Amazon and SMEs

Jim Shannon Excerpts

Wednesday 27th March 2019 Westminster Hall

[Kevin Brennan]

I can only say that I know my constituent would entirely endorse the view of that German company given his personal experience. As I outline the rest of the story of what happened, I think it will become clear why.

[Jim Shannon (Strangford) (DUP)]

I am aware that SMEs make some £2.3 billion in sales through Amazon, so there is potential for small and medium-sized enterprises to do well. Is the hon. Gentleman advocating regulation through the Minister’s Department and through Government to ensure that both companies that use Amazon and Amazon itself can benefit from the sales? I think it is important to do so.

[Kevin Brennan]

We all understand the importance of online sales to small and medium-sized enterprises, and the huge opportunity that this kind of tech platform has given small businesses. That is to be welcomed, but with that comes a responsibility on tech platforms wielding huge market power to treat small businesses fairly and in an ethical fashion, and I am afraid that that is not what has happened in this case or, as we have heard, in other cases.

As I described earlier, the stock on the website was going up, even though Amazon was not ordering any new stock from my constituent. Something was clearly wrong. He contacted his account manager, who refused to help other than by passing him a link on the Amazon website to report any infringement. He contacted intellectual property lawyers, who advised him to test purchase his own brand listings on the Amazon website. The test purchases, which were advertised as his brand, proved when they turned up to be the Australian brand.

Astonishingly, and in my view dishonestly, Amazon were using his Bikers Gear UK brand to pass off another different brand supplied by the Pakistani factory he had previously ceased trading with. The factory was using Bikers Gear UK garment patterns. He could not establish any line of contact, and by now his Amazon account manager was bouncing back his messages with the message, “mail box unable to receive your mail”.

In effect, Amazon had pilfered all Mr Brana’s data, his brand name, his product reviews, his barcodes and his customer base. He had lost 75% of work for the past eight months and he would have to liquidate the business before he fell into heavy debt. With September approaching and the bike season closing, he would be in danger of running up debts with good people with whom he had been trading for the past 18 years. As a result, Mr Brana lost his family business and his family lost their jobs in that business.

How could that happen? When Bikers Gear made a commercial decision to end the relationship with its main supplier in Pakistan and move production to a new, modern factory, those suppliers contacted Amazon’s buying team in Luxembourg, requesting to supply Biker Gear UK’s garments direct to them. Mr Brana has seen email evidence from Amazon showing that the Pakistani supplier had made contact with Amazon in Luxembourg. The content of that email was that their factory could supply the garments to Amazon directly. The factory had obtained important Amazon contact email addresses when Mr Brana had failed to remove Amazon’s email contact details from a forwarded message to the factory earlier that year.

In January 2018, Amazon started taking supply from the Pakistani supplier. There was a very slight change to the logo on the garments it supplied to Amazon, but in essence they were Mr Brana’s designs. It was as if someone reversed the tick on Nike trainers, which I am sure you are aware of, Sir Christopher, and then passed them off to the public as an original pair of Nikes. Amazon was by now passing off the non-registered garments to Mr Brana’s European customers, using all his data information.

Within eight months the Bikers Gear company was in financial difficulty and unable to continue its legal action against Amazon. In August 2018, this law-abiding, taxpaying company went into liquidation. Seven people based in the UK lost their jobs, five full time and two part time. The five full-time workers claimed redundancy money from the Government totalling between £25,000 and £30,000. Bikers Gear UK, in its last full financial year’s trading from April 2016 to April 2017, had a turnover of more than £1 million and the company paid taxes and duties approaching £150,000 across the European Union. Today, Amazon continues to pass off those garments to the public.

The Bikers Gear UK business grew organically year on year by reinvesting profits into the company and growing the Bikers Gear catalogue. Ironically, in January of this year, Roland and his company were invited by Lord Eric Pickles to take part in the 2019 Parliamentary Review, originally set up by David Cameron and co-chaired by David Blunkett, to share knowledge and good practice and to raise industry standards. Under the circumstances, Mr Brana felt unable to take up that invitation.

This is a cautionary tale for small businesses: a successful small business sells via Amazon, and Amazon offers a partnership to expand the cake and to take a slice, instead of which it effectively takes the whole cake. Mr Brana now deeply regrets having gone into partnership with Amazon. Far from helping his small business to grow, Amazon effectively cloned his business and starved the original. Amazon is too big for Mr Brana to take on. He is now having to start all over again with his new brand, Black Tab Motorcycle Clothing, and a small retail shop, again in Barry, south Wales. I say to the Minister that that is the type of predatory capitalism being practised by some big tech businesses that the Government need to be aware of and act on, and I ask the Minister what the Government are doing to protect small businesses and people such as my constituent, Roland Brana, from being drowned in the vast waters of Amazon and other institutions of the new high-tech plutocracy.