A Dollar at Amazon vs. a Dollar at a Small Business

Today, large international corporations such as Amazon are able to provide low-priced goods shipped quickly across North America. However, most people don’t consider the local effects of this retail giant, including direct and indirect impacts on local communities and businesses. In this article, we will discuss five reasons you should consider buying from local business to improve your community.

The proportion of Revenue in Local Community

According to a recent study conducted by Civic Economics, buying local has double the local economic impact relative to buying from a chain store. For online retailers, this number is exponentially higher. The percentage of revenue that circulates locally from when a purchase is made from a small business is 30.4%, while the same figure for Amazon stands at 3.9%. This means for every dollar you spend locally, you have roughly ten times the local economic locally relative to if you had bought online.

Local Jobs

Amazon has a massive effect on local employment. For every 10 million dollars in sales, Amazon only employs 19 people. On the other hand, a local business would employ 47. In the United States alone, 637,000 jobs and 44,000 businesses have been closed due to Amazon’s pricing tactics. This is taking away key jobs in almost every industry that can deteriorate the health of the local labor market in a community. Buying local helps protect the careers of your friends and family.

Taxes

One of the most controversial aspects of Amazon’s operations is their lack of tax payments in the areas in which they operate. Amazon rarely pays taxes due to their very intricate financial structure. It basically utilizes loopholes in global legal systems to avoid paying taxes to the jurisdictions in which they operate. This means less government revenue to support your local community, including programs for the homeless, social security, road improvements, and more. Combined with the closure of local businesses and potentially higher unemployment rates, governments can expect to see a decline in tax revenue due to online retailers such as Amazon.

Local Supply Chain

As mentioned earlier, when you buy local, revenue stays in the local community. This is primarily due to the local procurement processes by small businesses. Local business owners often have a network of local suppliers who they purchase inventory and supplies from and vice versa. Therefore, creating a circulating pool of cash that stays within a region to support its growth. A restaurant owner buying locally sourced ingredients from a farm, that employs many local youths, is a quick example.

Charity Work and Local Support

Online retailers do little to support local charities and events due to their lack of identity and physical ties to any geographic region. Local businesses are run by people who are part of the community and frequently give back to folks in the area in which they operate.

While Amazon simply extracts cash away from a region, think of supporting local business as servicing an engine of economic activity. It is important we do our part in supporting local business so that our communities continue to grow and prosper. While there is a small difference in cost to buy local, you are helping your community grow. You are ultimately helping to promote future economic prosperity.

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