Strate­gies for com­pa­nies con­cerned about Ama­zon wage hike


NEW YORK Ama­zon’s plans to pay all its U.S. em­ploy­ees at least $15 an hour is putting pres­sure on small busi­ness own­ers, even those who aren’t re­tail­ers di­rectly com­pet­ing with the huge com­pany.

“Ama­zon is giv­ing a kick in the butt to a lot of busi­ness own­ers to in­crease com­pen­sa­tion,” says Gene Marks, owner of The Marks Group, a small busi­ness con­sult­ing firm in Bala Cyn­wyd, Penn­syl­va­nia.

Small busi­nesses lo­cated near Ama­zon’s dozens of or­der ful­fil­ment­cen­tres vie with the com­pany for staffers, and the com­pe­ti­tion will be­come even fiercer dur­ing the up­com­ing hol­i­day sea­son, when Ama­zon needs an ex­tra 100,000 peo­ple to pack and ship boxes.

Ama­zon is “do­ing what they need to do to get em­ploy­ees,” Marks says.

The com­pany, whose mar­ket value briefly topped $1 tril­lion last month, has an­other mo­tive — placating crit­ics in­clud­ing some politi­cians who have called on Ama­zon to give its em­ploy­ees a raise.

The strong econ­omy and shrink­ing labour pool has made work­ers hard to find for em­ploy­ers of all kinds, in­clud­ing big re­tail chains, fast-food restau­rants and small busi­nesses. Some are boost­ing pay. But higher wages are harder for small busi­nesses to ab­sorb be­cause they don’t have the mas­sive rev­enue stream of a com­pany like Ama­zon.

Mean­while, small re­tail­ers who sell on Ama­zon ex­pect the in­ter­net gi­ant to in­crease the fees it charges them to help fund the salary in­creases. But small busi­ness con­sul­tants, and own­ers them­selves, say strate­giz­ing can help lessen the pain.

Here are three things small busi­ness own­ers need to know about Ama­zon’s wage hike:


A small busi­ness can be more flex­i­ble than a huge com­pany. So, while small busi­nesses may not be able to match Ama­zon’s pay, they can sweeten the pot for po­ten­tial hires and their cur­rent em­ploy­ees in other ways.

Own­ers should say to prospec­tive em­ploy­ees, “we may have a lit­tle dif­fi­culty giv­ing you the full $15, but what else can we do for you,” says Brent Leary, co-founder of CRM Essen­tials, a con­sult­ing firm.

With fewer work­ers to jug­gle, small busi­nesses can more eas­ily of­fer flex­i­ble sched­ules, trans­porta­tion or other perks that might make up for slightly lower pay. And com­pa­nies that em­ploy peo­ple in their 20s and 30s find that many of their staffers would pre­fer more ben­e­fits to ex­tra pay.

Small busi­nesses can also be bet­ter at giv­ing younger peo­ple train­ing and men­tor­ing, even dur­ing a short-term hire.

“If you pro­vide a work ex­pe­ri­ence that they’re look­ing for, that makes it eas­ier to find peo­ple,” Leary says.


Some small busi­ness own­ers may have to pass along the higher costs of com­pet­ing with Ama­zon or sell­ing through its web­site to their cus­tomers. Many own­ers dread hav­ing to charge more but they should re­al­ize that con­sumers and busi­nesses are likely to be more ac­cept­ing of higher prices now that the econ­omy is strong, Marks says.

More­over, “if you have to in­crease your prices, your com­pe­ti­tion prob­a­bly has to also,” Marks says.

Com­pa­nies that have to raise prices should be up-front with cus­tomers about why it’s hap­pen­ing, Leary says. That will help pre­serve a good re­la­tion­ship with their cus­tomers.

Ama­zon stokes good­will of its own by of­fer­ing cus­tomers same-day or even one-hour de­liv­ery. Still, re­tail­ers have the abil­ity to dif­fer­en­ti­ate them­selves, says John Law­son, an on­line mar­ket­ing con­sul­tant.

“Ama­zon doesn’t nec­es­sar­ily have the most per­son­al­ized ser­vice,” he says.

Law­son finds that more con­sumers are in­ter­ested in or­der­ing on­line and pick­ing up merchandise in stores; any brick-and-mor­tar re­tailer that can of­fer that ser­vice should, he says.

AMA­ZON SELL­ERS EX­PECT THEY’LL HELP FOOT THE BILL, which sells on Ama­zon as well as its own web­site, be­lieves the fees it pays the com­pany for tak­ing or­ders and pack­ing and ship­ping merchandise will go up as a re­sult of the higher wages. But Vice-Pres­i­dent Justin Haver says the in­crease is a cost of do­ing busi­ness, and a change the Chan­tilly, Vir­ginia, com­pany will take in stride.

“The re­al­ity is, sell­ing on­line and run­ning a busi­ness re­quires for­ward think­ing and nim­ble adap­ta­tion to cur­rent trends/op­por­tu­ni­ties,” Haver says.

Many own­ers may look for cost sav­ings else­where in their com­pany, per­haps find­ing cheaper sup­plies or lower ship­ping costs.

But Law­son, whose com­pany sells vac­uum clean­ers and parts, notes that it costs money to sell merchandise, no mat­ter what re­tail chan­nel or what dis­tri­bu­tion and de­liv­ery sys­tem a busi­ness owner uses.

“Af­ter all these years, you just kind of get used to it. If it’s not Ama­zon, it’s the U.S. Postal Ser­vice,” says Law­son, who has been an on­line seller. “Ev­ery year it gets more and more ex­pen­sive to stay in busi­ness and ul­ti­mately the con­sumer pays more.”

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