Back in 1995, in a basement in Seattle, packing paperbacks into boxes alongside his wife and a handful of employees, a skinny entrepreneur laid the foundations of an online bookselling business.

These were the humble beginnings of what is today known not just as the bookseller but digital conglomerate Amazon and its founder Jeff Bezos. 

In 2020, Bezos is the richest man in the world and CEO of a company which employs over one million people worldwide. The company’s dominance in the digital marketplace is indisputable, with a 2019 research by Mintel finding that nearly 90% of UK shoppers use Amazon and 40% have its Prime subscription service and that was before the Amazon received an unexpected prime delivery in the shape of the pandemic lockdowns. The research findings all that time ago also concluded that in spite of online retailing’s popularity, 82% of all retail sales in the UK still come through physical stores.

If Amazon’s growing dominance was already a major cause for concern to physical store owners prior to the pandemic outbreak, the lockdowns of recent months have triggered a boom in digital sales, with ecommerce sales in the UK raising to nearly a third of all retail sales by May.

Representatives of the British Independent Retailers Association recently launched a campaign encouraging consumers to shun this week’s Amazon’s Prime extravaganza and consider using small retailers that need support “more than ever” instead.

Amazon’s ever-growing market dominance has not gone unnoticed by government ministers. In April, the UK government attempted to introduce a digital services tax which would make tech giants pay 2 per cent tax on revenues from online sales, thus making “global giants with profitable businesses in the UK pay their fair share towards supporting our public services”. 

Hence the anger and dismay which ensued yesterday when The Times first reported that Amazon, whose total British tax bill last year amounted to just £293 million, will not have to pay the levy but will instead pass it on to the small and independent traders using its digital service.

Needless to say, this will result in small sellers paying more and counter intuitively contribute to establishing Amazon’s marketplace dominance in the UK. And while there are still a few products that cannot be found on the Amazon platform (full-size homes, cars, cigarettes and live animals, to be more precise), the tax will grant the digital jack-of-all-trades even more competitive advantage.

Which once again leaves everyone with the burning question: how can pandemic-struck small and independent retailers – the likes of Bezos’ very own Amazon back in 1995 – compete in an increasingly challenging market environment?