Rethinking the Procurement of Government Products in the Age of Amazon

Government procurement is undergoing a quiet but consequential shift. Once grounded in transparent, competitive bidding and strong relationships with local suppliers, public purchasing is increasingly routed through digital marketplaces in recent times. Nowhere is this more prevalent than with Amazon Business.

While platforms like Amazon Business promise convenience and speed, a recent investigation by the Institute for Local Self-Reliance (ILSR) suggests they may also undermine transparency, competition, and long-term public value. Let’s see why that is, and show you how your choices can help minimize any potential fallout for budgets and community economics.

The Pitfalls of Dynamic Pricing in Government Procurement

In the ILSR report, “Turning Public Money into Amazon’s Profits”, findings show that U.S. cities, counties, and school districts spent an estimated $2.2 billion with Amazon Business in 2023. This is nearly quadruple the amount that was spent seven years earlier. This rapid adoption of a dominant, algorithm-driven marketplace raises important questions about how public dollars are being managed. More specifically, it raises questions about whether these platforms are actually doing a service – or a disservice – to the communities they serve.

Pricing Concerns and Lack of Consistency

A central concern is pricing. Traditional government contracts rely on fixed prices, allowing agencies to budget predictably and compare bids fairly. Amazon’s marketplace, by contrast, uses dynamic pricing that fluctuates in real time. The result is wide variability: two agencies can pay dramatically different prices for the same item on the same day. In one example cited by ILSR, a 12-pack of markers cost $8.99 for one agency and $28.63 for another. Across thousands of items, agencies could have saved up to 17% by consistently paying Amazon’s lowest available prices, highlighting how opaque pricing can inflate public spending.

Market Impact of Dynamic Pricing on Government Procurement

The report also documents the broader market impact. Over the past decade, the number of independent office and janitorial supply vendors (companies similar to Guernsey) serving the public sector has fallen from about 1,300 to 900. When local suppliers go extinct, communities lose jobs, tax revenue, and personalized service. Fewer vendors also mean weaker competition and greater supply-chain vulnerability. Notably, ILSR found that local suppliers often matched or beat Amazon on both price and delivery reliability.

These risks extend to higher levels of government. During a federal pilot program designed to streamline small-dollar purchasing, Amazon captured 96% of sales. Meanwhile, many cooperative purchasing contracts simply funnel agencies into Amazon’s marketplace without fixed pricing or meaningful oversight, creating an illusion of competition.

Charting a Smart Path Forward

The path forward is not necessarily to reject e-commerce platforms outright. Rather, the goal is to re-balance your procurement policy. Restoring fixed pricing safeguards, strengthening competitive bidding, increasing transparency, and supporting neutral procurement platforms can help align purchasing with public goals. This is a key area where working with smaller local businesses like Guernsey adds considerable value. Not only can we offer set pricing, but we also provide something else that cannot be quantified: exceptional, personalized customer service.

Rather than waiting on hold for hours, sending emails that take weeks to get responses to, or talking to bots that send you in circles while you try to get an answer, you get a passionate team that knows your industry, your specific situation, and your budgetary constraints. We are part of your community and legitimately care about our customers and their success. Not to mention, money spent with us stays in the community, instead of being used to fund private corporate profits.

The value of consistent pricing and personalized service cannot be overstated or overlooked when it comes to government procurement. Procurement is a powerful policy tool. Used thoughtfully, it can protect taxpayer dollars while reinforcing the economic health of the communities that governments exist to serve.

It’s time to rethink how public dollars are spent. As one of the most trusted suppliers of office supplies and furniture throughout the Washington D.C., Virginia, Maryland, and Central Pennsylvania regions, Guernsey can deliver transparent pricing, reliable service, and stronger community outcomes.