“AMZN has been basically price dumping with its shipping for forever– they lose 2.4Bn a year on it. Amazon’s strategy is witheringly obvious. Drive companies for specific products (e.g. books) out of business or on to Amazon to a point where it is very difficult to get a certain product anywhere but Amazon.
Once you’ve done that, jack up the price. It’s monopoly and rent-seeking behaviour and trying to compete with tech companies using this strategy is probably the largest strategic driver of the trend towards market concentration and oligopoly right now.
Basically tech companies are actively trying to become monopolies and the rest of the companies competing with them need to merge or purchase until they’re big enough not be left behind. This is how you end up with two or three viable players in every market and that is definitely a harm to consumers.” ~ redditor
What will the purveyor of the lowest price possible—damn the consequences—do to Whole Foods, the largest organic food grocery?
Update: NY Times headline predicts vast layoffs at Whole Foods, other groceries:
Losing community and jobs is a gain for inequality and isolation. Some of the best moments of my everyday are with cashiers, baristas, and other helping human beings:
Community matters. Jobs matter. Amazon’s first move: use their infinite data on you to sell you everything, lay off workers at a business awarded best place to work for year after year, and work to squeeze suppliers, causing a further eroding of incomes, which, ala Walmart, makes we the people more dependent on low prices—a cycle of inequality Bezos makes 10 cents on the dollar off of.
“…Tim Hayduk, 46, likes to shop at the Morton Williams near his office and also enjoys the sense of community that independent grocery stores engender. Now, he worries that more will disappear, as grocery stores big and small compete in an increasingly cluttered market.
“It’s sad to see the mom and pops disappear,” Mr. Hayduk said “The neighborhood grocery store is really important. You need a quick and easy place.”
What to expect by way of changes at Whole Foods, the leader of the green and organic movement…
(I know you’ll want to say they aren’t, but they have helped push regulations and make it accessible, even as they made it yuppie—still, their loan programs to small food companies and insistence on integrity [no RgBH, for example], transparency “much of our stuff is junk,” and devotion to employee satisfaction—all have made Whole Foods one of Elephant’s favorite companies to interview and write about over the years)
…now that Amazon, the destroyer of the book industry and pusher of all things outsourced, including American jobs, has bought the green grocery?
Well, just see what Amazon has already done, and how. Operating like a mafia don, to quote the below article,
Cheap Words, in The New Yorker. Read it here in its entirety—it’s riveting.
Amazon is coming for your money, in everything you ever want to do. And it’s eating away at quality and craft and the incomes of those who bring you the products you didn’t know you wanted.
Amazon is a global superstore, like Walmart. It’s also a hardware manufacturer, like Apple, and a utility, like Con Edison, and a video distributor, like Netflix, and a book publisher, like Random House, and a production studio, like Paramount, and a literary magazine, like The Paris Review, and a grocery deliverer, like FreshDirect, and someday it might be a package service, like U.P.S. Its founder and chief executive, Jeff Bezos, also owns a major newspaper, the Washington Post. All these streams and tributaries make Amazon something radically new in the history of American business. Sam Walton wanted merely to be the world’s biggest retailer. After Apple launched the iPod, Steve Jobs didn’t sign up pop stars for recording contracts. A.T. & T. doesn’t build transmission towers and rent them to smaller phone companies, the way Amazon Web Services provides server infrastructure for startups (not to mention the C.I.A.). Amazon’s identity and goals are never clear and always fluid, which makes the company destabilizing and intimidating.
Bezos originally thought of calling his company Relentless.com—that U.R.L. still takes you to Amazon’s site—before adopting the name of the world’s largest river by volume. (If Bezos were a reader of classic American fiction, he might have hit upon Octopus.com.) Amazon’s shape-shifting, engulfing quality, its tentacles extending in all directions, makes it unusual even in the tech industry, where rapid growth, not profitability, is the measure of success. Amazon is not just the “Everything Store,” to quote the title of Brad Stone’s rich chronicle of Bezos and his company; it’s more like the Everything. What remains constant is ambition, and the search for new things to be ambitious about.
The company claims to want a more literate world—and it came along when the book world was in distress, offering a vital new source of sales. But then it started asking a lot of personal questions, and it created dependency and harshly exploited its leverage
A monopoly is dangerous because it concentrates so much economic power, but in the book business the prospect of a single owner of both the means of production and the modes of distribution is especially worrisome: it would give Amazon more control over the exchange of ideas than any company in U.S. history.
“I thought he was just a bookstore, stupid me. Books were going to be the way to get the names and the data. Books were his customer-acquisition strategy.”
2008—when the company was selling far more than books, and was making twenty billion dollars a year in revenue, more than the combined sales of all other American bookstores
The company despises friction in the marketplace,” the Amazon insider said. “It’s easier for us to sell books and make books happen if we do it our way and not deal with others. It’s a tech-industry thing: ‘We think we can do it better.’ ” If you could control the content, you controlled everything.
Many publishers had come to regard Amazon as a heavy in khakis and oxford shirts. In its drive for profitability, Amazon did not raise retail prices; it simply squeezed its suppliers harder, much as Walmart had done with manufacturers. Amazon demanded ever-larger co-op fees and better shipping terms; publishers knew that they would stop being favored by the site’s recommendation algorithms if they didn’t comply. Eventually, they all did. (Few customers realize that the results generated by Amazon’s search engine are partly determined by promotional fees.) Sales meetings in Seattle were now all about payments, not new books, and the size of orders was predicated on algorithms, rather than on the enthusiasm of the publishers’ sales staff and Amazon’s own buyers, who were rebranded as “inventory managers.” Brad Stone describes one campaign to pressure the most vulnerable publishers for better terms: internally, it was known as the Gazelle Project, after Bezos suggested “that Amazon should approach these small publishers the way a cheetah would pursue a sickly gazelle.” (Company lawyers later changed the name to the Small Publisher Negotiation Program.)
Before the impasse, Amazon had represented eight per cent of Melville House’s sales, more than Johnson could afford to lose. So he capitulated. “I paid that bribe”—he wouldn’t disclose the amount—“and the books reappeared.”
“Proceed as if your goal is to put everyone selling physical books out of a job.”
In any case, Amazon’s warehouse jobs are gradually being taken over by robots. Bezos recently predicted to a gobsmacked Charlie Rose that, in five years, packages will be delivered by small drones. Then Amazon will have eliminated the human factor from shopping, and we will finally be all alone with our purchases.
According to a recent study of U.S. Census data by the Institute for Local Self-Reliance, in Washington, brick-and-mortar retailers employ forty-seven people for every ten million dollars in revenue earned; Amazon employs fourteen.
In the book industry, many of those formerly employed people staffed independent stores. Two decades ago, there were some four thousand in America, and many of them functioned as cultural centers where people browsed and exchanged ideas. Today, there are fewer than two thousand—although, with Borders dead and Barnes & Noble ailing, the indies are making a small comeback.
The literary agent, contemplating the future of the editors currently at Amazon, said, “You’d have to consider the time you spent with Vichy when you’re looking for work after the occupation.”
The division pursued an unusual way of producing television series, using its strength in data collection. Amazon invited writers to submit scripts on its Web site—“an open platform for content creators,” as Bill Carr, the vice-president for digital music and video, put it. Five thousand scripts poured in, and Amazon chose to develop fourteen into pilots.
In 2010, Charlie Rose asked him what he thought of Bill Gates’s challenge to other billionaires to give away most of their wealth. Bezos didn’t answer. Instead, he launched into a monologue on the virtue of markets in solving social problems, and somehow ended up touting the Kindle.
“Amazon has successfully fostered the idea that a book is a thing of minimal value,” Johnson said. “It’s a widget.”
books that are expected to sell modestly but whose quality gives them a strong chance of enduring—have declined by a quarter. These are the kinds of book that particularly benefit from the attention of editors and marketers, and that attract gifted people to publishing, despite the pitiful salaries. Without sufficient advances, many writers will not be able to undertake long, difficult, risky projects. Those who do so anyway will have to expend a lot of effort mastering the art of blowing their own horn. “Writing is being outsourced, because the only people who can afford to write books make money elsewhere—academics, rich people, celebrities,” Colin Robinson, a veteran publisher, said. “The real talent, the people who are writers because they happen to be really good at writing—they aren’t going to be able to afford to do it.”
Seven-figure bidding wars still break out over potential blockbusters, even though these battles often turn out to be follies. The quest for publishing profits in an economy of scarcity drives the money toward a few big books. So does the gradual disappearance of book reviewers and knowledgeable booksellers, whose enthusiasm might have rescued a book from drowning in obscurity.
These trends point toward what the literary agent called “the rich getting richer, the poor getting poorer.” A few brand names at the top, a mass of unwashed titles down below, the middle hollowed out: the book business in the age of Amazon mirrors the widening inequality of the broader economy.