The majority of people I know (including myself) buy from Amazon; it's easy to locate the item you're looking for, it's sometimes cheaper than buying it at a physical store, and it arrives in 2 days at most. With the pandemic and restrictions, it also made more sense to stay home to shop.
But with those cheap prices and fast deliveries comes a different type of cost, one that ripples through our entire country and what we'll be discussing today: the negative impact to small businesses and members of the working class.
Throughout the last decade, Amazon has expanded into many new markets, including grocery, TV production, video streaming, cloud storage, in-home digital assistants, book publishing, fashion design, and even smart doorbells. Today half of every dollar spent in online retail goes into Amazon’s pocket. Its intention is to not only control the basic infrastructure that commerce runs on, but also to manufacture all of the products within that system. How can it be so successful in new markets against competitors that have already perfected their products? And what damage does this do to our economy?
Amazon eliminates their competition and collapses small businesses by stealing their products and selling them at a lower price.
The first method Amazon uses to take over the market is to bully competition into submission. Imagine you are a new small business named Locks and you've perfected "at-home hair extensions" that are salon-quality, but not as expensive. You are wanting to sell them for $50 each, which won't make you a ton of money due to the cost of producing them, but it generates enough money to allow you to get your foot in the door and start getting name recognition.
Amazon sees Locks' hair extensions online. Using the knowledge from its powerful marketplace machine -- from optimizing word-search algorithms to analyzing competitor's sales data, to using its customer-review networks -- Amazon decides that Locks is a product the market will love. Instead of partnering with Locks to start selling them on Amazon's marketplace, Amazon copies the product and sells it for $40 while also barring Locks from selling their product on the marketplace. Amazon's version won't be as good, but since it's the only one available on their vast marketplace, it will begin to outsell Locks.
Eventually, Locks won't be able to keep up with a competitor who has a lower price and a selling platform as strong as the Amazon marketplace. Locks will either have to lower their product and/or quality, or go out of business. This is Amazon's goal: they eliminate their competition by stealing products and selling them at a lower price, often happy to take a loss for months or even years to ensure that their competitor is forced to drop from the market.
And what do consumers end up with? They get an inferior product, since Amazon is trying to be the biggest, not the best. They get higher prices, not only because now Amazon is the sole producer, but also because Amazon now has to make up for their losses from trying to oust the former company. And they get failing small businesses because the average business owner cannot compete with Amazon's money and power.
As Amazon continues to get richer and richer, it becomes easier for them to recreate other companies' products themselves and own the entire online market.
In 2020 alone, Jeff Bezos net worth grew by $75 billion (with a b), mostly due to increased sales during the pandemic. To put it in perspective, here is a site that visualizes this amount of wealth, since most of us have a hard time understanding just how much a billion dollars really is. Having this financial power allows Amazon to enter any industry or recreate any product it wants.
The second way that Amazon takes over the marketplace is by recreating successful products already being sold on Amazon.com under it's own private line AmazonBasics.
From batteries, to bed linens, to headphones, to paper shredders - Amazon has created a reliable source for buying most household products and provided an easy system for returning them if you don't like them.
By owning the entire marketplace, Amazon is able to steer shoppers towards in-house brands and away from competitors. As consumers shop more using voice technology like Amazon's Alexa, the playing field becomes even more tilted. For instance, consumers asking Amazon’s Alexa to “buy batteries” get only one option: AmazonBasics. The emerging private label threat from Amazon presents a quandary for small vendors and big, national brands alike.
Amazon's success has been built on exploiting workers, unfair competition, disregarding environmental responsibility, violating user privacy, and “aggressive” tax avoidance.
So how has Bezos gotten this rich? How does anyone get $175 billion rich?
Amazon’s growth has come at a great cost to its workers. It's reliance on low-wage workers in warehouses and logistics, many of which are part-time or seasonal, allows it to keep payroll and benefits costs down while creating a system of high employee turnover. In fact, the average turnover rate for warehouse workers in counties with Amazon fulfillment centers was 100.9% in 2017. In other words, more workers leave their Amazon warehouse jobs each year than the total number of warehouse workers employed in those counties.
This extreme high-churn model allows Amazon to make workers temporary, eliminating the need to give raises or develop employees on career tracks. It also makes it easy to replace them in order to sustain dangerous and grueling work pace demands.
Workers around the country have reported being subjected to unsustainably fast productivity requirements, often resulting in injury and exhaustion. They describe pushing their bodies to the bring to avoid automatic termination for missing quotas. Amazon's records show that their warehouses have stunningly high injury rates, and workers who can’t keep up with extreme productivity goals are fired or encouraged to quit.
“The introduction of robots has made the work so much more dangerous. The robots speed up the pace so much, and there is a lot of repetitive motion involved. The sick rate and accident rate has soared,” says Christy Hoffman, the general secretary of UNI Global Union, which represents over 20 million workers internationally.
This is the reason that workers in Alabama are currently working to unionize.
Amazon Is Paying Consultants Nearly $10,000 a Day to Obstruct Union Drive and Paying Employees to Quit Right Before Critical Union Vote
What's now being called "the biggest union election in this century" is truly Amazon worker's last effort to force the company to improve working conditions and wages. Amazon understands that a union would be detrimental to their business practices, so they are pulling out all the stops against unionizers.
Amazon has started paying outside anti-union consultants over $10,000/day to obstruct efforts, bringing in hundreds of people, supervisors, and union-busting consultants to confront the workers on a minute-by-minute basis. Amazon has also offered to pay employees to quit (termed "The Offer") starting at $1,000 as an exit bonus. As with other efforts around the country, they have shown they do and pay anything to prevent a successful unionization of their company.
So what can we, as every day consumers, possibly do to help?
It's going to be a challenge to completely eliminate Amazon from our lives, since they have managed to branch into so many different industries. You're not required to do all of the items below, but if everyone can do just one or two it will make a difference. Ultimately, the goal is to show Amazon our priorities by impacting their bottom line.
Shop Local Online. "Sook" is an awesome Google Chrome extension that aggregates product listings from numerous small store websites in one place and makes it easier to “browse online and buy from the boutique next door. They may not have everything you're looking for, but if you at least search there before searching Amazon you may find some great purchases from local sellers.
Unsubscribe from Amazon Prime. It's hard, because who wants to pass on free 2-day shipping? But if you cancel your $119/year subscription you will be less tempted to make those quick purchases for simple things.
Replace PrimeNow with... Something. Whether it's Instacart, Doordash, or Postmates, there are other quick delivery services that don't involve giving your money to Amazon. Now I'm not saying that these companies are more ethical, but it's at least not feeding Amazon to get larger and more powerful.
Scrap Amazon Prime Video for Netflix, Hulu and Other Streaming Apps.
Replace Audible with Other Audiobook Services. For a start, your local library books can often be accessed for free via Overdrive, Libro.fm, Hoopla, or other similar apps. Scribd also offers an awesome subscription for unlimited listening at $9.99/month, compared to Audible's one book credit for $14.95/month.
None of us are perfect consumers and we can't expect to shun Amazon from every single aspect of our lives. In order to make strides in the right direction for long-term success of our workers and small businesses, we should try to spend our money at better places if we can. Sometimes this is a privilege that comes down to having dispensable income, and sometimes it's just being ethically conscious of your purchases. Regardless, we should all be rooting for David, not Goliath.