Special Report: Local business owner upset City is promoting online retail giant

The ‘Pencil Cup’ has been in business for nearly 20 years in El Paso. It sells office furniture, janitorial and break room supplies.

The family-owned company started in a garage by Teresa Gandara, a former educator, and her husband. They initially only had three customers that continue do work with Gandara.

Today, her adult son and daughter help run day-to-day operations.

Gandara said her business has grown and become successful in the community by word of mouth and loyal customers.

Customers include independent businesses, city, county, state, federal agencies and area school districts.

“My husband bleeds customer service. We’ve done things for our clients that come back and hurt us, but it’s OK because they are our customer,” Gandara said.

“Back in the day,” as Gandara described it the biggest threats were ‘big box’ office supplies stores, but now it is the online ordering that is making for some stiff competition.

Gandara said Amazon is one of the biggest threats for independent businesses.

Amazon Marketplace offers its platform to local businesses to sell their products.

According to the Amazon Small business impact report, more than 20,000 small and medium-sized businesses selling on the platform surpassed $1 million in sales last year.

Gandara said Amazon knocked on her door a few months ago and offered its platform to sell her products.

“We were all excited ‘woohoo, Amazon is courting us, fantastic.’ Then we started to ask questions,” Gandara said.

She found out that potential sellers have to pay a certain dollar amount to be part of the Amazon Marketplace and businesses have to install computer software compatible to Amazon’s.

Gandara said she would have been required to upload all her products and could not sell them for a lesser price than Amazon.

“Every product line that I sold for Amazon, I would be paying twelve to twenty-eight percent of my profit which is my gross profit. It’s the way I earn a living,” Gandara said.

“So they dictate what and who is selling what.”

A study from the Institute for Local Self-Reliance reported this year Amazon increased fees it charges sellers by as much as 14% for standard-size items.

Harvard Business School researchers found that when businesses post new products, Amazon follows by offering the most popular items for less.

On Wednesday , the City of El Paso is holding its annual Cooperative Purchasing Expo at the El Paso Convention and Performing Art Center from 8:00 a.m. to 6:00 p.m.

City officials say it is one of the largest business networking opportunities in the Southwest.

The expo will also inform local companies on how they can participate in cooperative contracts used by governmental agencies. Cooperative contracts allow businesses the chance to have their goods and services sold in large quantities locally and nationally,

Resources will be on-hand to give financing information and how businesses can attain state and federal certifications.

There is an afternoon breakout session that includes representatives from Amazon to inform local business owners about selling on the online platform.

“I would fight that there’s anything you order from Amazon that you can order from a local entity and keeping your economy strong,” Gandara said.

Gandara takes issue with the city giving Amazon an opportunity to promote its platform because money spent on Amazon does not help the local economy.

“This is about our tax dollars that our city and anyone else ordering from Amazon using tax dollars are sending out of our economy. What they’re doing is diluting our tax base,” Gandara said.

Gandara decided not to sell her products on Amazon, instead, she did more research and is now taking it to any local business owner that will listen to her.

“Every dollar that you spend with a local entity stays and gets recirculated at least ten times in your economy.”

That is a statistic that Bruce Collins, purchasing director for the City of El Paso, can likely agree on with Gandara, but he has a different view on Amazon’s appearance at this year’s expo.

“I think it’s a good partnership, we’re looking forward to it because anything the city can do to help our local businesses sell and to generate and spur our economy is good for the city,” Collins said.

Collins said the session will inform small business owners about how to use Amazon’s online platform to sell products.

Any company registered with the city as a local vendor and agrees to sell products through Amazon can gain more online traffic through the online market’s search engine.

Collins said Amazon will help by making it easier for consumers to find the company when searching for it.

“If you’re a member of the Hire El Paso First city ordinance, you’re company will be elevated first in the search engine and they’re (Amazon) also going to teach you how to sell your products on Amazon,” Collins said.

Collins said the Amazon platform is ideal for companies who are trying to sell inventory that they have on their shelves and trying to sell it. He added Amazon is not ideal for every small business.

“From the city’s perspective, we’re not telling people that you have to join the Amazon platform, we’re just saying there is another tool,” Collins said.

Gandara said she met with Collins and Deputy City Manager Cary Westin to give a presentation on the negative impact of Amazon on small businesses.

Gandara said her information and account of what she learned while negotiating with Amazon “fell on deaf ears.”

“The city does not get involved with those details. Those are the details that an individual’s company will work and negotiate with Amazon,” Collins said.

Collins said this is the first year Amazon is featured in the expo and only time will tell if the partnership is a good idea or if it will have an adverse impact.

“My challenge would be, let’s see if it can grow the business and help El Paso. If it turns our that it doesn’t help, then we can always revisit it,” Collins said.

When asked if Gandara would be given other opportunities to share her information with other city departments, Collins said she can attend city council meeting any time.

“We always have, in our city council sessions, open to the public. So if someone has a concern they’re always able to come to city council to voice their concern,” Collins said.

The city said it will continue to support small businesses by offering networking and businesses opportunities, and ultimately it is the owner who has to make a business decision.

Gandara said she will continue to help educate her community.

“I was born here, raised here, I’ll die here. El Pasoan through-and-through. When I see that the tax dollars are leaving and weakening us, and knowing that something could be done about this and isn’t being done, somebody has to do it,” Gandara said.

The El Paso Hispanic Chamber of Commerce also spearheads an initiative to support local business. Chief Executive Officer Cindy Ramos-Davidson sent ABC-7 the following statement:

“By definition, economic development is the nucleus of a nation’s master plan for continued prosperity and existence. Economic development must link the sources of production with the wellbeing of its people.

If economic development is to occur, several conditions must be present.

One report refers to these conditions as the Five M’s which are materials, manpower, markets, management and money (Bruno 1980). As also shown by data from the Office of Advocacy (Advocacy) at the United States’ Small Business Administration (SBA), small businesses are the gate keeper of the five M’s.

Economic development must not only be in the present, but it must also be visionary for the nation and its regions and must be reflective of large, medium and small businesses.

As an entrepreneurial EDO (economic development organization) our focus is on the small, minority, women and veteran owned businesses. What we ask of procurement professional in our region is to Think El Paso First to Keep It In El Paso.

Keeping in mind that at times things can’t be found locally for whatever reason, but a huge effort on everyone’s part needs to be made to Think El Paso First to Keep It In El Paso. Economic development has many formulas, large business, medium business and small business with each one intertwined and the key element is balancing all three to have a healthily mixture so that when one part of the bricks fall the others are there to support , but ultimately the cornerstone of any community is small business.

The city’s role is to create options for the community one of which is in the procurement world where there are different purchasing channels so small business locally have a chance to compete for products and services and where city procurement officials have a shopping list to buy from. It’s important to know that most online purchasing channels only pay state tax and not local tax so for even the private consumer shopping from home the state benefits from the taxes on those goods and services not the local community. That’s why we have brought back our Think El Paso First when buying goods and services and asked the City Procurement Department to adopt as well.”

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