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Alabama ranked 3rd fastest growing state in Amazon sales

By: Donnamy Steele

Internet sales in Alabama have skyrocketed, making it the third fastest-growing sales in the country according to Amazon. This influx of online shopping can cause local brick and mortar businesses to suffer. Rick Clifton, President and CEO of the Covington County Economic Development Commission, explained what this could mean for local businesses.

“I think one of the reasons for that recent growth is the virus because people have not been able to or are not comfortable enough to shop so they have been ordering online,” Clifton said. “I think Opp has experienced an increase in internet sales recently during this period so you’re seeing more people staying at home and ordering at home and getting things delivered to home than in the past, so internet sales are going up in Opp.”

Although some areas in the county are benefiting from online sales, Andalusia is not seeing as big of a difference, said Clifton.

“I checked in Andalusia and it isn’t up as much, if at all, in Andalusia, so the internet sales are not as big as in Opp and other areas of the community,” Clifton said. “I think it’s because we have Walmart in Andalusia.”

Clifton explained that rural areas do not have as much access to inventory, which is why people may resort to shopping online.

“Rural areas where people don’t have access to a lot of the things they might want would lead people in rural areas to utilize internet sales more than if you were in Birmingham or Montgomery where you can go to a store fairly easily,” Clifton said. “You may go online and see what you like to order instead of traveling farther away to shop in-store.”

The competition between online vendors and smaller shops also pose an issue.

“Big box stores and mom and pop stores are also hurting because it’s hard to compete against that internet inventory out there,” Clifton said. “Now with the sales tax being added to internet sales, that equals things up a little bit because used to you, you didn’t have sales tax so you used to save that, but now in Alabama you get sales tax and its portioned out to different parts of the state. I’m not sure exactly how that works or how they track how much comes from each county or if they break it down some way or another, but I know that different parts of the county get different parts of sales and track.”

Convenience is another factor that is considered when weighing shopping alternatives, said Clifton.

“I think it hurts, and COVID is a factor, but the rural nature of Alabama does as well,” Clifton said. “It does hurt and there’s always been a big push by brick and mortar stores to level the playing field and the online sales tax helped. Also, people do not want to get out into this mess because it’s easier to place an order and two days later it’s at your house.”

Kelly Brandin, Executive Administrator for the Opp and Covington County Area Chamber of Commerce, believes the virus has pushed people to online shopping as well.

“I feel recently people have resorted more so than before to online shopping due to the coronavirus threat. I also believe people may find it easier and more time-efficient to shop online,” Brandin said.

Brandin stated that stores in Opp are not facing the same struggles as other small businesses in the state.

“Fortunately, I believe Covington County residents know the importance of shopping locally and supporting small businesses,” Brandin said. “I know in Opp our small retail businesses are being supported through local shopping.”

Brandin hopes local businesses will consider adding an online option to keep their businesses afloat during this time.

“I think local small business owners need to learn to adjust to the reality of online shopping. They can do this through marketing and offering their products and services online through social media,” Brandin said. “I am aware many of Opp’s small business owners have begun offering their products and services in an online fashion.”

Alabama does not show up among the states with the 10 highest total sales volumes with Amazon, but it sales are rapidly advancing, at a growth rate of 53 percent year-to-year, for the 12 months ending May 31. That was the third-highest growth rate in the country, says Amazon, in its just-released assessment called the Amazon 2020 Small and Medium Business Report.

“Since the pandemic hit, third-party sellers have had record sales,” said Jeff Wilke, CEO of Amazon Worldwide Consumer. “Their products continue to account for more than 50 percent of all units sold in our online stores, and their sales continue to outpace our first-party sales. During the 12 months ending May 31, American SMBs sold more than 3.4 billion products in our stores and averaged 6,500 products sold per minute.”

Amazon says it works with more than 2 million independent sellers, authors, content creators, developers, delivery businesses and IT solution providers.

American SMBs sold more than 3.4 billion products in its online stores, up from 2.7 billion year-over-year, the annual report says.