Amazon gave 'small business' and 'Black-owned business' badges to companies that were neither, report says
- Amazon reportedly gave some sellers "Small Business" badges even though they were large companies, The Information reports.
- "Black-Owned Small Business" badges were also reportedly given to companies that aren't Black-owned.
Amazon has reportedly miscategorized some businesses selling on its site as being "small" and "Black-owned," The Information reported earlier this week.
Amazon gave "Small Business" badges to sellers that are "multinational corporations with thousands of employees," The Information reported. Amazon has said the badges are intended for US companies with fewer than 100 employees and less than $50 million in revenue.
Likewise, Amazon reportedly also gave "Black-Owned Small Business" badges to companies that were not actually Black-owned, The Information reported.
When The Information reached out for comment, Amazon removed the badges from some of the products it apparently miscategorized, though some still remain. Amazon didn't immediately respond to Insider's request for comment.
The Information's findings could call into question whether Amazon's badge programs intended to help boost sales for small businesses and those run by Black founders really work. They come amid criticisms that Amazon's iron grip on the American customer is hurting local commerce.
For instance, Amazon gave companies like coffee bean and clothing store Black Rifle Coffee Co. a badge even though it generated over $300 million in revenue in 2022, The Information reported. The company has a market cap of $1.1 billion as of this year.
Backpacks and luggage from SwissGear, a subsidiary of knife manufacturer Victorinox that made $446 million in revenue as of December 2021, per Pitchbook, also received the badge. Clothes from sportswear firm Cutter & Buck, and kitchen items and handbags from vendors based in China, did as well, The Information said.
And products from grass-fed beef jerky firm Chomps were given the Black-owned business badge even though its founders Pete Maldonado and Rashid Ali are not Black.
Still, Chomps cofounder Maldonado told The Information that his company didn't "see much lift" in sales from the badges. Maldonado wrote in a LinkedIn post last week that he expects Chomps to generate more than $200 million in retail sales this year.
The companies mentioned in this story didn't immediately respond to Insider's request for comment.
Jason Boyce, the CEO of Avenue7Media, which helps companies sell on Amazon, said the badges were "fishy."
"If they're not managing this program, they're being negligent and they're disadvantaging true small businesses," Boyce told The Information. "And they're giving companies that don't need the help an unfair advantage."
Meanwhile, running a small business on Amazon isn't easy. Rabbi Yael Buechler, a small business owner, tried selling Jewish fashion accessories like Hanukkah scrunchies on Amazon and found that her products were "overshadowed" by many others on the platform and required extra monthly fees, resulting in meager profits, she wrote in an opinion post on Insider.
Even though not all businesses say they've seen a boost from the badges, the badges could have the potential to increase sales. An IBM study found that product downloads rose by 64% after the products were given digital badges, showing that badges can help some sales professionals "achieve sales quotas."
But whether Amazon's badge programs intend to really support small and Black-owned businesses rather than boost its own bottom line is up for debate, Stacey Mitchell, a co-director of the Institute for Local Self-Reliance and vocal Amazon critic, told The Information.
"It's very much in Amazon's interest to try to suggest that in fact they're supporting small businesses rather than eating their lunch," Mitchell said.