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, Penn.
Small businesses located near Amazon’s dozens of order fulfillment centers 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 strong economy and shrinking labor 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:
An advantage when hiring.
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,” said 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.
Raising prices might not scare customers away.
Some small business owners might 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 said.
Companies that have to raise prices should be upfront 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, said John Lawson, an online marketing consultant.
“Amazon doesn’t necessarily have the most personalized service,” he says.
Amazon sellers expect they will help foot the bill.
GoVacuum.com, 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 GoVacuum.com vice president Justin Haver said the increase is a cost of doing business, and a change the Chantilly, Va., company will take in stride.
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,” said 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.”