a product sold on Amazon, but deliberately purchased it from the manufacturer, via their Shopify site, to support them more.

Six days later, it arrived.

From an Amazon warehouse. In an Amazon box. Sporting a bright white ASIN sticker.

Hmmmmmmm.

Mom and pop are drop shipping these days, it's much cheaper but less fun (and less work) for them.

I find that a little sad too. I am also starting to wonder if big companies are actually creating wealth like it usually is said. Or maybe they just concentrate wealth that could have gone to a lot of smaller players towards themselves and in the end it's just a zero-sum game.

Shopify enables new generation of Mom & Pop E-Store :)

It’s some deja vu that Walmart was branded as the place that killed mom and pop stores some 10+ years ago, and now Amazon is the place killing online stores (and partly Walmart) since ecommerce has taken off in recent years.

Amazon’s golden goose has been their logistics. It creates a company that is like ebay+ups together. Mom and pops may have the same wares as amazon, but the shipping and order efficiency is a tough gap to close against amazon. Getting an order packaged, to the courier, and in transport for delivery still takes time and people for most ‘mom and pops’. It’s like trying to build a faster locomotive to compete with the company that owns the railroad.

Its big fish eating smaller fish. Most commerce goes like this: Person A buys from person B who buys from person C. Put yourself in between and take a cut, or run a service to make the chain more efficient/convenient. Or add a link to the chain.

I love shopping at smaller retailers that sell great products. In fact, my main problem is finding them. Does anyone know of a website or something that promotes niche retailers in different categories?

The software side of it has not helped. I blame the state of frontend web development rather than databases, payment gateways and other backend aspects.

Not every mom and pop store has a six figure sum to throw to an agency for them to spend six months under delivering a website for them with the 'latest agile methods'.

We sort of have ourselves to blame, the hubris and pathetic development approaches that go with ecommerce have killed the market for mom and pop ecommerce stores.

This is really bad for web development, the customer and the independent retailer.

There are many edge cases on dimensions other than product.

I live on a small island that enjoys US Postal Service by boat. Amazon will ship to me. The high number of mom-and-pops that aren't set up to ship to me creates a situation where, if I need something Amazon doesn't have, I usually have to send it to someone in the US and once enough stuff builds up, they ship a package to me. This holds true even for international shippers (e.g. an Etsy seller in Europe is more likely to ship to the US than to me).

I'm not sure this is true as presented. I agree less and less people run their own sites. But I don't know if this is because customers prefer platforms for cyber security reasons, or if it's also a value proposition for sellers (e.g. not having the headache of keeping a site running so you can focus on selling).

For hobbyist materials, eBay is still great. For bespoke goods, Etsy is unbeatable and you can even build relationships with the sellers.

When was the last time we bemoaned the fact we don't have to call a travel agent to book a flight, or that we needn't pull out our yellow pages to find a cab company when we need to go to the airport?

The march towards efficiency is a never ending one, for better or worse. Mom and pop e-stores were a go-between that except for specific niches are likely casualties of that march.

>Many sex toy and adult novelty manufacturers refuse to sell their products on Amazon, or even offer wholesale products to any vendors who have an Amazon or eBay presence3. Mostly this is due to the influx of potentially counterfeit products.

This is incorrect and shows the author does not understand the topic. The primary reason people don't want to sell to Amazon sellers is that it leads to price erosion. Amazon sellers compete on price, which has negative effects for other channels; retail stores will see products selling cheaply on Amazon and won't be willing to pay your regular wholesale price.

Obviously, selling wholesale to someone who sells on Amazon doesn't make the counterfeit issue any worse.

55% of Amazon sales are from 3rd parties, which are largely small businesses.

I like that this article actually takes a nuanced approach and describes the pros on both sides. Most writing on this I see doesn't.

I believe there is an inevitable tension between centralization and decentralization. The former gives you:

- Usability. Look at fifty product pages on Amazon and you can easily scan each one since they all have the same layout and user experience. You don't have to hunt through fifty different web designs trying to find the price. You don't have to figure out if this page includes the shipping in the price while this one doesn't. Consistency is one of the keys to usability, and centralization gives you this.

- Economies of scale. A mom and pop store likely can't afford to roll their own crypto, fraud prevention, 24/7 support, etc. But when a single organization moves enough product, these kinds of things enter the realm of affordability.

- Predictability. Consumers can accurately predict how their experience is going to go. Fewer unpleasant surprises because they are likely dealing with the same branch of one giant organization every time. Walk into a McDonald's anywhere on Earth and you mostly know what you're going to get. That can be a real relief when you just want a safe experience.

But you lose:

- Innovation. If changing the layout of a design affects a hundred million pages and a billion users, it takes a hell of a lot of work to get everyone on board to ship it. It's much harder to just throw stuff at the wall and see what sticks.

- Resilience. A centralized organization is basically a monoculture, and suffers the same risks as biological monocultures. A single vulnerability or bug can take down the entire system because every part of the system is identical, including having the same weaknesses. When you have a lot of diversity and redundancy in the system, much like genetic diversity, the system is more able to respond to a surprising condition. There may be some winners and losers, but the whole system won't lose, and then can learn and adapt from the winners that remain.

- Novelty. When it's all the same, the time you spend interacting with the system becomes less personally enriching. No one writes an entry in their diary about the 523th burger they had from McDonald's. The stories people remember about their lives -- especially when interacting with businesses -- are almost always unique experiences with small enterprises. The family-owned hole in the wall restaurant, the tiny labor-of-love tabletop game store, the three-partner law firm that helped them navigate a crisis.

The important part is that each of these pairs of points are diametrically opposed. Gaining one sacrifices the other, so there is no perfect solution. Just trade-offs. Which means what we probably need is a meta-diversity -- a range of businesses at all scales. Accept that some big businesses are good. Sometimes you just want to complete a transaction or eat a damn burger. But also support a thriving set of small and medium-sized businesses for when you want something more lively.

One thing I really worry about the US is that government and incentives today clearly push towards a mono-scale where almost all successful business are big. I see few forces to combat the economies of scale and the power that large corporations wield, so we're heading towards a world where there are only giant mega-corps.

He, who has the biggest, fastest computer wins.

And the birth of the Mom and Pop E-girls.