Amazon

The online retailer's practices are making Walmart look like a good alternative

In less than twenty years, in another case of the high cost of low price, Amazon has become the Walmart of the online community in just about every way. Amazon, the world’s largest book store has become one of the largest stores period. In fact, book sales only make up 19% of Amazon’s total sales, which last year came to $74.5 billion.

Amazon now sells everything from electronics to groceries and has its hands in hardware manufacturing, video distribution and of course book publishing among others. Pretty soon we might see Amazon take on UPS as a delivery service.

Amazon Books

Amazon is very secretive when it comes to numbers and speaking to reporters, but estimates are that Amazon controls 50% of the physical book market and 65% of the digital market. At one time they owned 90% of digital book sales, but Apple has put a dent in their numbers. Either way, one out of every two books sold in the United States is bought through Amazon.

As Amazon’s control of the book market grows, so does its control over publishers. As the New York Times’ David Streitfeld summed up in a recent blog post. “No company in American history has exerted the control over the American book market – physical, digital and second-hand – that Amazon does”

When Amazon came out with the Kindle, an e-reader device that allows its users to download books instantly, it changed the industry, but not necessarily for the better. Amazon priced these digital books too cheap for regular book stores to compete. The big six publishing companies complained as well that these books were often sold below wholesale price, sometimes as low as ninety-nine cents.

Frustrated, the publishing companies began looking for a better partner, which they found in Apple Inc. who was about to release the iPad. Apple’s deal allowed the publishing companies to set their own retail prices. This hurt the five publishing companies that signed on with apple a little, but they effectively regained control over their products. Soon after, Amazon was forced to raise its prices significantly.

Amazon decided to file a complaint with the Federal Trade Commission. In 2012, the Justice Department sued Apple and the five publishers for conspiring to raise prices and restrain competition. The five publishing companies settled out of court and were forced to pay millions in damages. Apple meanwhile fought the charges and is currently appealing the ruling against them.

Amazon effectively got what they wanted, even though they held a virtual monopoly on digital book sales at the time. You see, for the last few decades anti-trust cases don’t actually look at the amount of competition, judges rule to ensure consumers have access to the lowest prices possible, competition be damned. As a result, Amazon has regained control of setting their own prices.

Like I mentioned at the beginning, Amazon’s book sales are only 19% of their total. They can afford to intentionally sell their books at a loss in order to gain an increasing larger piece of the market. With less profit for the publishers, this practice will make publishers less likely to invest in riskier book projects and could dumb down what we read in general.

Aside from book sales, Amazon now captures 1/3 of all online sales in the United States. Their size doubles roughly every three years. It’s become a behemoth by working their employees to the bone, free-riding on regular retail stores, limiting choice by cutting exclusive deals with manufacturers and distributors, strong arming suppliers, selling their products at a loss and by being exempt from paying sales taxes in most states.

London Amazon Warehouse
Workers in the Amazon warehouse in Milton Keynes, north of London.

Amazon’s Employees

Amazon treats its employees arguably worse than Walmart. The warehouse workers who make up the bulk of their labor force earn on average between $11 and $12 an hour (less than a Walmart warehouse worker). In addition, Amazon’s system of employee monitoring is extremely oppressive.

Amazon tags its employees with personal satellite navigation computers that tell them the route they must travel to pick or shelve orders. However, it also sets a target time for each task and then measures whether targets are met. All this information is available to management in real time. If someone falls behind the expected designated time or is found guilty of other types of “time theft”, the employee is often disciplined or fired.

There are also security checkpoints setup throughout the warehouses to prevent real theft. After all, employees making a sub-standard wage may feel the need to steal. While these checkpoints must prevent theft, it also reduces the hard earned lunch break from thirty minutes to twenty minutes. Even with all of Amazon`s secrecy, employee horror stories have begun to surface everywhere and they’ve been well documented by Salon.com

The worst example I saw occurred at Amazon’s Allentown, Pennsylvania, center during the summer of 2011. A prizewinning series in the Allentown newspaper revealed the lengths Amazon was prepared to go to keep costs down and output high. It yielded a singular image of Amazon’s ruthlessness:

Ambulances would be stationed on hot days at the Amazon center to take employees suffering from heat stroke to the hospital. Despite the summer weather, there was no air-conditioning in the depot, and Amazon refused to let fresh air circulate by opening loading doors at either end of the depot, for fear of theft. Inside the plant there was no slackening of the pace, even as temperatures rose to more than 100 degrees. In June of that year, 15 employees collapsed in one day.

Needless to say, Amazon frowns upon unions and attempts at unionization.

Amazon’s other Practices and Special Treatment

Through its mobile shopping app, Amazon has encouraged its customers to “free-ride” their local retail stores. Customers would go to these local stores for the products they wish to obtain, ask the sales people questions about them, and then purchase the items on Amazon by scanning the barcode instead of buying it from the store they’re in. Last December, Amazon customers were actually given a 5% discount for items that were purchased with the scanning of a barcode.

amazonOnline retailers do business with an unfair advantage. There is still no federal law that allows states to collect sales taxes for purchases made online. This effectively gives online companies like Amazon an additional discount of between 4% and 10%.

Last year the Senate passed the Marketplace Fairness Act which would give States the tools to collect sales taxes on cross-State sales transactions. The bill is currently being held up in the House by Speaker John Boehner. Amazon apparently supports the bill.

Amazon continues to grow at an alarming rate (22% last year alone). At the same time they continue to bully their employees, their competitors and their suppliers. The only people unaffected by Amazon’s business practices are its customers who get treated like royalty and would rather remain oblivious to what goes on behind the scenes and enjoy their rock bottom prices.

SHARE

Mike Weishar (A.K.A. Quiet Mike) has been a politics & news writer since May 2010. In December of 2012 he founded quietmike.org. Five years later he founded Progressive Spring where he remains the chief writer, editor and administrator. He has been active in politics, writing and social causes for many years. He is a proud activist and a rebel without applause.

11 COMMENTS

  1. Want to talk about “unfair advantages?”
    Wal-Mart effectively operates under a government subsidy.
    For every Wal-Mart store, the taxpayers pay about a million dollars a year to pay for food stamps for Wal-Mart’s underpaid workers.

    That’s over four billion dollars a year that the taxpayers are subsidizing Wal-Mart.

    Oh and they make money on the other end as well…nearly 20 billion a year food stamp benefits are spent at Wal-Mart.

  2. So now what, I stopped shopping at Walmart, am trying to divest from Target, send my husband out of town once a month to Costco, the environment there gives me a migraine. So now I stop shopping at Amazon? I admit I could do some more local shopping, but I still need another alternative. Not trying to be sarcastic, honestly asking for suggestions.

    • It`s hard to suggest alternatives without knowing where you live, but there are still nearly 10,000 book stores in the US, many of whom are independent. As far as groceries are concerned, you must have local markets where you live.

      • So avoid chain stores altogether. My last Amazon order was for boots, flavored syrup and craft supplies. I don’t want to shop at Hobby Lobby. Sometimes doing the right thing is very overwhelming. But thanks for your revealing article.

      • We do as much shopping as we can at our local Costco, grocery store, Target and 99-cent stores. But sometimes it’s impossible to avoid Amazon. I remember looking for a mop head refill one time–I must have gone to 4 or 5 local stores looking for the right refill (even Wal Mart!). Couldn’t find it. I ended up finding it on Amazon. Like Hazel says–doing the right thing can be overwhelming.

  3. You’re full of shit on this one. My girlfriend works at an Amazon warehouse in Texas and she loves it. Decent pay and awesome benefits. I guess if you’re scared of a little hard work and heat I can see how you would whine about this job but that’s just how we do things in Texas. Maybe that’s why this state’s economy is growing instead of collapsing like all the blue States

    • Among the 50 states, Texas ranks last in the percent of the population that has graduated high school.
      It has the highest proportion of people without health insurance, and releases the most carbon dioxide and hazardous waste of any state.
      Inadequate state spending on education and health care is creating a new underclass of unprepared workers.
      Despite its growth and diversified economy, Texas also has had the less fortunate history since 1980 of having a larger percent of its population living in poverty than the overall US average.

      Texas ranks 50th among the states in the percentage of its population 25 or older with a high school diploma, per capita spending on mental health, the percentage of non-elderly women with health insurance, the percentage of pregnant women who receive prenatal care and share of its workforce – 76 percent – covered by workers’ compensation.

      It’s No. 1 in executions, share of its population that lacks health insurance and five categories of air pollution — nitrogen oxide, carbon dioxide, mercury emissions, volatile organic compounds and particulates.

      Average Scholastic Assessment Test (SAT) Combined Scores, 47th in the nation.
      Estimated Public High School Graduation Rate, 44th in the nation.
      Percentage of Population Graduated from High School, 50th (last) in the nation.
      Texas reportedly ranks 48th in per-student spending.

LEAVE A REPLY

Please enter your comment!
Please enter your name here