Why This Innovator Spoke Up Against Amazon

After Jasmine Johnson lost her job as a DoorDash driver early in the pandemic, the young grandmother from the Chicago area decided to act on a long-held dream to become an entrepreneur.

With her unemployment checks and stimulus money, Johnson developed a device to keep children’s fingers away from electrical outlets. She expects the outlet plug plate to be for sale in Walmart stores in October. “I wanted to show my kids, it’s never too late to start,” she said.

But it hasn’t been easy. She launched as a new third-party seller on Amazon in 2021, and immediately experienced the downsides of Amazon’s power over sellers, as all the excess fees made it impossible to stay in business on the platform. Her experience led her to testify against the company in front of the Department of Justice and Federal Trade Commission this past May.

The big companies’ unbridled power to retaliate against small businesses means that most owners stay quiet. It’s understandable. They have families to feed. For every Johnson, there are dozens, hundreds, or thousands more who won’t speak out because of fear of retaliation from big tech platforms. Some booksellers told Congress that after going public with their complaints about Amazon’s abuses, they saw the “buy” buttons disappear from their listings, or that Amazon showed publishers’ titles as out of stock or with delayed shipping times. Other small businesses on the platforms controlled by Google and Apple reported similar experiences. As the 2020 Congressional Investigation of Competition in Digital Markets says, “Publishers, authors, and booksellers have ‘significant fear’ because of Amazon’s dominance. Amazon can treat sellers in this manner because it knows that sellers have no other realistic alternatives to the platform.”

This threat of retaliation is silencing the discourse about one of the most important economic policy debates today. The small business economy in the United States is in crisis, with the size and power of most startup companies and small businesses continuing a 40-year slide. One of the factors is government regulation that has favored big businesses since the 1970s, and enabled gatekeepers like Amazon, Apple, DoorDash, and Google to take an increasing share of the value created by risk-takers like Johnson.

Johnson told us her story – including why she decided to go public with it. “I wondered, should I speak out?” Johnson said, “If I’m being honest, I did worry about that. I told my husband, ‘I hope Jeff Bezos don’t send somebody to hop out of the bush at me.’”

How Her Innovation Came About

As a young mother 20 years earlier, Johnson recognized a pain and a potential danger, in the plugs that are sold as safety devices to keep toddlers away from electrical outlets. As any parent can tell you, getting the plastic devices out of the sockets is difficult for adults, too – to the extent that some parents may not use them. Johnson had a better idea – an outlet cover that screwed into a socket, with a flip-up mechanism to keep tiny fingers away.

“I did not have the background in this,” Johnson said. “But I just hopped off the couch and started Googling.” The Googling, a good deal of persistence, and $25,310 of her own money, led her to makersrow.com – a platform to find a US manufacturer. She started in July 2020. After developing a prototype, she was ready to launch in July 2021. She set a retail price of $9.95 for the outlet plug plate. Her profit margin after manufacturing was $4.24.

What she didn’t realize was that the Amazon fees would total $5.71 per plate. The advertising, packaging, picking and pack fee totaled $2.72. The referral fee was $1.90. But then there was a storage fee she hadn’t heard about, which doubled around the holidays.

“When you first come, unless you have hired help – you find out through trial and error. It wasn’t until I got billed that I realized I can’t afford it,” she said.

She had to liquidate much of the inventory, to avoid paying the storage fees, she told us. In the Amazon world, “liquidate” means telling the company that it can have the product for free.

It was a devastating blow. But she picked herself up and with the evidence from her Amazon sales that people would indeed buy the product, she approached Wal-Mart, which was holding an open-pitch for American-made products. She expects to be on the shelves by October. She’s also received a $10,000 grant from Alibaba, training from the Small Business Majority, and some support from Amazon itself, which gave her free advertising through a program to support black-owned businesses.

She said she regards Amazon as a casino. “Everyone wants to be on Amazon. [Amazon executives] understand a lot of people will fail, but Amazon will have benefitted already.”

Standing up to the Goliath

When Johnson stood up to Amazon publicly, she told regulators at the FTC and the DOJ, “I didn't expect a silver spoon, but I certainly didn't expect for large tech companies or platforms with their unlimited resources to make it hard for me to compete. I didn't expect that.”

And she’s standing up to the company again, with this interview, for two reasons. First, she said she never intended to build a business on Amazon. It was only a means to an end. She wants to be in a retail setting, where she thinks people will be more likely to buy the plug plate.

Second, last year, she had a realization about Amazon’s power, both over the livelihoods of people on its platform and over public discourse, when a check arrived unexpectedly in her mailbox.

Earlier in her career, she had worked as an Amazon Flex driver, delivering groceries. The FTC sent more than $60 million to 140,000 Flex drivers who had their tips withheld by Amazon between 2016 and 2019. Seeing how the company had first stolen her wages and then limited her prospects as an entrepreneur, she felt compelled to speak out.

She was astonished that news of Amazon’s actions didn’t break through the media. “Why didn’t the world know a big company like Amazon is taking people’s money?” she said. “This giant company was keeping the tips of people like me?”

Johnson is rare for her courage. Hundreds or thousands of small business owners don’t speak out about their experiences because they fear retaliation. They fear being closed out of their markets, by the gatekeepers.

It’s a Catch-22. We do not hear from people who have experienced the gatekeepers’ power because those who might speak out fear that power. The result is silence – which serves the big companies very well.

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