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Some Local Businesses Discover a Surprising Customer: Amazon

Image: Some Local Businesses Discover a Surprising Customer: Amazon
(Getty/Leon Neal)

Tuesday, 14 Mar 2017 10:19 AM

Renee Plante admits she got a little nervous last year when Amazon.com Inc. opened a massive warehouse just a few miles away from the sporting goods shop she manages in the Minneapolis suburb of Shakopee.

Valley Sports has occupied the same brick building on 1st Avenue since 1977. She expected even longtime customers might want to try Amazon, given the buzz about the new facility and its new proximity. She worried she might lose some sales of sweatshirts, soccer balls and other gear.

But then Amazon became a customer, and a good one: The world's largest online retailer began ordering customized t-shirts, hats and water bottles from Valley Sports for the 1,000 employees at the new warehouse. Amazon is now its biggest customer, ordering shirts by the hundreds compared to the typical orders in the dozens for other local businesses and sport teams.

"It was a surprise to us, that they'd prefer to work with a local vendor rather than someone who would be less expensive and not here in Shakopee," Plante said.

Amazon has earned a reputation for slaying brick-and-mortar retailers. (Think of all the recent Macy's, Sears and JCPenney store closings.) And though Amazon hires workers whenever it builds a new warehouse, a recent report by the Institute for Local Self Reliance asserts that the retailer is actually killing more jobs than it's creating by shifting shopping from physical stores-- including independent Main Street businesses-- to its website. (It’s the subject of the latest episode of the Decrypted podcast; subscribe here on iTunes.)

A lesser known phenomenon is that while Amazon can be a fierce competitor, it also procures services and supplies from mom-and-pop merchants, even those it might consider as rivals.

"Our fulfillment centers across the U.S. are encouraged to work with local businesses to support the site’s needs whether that’s connecting with local restaurants and catering companies to provide employee appreciation meals to purchasing supplies from local vendors," Amazon spokeswoman Kelly Cheeseman said. "Whether it’s through the creation of jobs, purchasing from local suppliers or local giving, we’re proud to support the communities where employees live and work."

Juan Solano opened a custom t-shirt printing business near Phoenix in 2008. His brother worked briefly in an Amazon warehouse in town and was also on a company softball team. The company ordered some team t-shirts from Solano in 2009, the beginning of a lucrative relationship for Solano. He now makes thousands of shirts a year for Amazon facilities, including ones in Texas and Washington.

"It's all by word of mouth," Solano said. "They have their own internal network and they keep saying: 'Use this guy.' We do the grand opening shirts, and during peak season, we do a lot of employee shirts for them. Their peak is our peak."

In 2015, Solano moved his store to a bigger location and has doubled the size of his workforce to ten employees, in large part because of all of the business he is getting from Amazon.

Amazon has nearly 200 warehouses around the country where inventory is stowed before being packed and shipped to customers' homes. The company announced several new locations already this year that will employ thousands more workers. Each new location means Amazon is gaining more market share from local retailers. But in some of those places, there are also new opportunities for those businesses.

Hondo Guillen's family runs Schaefer's Food 'N Drinks, a catering company in Chino, California. A few years ago, they started serving Amazon warehouse workers in San Bernardino tacos from a cart in the employee parking lot. Soon they were being asked to cater celebrations for Thanksgiving and Christmas and the occasional manager meeting.

They started with tacos, quesadillas, beans and rice, keeping it simple because they'd have to serve hundreds of people at a time during a brief lunch break. Their biggest Amazon order was feeding 2,000 workers over two days, 600 at lunchtime and 400 in the evening each day. An event like that costs about $15,000.

"You can't be late and you can't run out of food, or else they don't call you back," Guillen said.

Business from Amazon is helping the family expand from catering to a 135-seat restaurant and bar scheduled to open any day. Guillen's father started the business 30 years ago, mostly doing events like weddings for friends and hosting big meal parties as fundraisers to help Hondo and his brothers play baseball and participate in school agriculture programs.

Hondo and his brother Al, who worked as a chef in Las Vegas, have been expanding the business over the last five years. Their new restaurant has an oversized kitchen so they can manage large events feeding thousands of Amazon warehouse workers.

Feeding the masses at Amazon also makes a good sales pitch when they get a call about catering a large church or school event, he said.

"We can say, 'We do Amazon. We can feed 2,000 people and they love our food,'" Guillen said. "That's huge."

© Copyright 2017 Bloomberg News. All rights reserved.

   
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Renee Plante admits she got a little nervous last year when Amazon.com Inc. opened a massive warehouse just a few miles away from the sporting goods shop she manages in the Minneapolis suburb of Shakopee.
amazon, small business, customer, local
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2017-19-14
Tuesday, 14 Mar 2017 10:19 AM
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