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Amazon’s Powerful Grasp on the Economy / By: Ernest Gontarz

In 2008, most people did their Christmas shopping in a brick-and-mortar store, such as Walmart or a local mom-and-pop shop. Today, shopping looks very different. People can purchase almost anything online and sometimes even get it the same day on their doorstep. Rayteng Skotmyr, a sophomore at Whitney Young, says he “love[s] it, the delivery is quick plus the prices are nice.” The expansion of marketplaces like Amazon have dominated the e-commerce market for a while. Insider Intelligence found that “Amazon sits at the top of US e-commerce, accounting for 37.6% of sales this year” (Feger, 2023). Some fear that this “domination” is bad for small businesses, making it hard for brick-and-mortar stores to thrive.

The first year where Amazon was able to turn a profit was during the 2001 Christmas season, seven years after Amazon’s conception (MJE, 2023). After this, the company started to see positive profits, with the first full year of profits in the year 2003. The company’s most profitable service that many people recognize today is Prime, which helped skyrocket Amazon’s profit later on. With Prime, Amazon was able to increase spending among members with their incentives. The Michigan Journal of Economics mentions how “a Prime member’s average spending rate was $1,400 per year through Amazon, while non-members only spent roughly $600 yearly” (MJE, 2023). Combined with the COVID-19 pandemic, Amazon has experienced exponential growth going forward.

One negative consequence of Amazon’s rise is the negative toll on local businesses throughout America. With the increased convenience that Amazon offers busy Americans, it seems to be obvious that less people are doing in-person shopping. With the filing of a 2023 FTC lawsuit alleging “Amazon is a monopolist.”, Amazon is under fire for its manipulative market practices (FTC, 2023). However, many small businesses have a positive outlook on the future, as competition has always existed. Michael Alter, a Clinical Professor of Entrepreneurship at University of Chicago, mentions how “other players like Chicago-based ShipBob have built great businesses, helping serve these smaller retailers to be cost and service competitive with Amazon”. Small businesses can capitalize through different means to gain a competitive edge. Overall, while small businesses might not be able to compete directly with Amazon in many sectors, small businesses will be able to adapt to the market and be able to compete with Amazon and other major retailers in different ways.



  • Michael Alter - Clinical Professor of Entrepreneurship

  • Rayteng Skotmyr - Student at Whitney Young


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