Amazon Is Crushing Main Street and Threatening the Vitality of Our Communities

It’s that time of year—Thanksgiving holiday will be here soon, and we’ll gorge ourselves on good food. And then we’ll get to celebrate black Friday (the frenzy-filled shopping Friday right after Thanksgiving, which has actually encroached on Thanksgiving in recent years) and cyber Monday (the Monday after Thanksgiving when retail marketers encourage us to shop online). And, if we’re shopping online, odds are good that we’ll shop on Amazon.com. Maybe we should rethink that.

Even by the anything-goes ethical code of the corporate jungle, Amazon.com’s CEO, Jeff Bezos, is considered a ruthless predator by businesses that deal with him. He has the monopoly power to stalk, weaken and even kill off retail competitors — from giants as Barnes & Noble and Walmart, to hundreds of small Main Street shops.

If you think “predator” is too harsh a term, consider the metaphor that Bezos chose when explaining how to approach small book publishers to make them cough up ever-deeper discounts: stalk them “the way a cheetah would pursue a sickly gazelle.”

Amazon’s zip-zip, direct-to-customer Internet business structure ripped right through the segmented system of publishers, wholesalers, distributors, bookstores and big-box retailers — and quickly became a monopolistic powerhouse. Today, this one corporation sells a stunning 40 percent of all new books, up from 12 percent five years ago.

 With his market clout, deep-pocket financing and ferocious price-cutting, Bezos has forced hundreds of America’s independent bookstores to close, which depletes the economic and cultural vitality of the communities they served. The online carnivore has also devastated the haughty superstore book chains that only a short time ago preyed on the local independents and dominated the market. Borders, the second-largest chain, couldn’t keep up with Amazon’s pace, succumbing to bankruptcy in 2011. Now, Barnes & Noble, the largest brick-and-mortar bookstore, is stumbling.

But it’s not just books, for Bezos has laid siege to the market for nearly all consumer products — and to America’s business culture itself, stripping out every value except efficiency and price. From A to Z — appliances to zucchini — Amazon really has become the “everything” store. As a result, books now make up a mere 7 percent of Amazon’s total business.

Its explosive sales growth in recent years has come from Bezos’ realization that his cheetah business model could be applied to any number of product categories being sold in neighborhood shops and suburban malls. Quietly but quickly, he has been poaching millions of customers from those retailers, captivating them with the same dazzling, deeply discounted prices he used to conquer and remake the book business.

Without actually “being” anywhere and without hiring any sales clerks, Amazon is now a top seller of such consumer goods as baby products, jewelry, groceries, sports equipment, cosmetics, auto parts, pet supplies, luggage, kitchen gadgets, musical instruments, garden tools, etc.

Central to the business plan that Bezos drew up in 1994 was a loophole he’d found in a Supreme Court ruling just two years earlier: If a retailer has no physical presence in a state, it need not collect sales taxes. So, he has emphatically insisted from the start that Amazon’s only facility is its headquarters in Washington State. Up until recently, Amazon was not collecting sales tax in 49 states (21 states have now closed the “Amazon loophole”).

To understand that impact of not paying sales taxes, let’s look at my home state of Texas, where the sales tax rate is 8.15 percent. By claiming to be exempt, Amazon gets a price subsidy of more than eight cents on every dollar of its sales — more than the entire profit margin of most independent shops!

Source: Alternet