The Dangers of Amazon SuperCorp

[Manhole Eunuchsbane]

 With the recent purchase of Whole Foods by Amazon, I came to the realization that this company has really changed the face of retail much the same way that Walmart has over the last couple decades. I know this is not exactly news to you guys, but for me personally I guess this has sort of flown under my radar, seeing as how I like the company. I usually use Amazon to buy Trade Paperbacks, and I find the savings I get from them are significantly greater than what I would have to spend for the same books at my local comic shop. 

 http://www.investopedia.com/articles/investing/031816/amazon-new-king-walmart-effect-amzn-wmt.asp

 

https://www.forbes.com/sites/ciocentral/2017/06/23/amazon-buys-whole-foods-now-what-the-story-behind-the-story/#d518fc7e8986

 

It's kind of interesting to me that Amazon has seemed to accomplish this feat without generating the same sort of negative press that Walmart is often harried by.

[Seli]

Well, they are well known for the way they treat their warehouse employees. The way they change the rules for authors selling directly through them.  The tricks they use to avoid paying taxes.

So the bad news about them is out there.

[Manhole Eunuchsbane]

1 minute ago, Seli said:

Well, they are well known for the way they treat their warehouse employees. The way they change the rules for authors selling directly through them.  The tricks they use to avoid paying taxes.

So the bad news about them is out there.

Yeah, they haven't been immune to criticism for sure, but they seem to have a higher profile than Walmart.

[ThinkerX]

Coming soon to the Presidents Cabinet:

 

'Secretary of Amazon Affairs'

 

Because Amazon is that big. And we live in a corporate oligarchy with democratic trimmings.

[Dr. Pepper]

Yup, Amazon's problems are known.  The issue is they don't have warehouses all over the place whereas Walmart has stores everywhere so the problems with working conditions are more widespread and it's devastating effects on communities more easily seen.  

 

[Manhole Eunuchsbane]

1 hour ago, ThinkerX said:

Coming soon to the Presidents Cabinet:

 

'Secretary of Amazon Affairs'

 

Because Amazon is that big. And we live in a corporate oligarchy with democratic trimmings.

They already have those. They're called lobbyists.

[mcbigski]

Plus media members and opinion shapers are far more likely to shop via Amazon than at walmart and there s no People of Amazon memes to stoke feelings of superiority.

[DireWolfSpirit]

It will be interesting to see how "home delivery" groceries may grow over the next decade. 

[Manhole Eunuchsbane]

13 hours ago, mcbigski said:

Plus media members and opinion shapers are far more likely to shop via Amazon than at walmart and there s no People of Amazon memes to stoke feelings of superiority.

Yeah, that's kind of the point I'm trying to make. Despite having many of the same negative effects of say a Walmart (killing local business, and small business in general) they don't seem to have any of the same image problems. It's made even more difficult to paint them in this light, as I feel they are an extremely well run business, and they are really good at what they do. 

[Lordsteve666]

Amazon generally is extremely well run, from the customer's point of view. Their customer service is for the most part excellent, often accepting returns or refunds well after the expiry of said terms and conditions on products. 
Plus i think the fact you can get literally anything via them is a massive step forward compared to even the major retailers with physical shops.
Nothing else really compares.

They do though have big issues with taxes they (don't) pay, treatment of warehouse workers and obviously the damage to small businesses. The first two of those are something that really, governments in respective countries should be dealing with rather than letting Amazon walk all over them. The third is more tricky as it lies really with the customers and those using the services; if they really are providing the best service for product x then there's little you can do to stop people using them.

[Kalbear]

Their treatment of programmers also sucks quite a bit. 

[Martell Spy]

Quote

Their treatment of programmers also sucks quite a bit. 

Yeah, I believe there was a NY Times story about how they treat non warehouse employees as well.

Ah, there it is: 

Inside Amazon: Wrestling Big Ideas in a Bruising Workplace
The company is conducting an experiment in how far it can push
white-collar workers to get them to achieve its ever-expanding ambitions.
By JODI KANTOR and DAVID STREITFELD

https://www.nytimes.com/2015/08/16/technology/inside-amazon-wrestling-big-ideas-in-a-bruising-workplace.html

[Iskaral Pust]

Most people overlooked that the same day Amazon acquired Whole Foods, Walmart acquired Bonobos.  Both are trying to become universal retailers selling all things to all people, and they are using their incredible advantage in logistics to squeeze out all competitors. 

Amazon is starting from a situation where they are very popular with urban & suburban, educated, relatively high income Millenial & Gen X shoppers (think Obama nation) and with very limited physical retail presence, while Walmart is starting from a base of rural & exurban, less educated, lower income shoppers (Trump nation) and with extensive physical retail presence.

Amazon acquired Whole Foods to add physical retail presence that aligns with it's existing customer base, and to experiment with groceries as a new line of business.  Amazon is very good at learning new businesses.  Walmart acquired Bonobos to increase it's e-commerce approach and to start accessing higher income (higher profit), educated, urban shoppers.

Both are attempting to become monopolies and monopsonies, or at least oligopolies and oligopsonies.  Both have faced many years of complaints about destroying mom & pop stores and treating workers shabbily, but customers still flock to them and they are both a relatively high growth opportunity for low skill employment.

Just like China in global manufacturing and many, many other industries (telecom, consumer goods, finance, tech, media, minerals & mining, etc) it looks like scale creates natural oligopolies in retail.  It's happening almost everywhere.  Modern tech and large pools of capital have unleashed huge economies of scale.  And we collectively haven't decided yet if we should limit or regulate these natural oligopolies. 

[mormont]

Maybe it's different in the US but here at least the idea that Amazon doesn't get criticised in the press seems a very odd assertion. They get criticised frequently for not paying taxes, for treating the workforce poorly, for monopolistic behaviour, the list goes on. It's very common to see negative stories about Amazon in my experience.

[Iskaral Pust]

6 hours ago, mormont said:

Maybe it's different in the US but here at least the idea that Amazon doesn't get criticised in the press seems a very odd assertion. They get criticised frequently for not paying taxes, for treating the workforce poorly, for monopolistic behaviour, the list goes on. It's very common to see negative stories about Amazon in my experience.

There's tons of negative press here too, although helping customers avoid sales tax isn't considered a negative by many people, but their treatment of workers got huge press here and their monopolistic behavior and doom of mom & pop stores has been reported for more than a decade. 

There has also a crushing amount of negative reports of fakes and counterfeits on Amazon, to the point where they seriously risk losing the trust of their customers. 

[Maltaran]

2 hours ago, Iskaral Pust said:

 helping customers avoid sales tax isn't considered a negative by many people,

Not paying corporation tax because they're funneling all their EU sales through Luxembourg, however...

[Manhole Eunuchsbane]

9 hours ago, mormont said:

Maybe it's different in the US but here at least the idea that Amazon doesn't get criticised in the press seems a very odd assertion. They get criticised frequently for not paying taxes, for treating the workforce poorly, for monopolistic behaviour, the list goes on. It's very common to see negative stories about Amazon in my experience.

I guess the distinction that I'm trying to make here is it seems that this negative press has had little effect. I think it's similar to say Apple, wherein folks realize that their business model has some problematic aspects, yet everyone and their mother has an Iphone and an Ipad. Same thing with Amazon. Seems to me like just about everyone I know uses it, despite some of their more problematic business practices. Many of these same people would never be caught dead in a Walmart.

[Mlle. Zabzie]

1.  Mind you this is anecdotal, but my roommate from college worked for Amazon in their Kindle program for years.  She is not their biggest cheerleader (and has since left for bigger and better things) but she did say that she thought that NY Times coverage needed to be taken with a grain of salt.

2.  Leaving aside the offshore planning for a second (I have thoughts on that as well), the sales tax thing is actually fairly nuanced and has gone to the Supreme Court.  What constitutes "nexus" in state such that the state can exercise its sovereign taxing authority is actually far from a settled question, particularly in e commerce.  Everything really proceeds from Quill v. North Dakota, which is a 1992 case, which in technological terms might as well be an 1892 case, and relies on physical presence.  And the court hasn't helped much since, denying cert in a case against the state of Colorado's information reporting regime.  Additionally, whether you knew it or not, there are "use tax" obligations for purchases made out of state and brought in state, but from individuals, except for big purchases like cars, it's more or less noncollectable.  This differs from European centralized VAT regimes (and even the Canadian GST system, to my understanding).  

3.  It will be interesting to see what the next wave of European/EMEA planning looks like.  BEPS has all but shut down traditional Luxembourg/Netherlands structures, and Brexit has certainly made things more uncertain.  There will be something, I am sure, and as long as the EU allows money to move among EU countries pretty much at will and has broad participation exemptions, there are still a lot of things that can be done.  The point being that the tech companies get a lot of flak for the planning because the fact that IP doesn't have a physical location shines a spot light on it, and exacerbates it, but that is more the fault of systems not keeping up with technology and systems not being aligned, creating disynergies that can be exploited by taxpayers.

[mormont]

3 hours ago, Manhole Eunuchsbane said:

I guess the distinction that I'm trying to make here is it seems that this negative press has had little effect. I think it's similar to say Apple, wherein folks realize that their business model has some problematic aspects, yet everyone and their mother has an Iphone and an Ipad. Same thing with Amazon. Seems to me like just about everyone I know uses it, despite some of their more problematic business practices. Many of these same people would never be caught dead in a Walmart.

OK, a question: is the assumption that negative press has had little effect on Amazon but a measurable effect on Wal-Mart not, perhaps, based on the fact that you, yourself, spend more time with people who shop on Amazon than people who shop at Wal-Mart?

In other words, is this not just as much about your own bubble as the bubble you're accusing the press of being in?

[Manhole Eunuchsbane]

2 hours ago, mormont said:

OK, a question: is the assumption that negative press has had little effect on Amazon but a measurable effect on Wal-Mart not, perhaps, based on the fact that you, yourself, spend more time with people who shop on Amazon than people who shop at Wal-Mart?

In other words, is this not just as much about your own bubble as the bubble you're accusing the press of being in?

Both? I guess?

For instance, my wife and I took our grandson toy shopping the other day at Walmart. She took a little video of him picking out the toy and then making a beeline for the registers (as he is wont to do). You can clearly makeout the Walmart logo and signage and such at the check-out area. Anyway, she posts it to her Facebook and this illicits a fair share of "Eww, you shop at Walmart?" sort of responses. Alternatively, a decent percentage of friends and family on my wife's feed will post unboxing videos and the like with the box clearly being an Amazon one, and I don't believe I've ever seen a negative comment.

I'm not actually accusing the press of anything, I just find it interesting that companies like Amazon and Apple seem to avoid being stained by negative press in the same manner that Walmart has been. I think McBigski's post earlier explained this in some measure (Apple and Amazon are perceived as being high-end, whilst Wally World is low rent), but I'm not sure that explains the situation completely. 

 

/To answer your question more directly, I'd say this is more about the apparent cognitive dissonance of the american consumer.