MANKATO — Rhonda Abrams knows small businesses face threats aplenty from Amazon. And it's not just retailers who are seeing the disruption from the online juggernaut.
Manufacturing, services, banking, business-to-business, digital services and groceries are all areas Amazon is quickly expanding into.
"There's nothing Jeff Bezos doesn't want to control," Abrams told a group of small business owners in Mankato Tuesday.
But Abrams, an author, business owner, and USA Today columnist, said small businesses can compete and thrive in the era of Amazon.
While small businesses have been rattled over the years by everything from shopping malls, to Walmart to big box specialty stores, Amazon brings a new type of competition and at a rate of change never seen before.
Amazon's business model has long been one that shouldn't work: Selling a lot of different stuff at low prices and with free shipping, while losing money on every return. It's a business model designed to lose money, but to expand their reach into most Americans' lives.
For years the company needed no profit because its stocks soared, giving it all the cash it needed to grow. Now, Abrams said, Amazon has moved into things like finance, supplying equipment to business and industry, offering services and more. But the company's big profit center comes from the technology it has built.
"Amazon Web Services is how they make money. They're the backbone of digital services for a large number of American companies. They have server farms everywhere and they keep up-to-date."
Despite Amazon's reach, Abrams said small businesses that innovate, find their niche, leverage technology and work together with others in the community, will thrive.
Finding a niche, she said, is key. Increasingly grocers are either high end or discount, there's wine marketed to women and Hispanics and there are restaurants that focus on a few specialties.
She said independents must use technology in relentless marketing through things like Google AdWords and social media. She told of an oyster bar that uses Facebook to target those who like oysters and are over 21 and are in a 20 mile radius using Facebook.
"Facebook can micro-target audiences."
She said successful independents are hosting more parties, classes and kids events to become a destination business and said small businesses that cooperate on things like Small Business Saturday and other community events are more successful.
And, Abrams said, millennials are a hopeful sign for small businesses. "Despite all the bad raps they get, millennials love small businesses. Surveys show they shop small shops and are willing to spend more. Millennials mistrust large companies."
Abrams points to independent bookstores as a sector that found how to compete with Amazon, which is the world's largest book seller.
She said they learned to change their product mix, focusing on such niches as kids books, popular fiction and cookbooks, along with holding more events. And the stores have an active association, which helps them support each other and share ideas.
"Independent bookstores are thriving. The sales numbers and the number of independent bookstores have both increased in each of the last three years."
Abrams spoke at Minnesota State University at a business awards luncheon hosted by the Small Business Development Center.