The federal government is now testing new ways to purchase office supplies, opening up a new market for e-marketplace platforms.
This market could be worth as much as $50 billion dollars a year. E-marketplace platforms include companies such as Walmart, eBay and Amazon.
Additionally, these companies have also put forward confidential proposals laying out how their services and platforms would align with government regulations. Purchases from the government would be limited at $10,000 per transaction which creates a market of $6 billion dollars. However, eventually this cap could be altered.
However, this could hurt businesses that currently sell to the U.S. government. These small businesses sell their products through the General Services Administration. These transactions typically have a thin profit margin.
If an e-marketplace platform were to gain a contract, then these businesses might have to sell their products through the platform. This would add fees imposed by the e-marketplace platform that would shave profits even more.
“We’re going to lose our shirts,” said Steve Armstrong, general counsel at MSC Industrial Supply Co., a current vendor to the federal government.
Amazon is currently seeking to win the contract and has extensive contracts with the government through its web services arm.