Amazon is in the news a lot and most of it isn’t very good. It is becoming a business that some people love to hate. They have become the 800 lb. gorilla in the e-commerce retail business. Surprisingly they don’t yet have as many customers as Walmart, but it appears that it is just a matter of time.
The company seems to suffer from one scandal after another and the common scenario seems to be exploitation of their own and contracted work force. Not to mention their penchant for not paying Federal taxes. They are poised to monopolize online and brick and mortar retail. For a company that commands such a large part of the online retail market (37% in 2017) with a quite well-off CEO worth $106 billion, why does the company keep pushing the envelope? They wanted to build another headquarter outside of Seattle and started a bidding war between cities. New York City was a possibility until they balked at the loss in tax revenue that was part of the entitlement package that Amazon was seeking, approximately $3 billion in government incentives. Amazon refused to negotiate with the City, instead it just walked away to Virginia City.
Why can’t such a large, prosperous company be a good neighbor instead of a bully? I recently read a BuzzFeed News article about Amazon’s solution to their next-day delivery problem. In 2013, the large carriers that Amazon had depended on: UPS, USPS and FedEx, failed to deliver many packages by December 25th. The company’s solution to keep from being in this predicament again was to build out their own network of contract delivery vehicles and drivers for that “last mile” delivery. In the U.S., half of Amazon’s packages are delivered by this homegrown network. This system of “independent” delivery has been fraught with accidents, some deadly, as drivers try to deliver 250 packages a day without adequate lunch or bathroom breaks, speeding and ignoring stop signs as they try to meet the quota. Some of the delivery companies contracting with Amazon already have issues of worker exploitation and unsafe practices that endanger the lives of drivers and pedestrians. Since these entities work for Amazon as contractors, Amazon shares no liability when things go wrong. Technically the company bares no responsibility. However, they dictate what the drivers wear, how many packages they are to deliver daily and track the vehicles whereabouts. They choose the contractors that they work with but at the same time carry no liability under the law. For some of these contractors Amazon represents as much as 70% of their business, in some cases it is 100%.
Amazon also competes with its own sellers by directing shoppers to the Amazon version of a product. A seller is taking a risk placing their product on a site built by and for Amazon. The company can compete, ruthlessly, with their own sellers on this platform, while collecting fees for the listing privilege and withholding payments for the latest Amazon generated infraction. The system is rigged in their favor. I guess here you can’t blame them too much if your company decides to play, knowing who is making the rules.
Amazon is a bull in a china shop.They don't appear to be aware of or care about the long term effects of some of their business practices.The mentality of winner takes all is not sustainable.