Byon September 03, 2019
Being a small business owner can be incredibly rewarding, but growing a small business with limited resources can be challenging, especially when trying to reach new customers. Like many small business owners, Rita Bonarrigo, founder and CEO of The Office Tex, a small, woman-owned business in Houston, Texas, struggled to reach new customers at government agencies. Rita wanted to promote availability of The Office Tex products and its strong customer service, but had a limited budget for dedicated marketing and advertising. “We tried everything that our budget would allow for... but we just weren’t seeing any return,” she said. Getting products in front of government buyers through traditional channels can be a complicated, timely, and costly process, especially for a small business owner with limited time and resources.
The good news is that government buyers are eager to buy from small business sellers. Federal, state, and local governments know that directing spend to small businesses for the purchase of items and equipment that support their mission is a great way to support small, local businesses. Many governments have established regulatory or policy requirements that ensure their contracting spend supports small businesses. The federal government, for example, requires that 23% of annual competitive procurement spend goes to small businesses. Likewise, the State of California requires its state agencies to award at least 25% of their annual contracting dollars to certified small businesses.
While governments are actively looking to spend with small businesses, unfortunately the matchmaking – finding a small business that meets its needs - is not as simple. Agencies struggle to discover small business sellers, while small businesses struggle to reach potential government buyers. It’s time for a new model that makes it easier to bring them together.
The barriers to small business growth in the public sector
The process to sell to the government is rife with a myriad of requirements that are difficult to understand, follow and track, beginning with the challenge of even finding timely and accurate information about upcoming contracting opportunities through less than user-friendly websites.
The General Service Administration (GSA), which manages government-wide contracts (referred to as schedules) for federal agencies, estimates that it can take up to 12 months to qualify for a schedule. Even qualifying for a schedule does not guarantee sales. According to the GSA, “Although schedules are the premier vehicle for government sales, including federal, state, and local government agencies, getting a Multiple Award Schedule (MAS) or schedule contract does not guarantee business with the government. Your contract will need to be managed, marketed, and you will need to actively pursue opportunities to work with the government.”
If you’re lucky enough to generate government sales as a small business, there can be complex and ongoing reporting obligations. GSA requires that small businesses report at least $25,000 in sales to GSA and its procurement customers within the first 24 months of a contract award, and $25,000 in sales each 12-month period thereafter; participate in contractor assessments; and, keep registrations and certifications up to date.
The regulations are just as complex at the state and local level where each government entity may have its own set of rules and requirements. Procurement methods, contract provisions, reporting obligations, and small business certification programs vary from state to state and by jurisdiction. Non-compliance with government reporting requirements can be costly and can result in penalties, fines, contract cancellations, and even prohibitions from doing business with the government.
So what can help match government demand and small business supply, when already navigating these costly and time-consuming barriers?
Selling to government agencies via an online store
Online stores like Amazon Business provide a great matchmaking opportunity for small businesses and government buyers. Small businesses are no longer limited to selling to governments in close proximity, nor are they burdened by the marketing costs to find customers.
Rita Bonarrigo launched the catalog for The Office Tex on Amazon Business in 2018. “Implementing a marketplace-based e-commerce business model was the equivalent to hiring several full-time sales people, but for far less money. We effortlessly bridged the gap between our inventory and our suppliers, reaching tons of new global customers without having to get out there and knock on doors or launch a nationwide marketing campaign to find them,” she said. “Through our marketplace, we found success with government, education, and healthcare customers that we weren’t previously servicing.”
— Rita Bonarrigo, The Office Tex
“[Amazon Business] allowed us to continue growing our catalog of products as we saw a market need for new supplies coming from these previously untapped shoppers. Many of our newer customers prefer the convenience, consolidated shopping experience of Amazon Business. As an added bonus, Amazon Business offers a program that allows us to tout our small business and woman-owned status, connecting us to new customers such as government agencies that seek out these types of businesses to stay in compliance with policies like the Small Business Act,” said Rita.
Amazon Business offers features like Guided Buying to better connect government buyers with their preferred small businesses. Buyers can also narrow product searches to items sold by sellers with 11 nationally recognized small business and diversity certifications, such as minority- or woman-owned.
The user experience for sellers and buyers is simple and intuitive, and the selection, convenience and value from Amazon pairs with unique benefits tailored to the needs of businesses – including government entities. Those benefits include business pricing, quantity discounts, and features to comply with tax exemptions or workflow approvals to allow the appropriate review of purchases. Small and medium-sized businesses have thrived on Amazon Business: they make up over half of last year’s $10 billion in global annualized sales because customers are able to discover sellers that they could not find before.
King County, Washington, where the City of Seattle is located, recently asked small businesses to sell on Amazon Business so the county could more easily find and buy from them. “King County's search tools are limited... we need a better way to find your products! Amazon Business will highlight SCS-certified small businesses as ‘preferred King County sellers’ and elevate your products to the top of our search results.”
Amazon Business has teams solely dedicated to helping onboard selling partners. This can include helping them navigate through account registration, catalog integration, shipping and inventory settings, and feature adoption. We also help our selling partners learn and adopt features that are in-demand from business and government buyers, like business-specific pricing or quantity discounts. If merchants have diversity certifications or quality credentials (e.g. ISO: 9001), we advise them on how to make those certifications visible to Amazon Business buyers, including the hundreds of thousands of government buyers who are looking for a match today.