President Biden’s recent executive order to ensure that the federal government buys goods produced here at home should, in theory, deliver a necessary boost to American manufacturers and small businesses, many of which are now struggling to stay afloat amid an unprecedented economic crisis. But the Buy American directive won’t live up to its promise if the government relies on Amazon as its own personal Everything Store, because the tech giant’s online marketplace is increasingly relying on products from foreign companies.
Given Amazon’s growing interest in scaling up its foreign partnerships—often at the expense of those back home—the Biden administration must be fully committed to supporting companies actually committed to supporting American manufacturing, and to spending taxpayer dollars on domestic goods to realize the promise of “Made in America.”
There’s no doubt that the latest executive order is a step in the right direction towards reinvigorating U.S. Manufacturing. It directs regulators to tighten the definition of American-made products, while also creating a position in the Office of Management and Budget to oversee purchases of domestic goods. These moves will help get more Americans back to work and should be applauded.
However, the executive order does nothing to address the federal government’s increasing dependence on Amazon as a primary procurement source as the company scales up its efforts to dominate public sector purchasing. Amazon Business—the company’s B2B marketplace that allows governments along with businesses to purchase goods like office supplies and IT products—has quietly become one of Amazon’s most lucrative revenue streams, growing at nearly triple the pace of the company’s overall growth.
Amazon is already working with the federal government on procurement. The U.S. General Services Administration awarded a lucrative contract to Amazon in June to facilitate micropurchases (think office supplies and other low-dollar items) made online by federal agencies—a $6 billion market that could land Amazon tens of millions of dollars in fees. As Amazon looks to grow its foothold in the nearly $600 billion market for federal procurement, business leaders have warned that allowing any one company to dominate public purchasing could bring higher prices and create barriers to entry for other competitors—making it more important than ever to ensure those taxpayer dollars are going to the right places.
Similarly, state and local government purchasing departments have increasingly turned to the e-commerce platform for their procurement needs, with more than 40% of the 100 largest local governments now using Amazon Business. This could further strangle small businesses already reeling from the pandemic, which have long depended on these contracts but are now being undercut by Amazon at a time when they can least afford a race to the bottom.
Unfortunately, many of these officials are likely purchasing imported goods instead of those made here in the U.S. China-based sellers represented 75% of new sellers on the e-commerce platform in January, according to e-commerce research firm Marketplace Pulse, a spike from 47% in the previous year. The reliance on China-based sellers is already inviting serious concerns about the quality and safety of goods being purchased.
This is the disappointing—but also, unsurprising—result of Amazon’s decision to cut out U.S. Sellers and go directly to Chinese factories. Tucked into the recent House antitrust subcommittee report on Big Tech companies was an email exchange between Amazon executives that confirmed what American third-party businesses have suspected for quite some time. An employee boasted of “accelerating” Chinese-seller recruiting numbers and wanting to hide the broader implications among U.S. Sellers for the “avalanche of China-based sellers”—a clear signal that Amazon decision-makers understood that its tactics undercut American Amazon sellers and U.S. Manufacturers while killing jobs along the way.
Rather than allowing procurement to run unchecked through the Amazon B2B marketplace, Biden’s plan should require that all government purchases go through vetted American sellers and manufacturers. Beyond the glaring safety concerns from foreign sellers, Amazon’s moves to prioritize Chinese manufacturers has forced American sellers—often small businesses that pay their fair share in taxes and support employees back home—to buy from overseas factories simply because they have no other sourcing options available.
As a former Marine who has served this country, I can appreciate the important contributions of the manufacturers and sellers who have created millions of high-paying jobs nationwide and guaranteed America’s prosperity. Ensuring that Amazon sellers are buying from American manufacturers will help bring more of these jobs back to the U.S., while allowing us to stimulate economic growth at home.
We now face a long road to recovery. Moves like President Biden’s Buy American plan can help American manufacturers, businesses, and workers come back stronger. But in order to truly kick-start our economic growth, we need to ensure that government dollars are actually going to building back our manufacturing industry back home, and that can begin with Amazon.
Jason Boyce is the author of The Amazon Jungle and founder of Amazon managed services agency, Avenue7Media. Previously, Boyce was an 18-year Top 200 Amazon seller.
