The Dark Side of Amazon
Where can you buy 10 outfits, an orange desk, a pillow with Michael Scott’s face on it, a blow up squirrel, and binge watch “The Real Housewives of Beverly Hills” all in one place in one day? Amazon! When we need anything, from a new lamp to a book to a panini press, we turn to Amazon before thinking of companies that specialize in these items. Amazon’s great convenience should not be undervalued; however, one must question how objects that are regularly valued at $100 can arrive within a day or two through Amazon, packaged on your doorstep, for a mere $60. From the consumer’s point of view, it seems that Amazon has cornered most markets through its ingenuity in finance and marketing strategy, but there are layers of hidden stepping stones that Jeff Bezos and his company took to achieve their dominant status.
Amazon became a publicly traded company in 1997 under the guidance of CEO Jeff Bezos. In light of Jeff Bezos’s recent decision to step down as CEO and assume the role of executive chair, it is fascinating to analyze how he has both pioneered the modern marketplace while causing irreparable damage to individual companies and to many industries. From Amazon’s debut on the public market, Bezos used innovative trading techniques. He purchased a large portion of his firm’s stock so that he could maintain control and grow the company using his own strategies. Amazon grew slowly in the beginning, but did not show a profit. That was part of Bezos’s strategy: to grow Amazon by creating a large, loyal customer base, rather than one-time users. On the surface, it would seem that Amazon would continually lose money selling items at a lower place. However, Bezos insightfully planned to create lifetime customers, and profit once customers got hooked in by inexpensive initial purchases. In a sense, buying from Amazon is similar to an addiction.
Bezos has preached that Amazon’s goal is to provide the easiest, most affordable experience to all its customers. But how can Amazon afford to do that? The truth goes far beyond the strategic business planning of Bezos and his team. Bezos’s hyperfocus on the needs of the customer was effective in building Amazon into one of the world’s most powerful entities. Unfortunately, this great success has come with the consequences of putting startups out of business, and using unethical advertising tactics.
Once someone creates an Amazon account, they are inevitably sucked into Bezos’s marketing strategies. Amazon invented the strategy that Instagram and Tiktok now use to understand the mind of the consumer and to personalize every ad. To maximize each customer’s usage of Amazon, the company displays carefully curated ads for products and services to match the exact personality that has been inferred from the customer’s unsuspecting clicks. Although this sort of marketing may have been viewed as unethical at some point, it is now widely accepted and utilized by an increasing number of consumer product and social media companies.
In recent years, Amazon has rapidly expanded its inventory from its original focus on books to household appliances and items from almost every sector. Amazon has created one of the most popular streaming services, and has produced award winning movies and TV shows. It has monopolized all parts of the consumer market by controlling the means of production and distribution. It also controls the technical and essential business operations for companies by providing the Amazon Web Service (AWS), and therefore eliminating the competition of service providing companies.
Amazon has always been criticized specifically for putting bookstores out of business due to sentimentality, but their monopolizing offenses stretch far beyond books. Large companies with long histories, like Toys"R”Us and Macy’s, have blamed Amazon for the closing of their stores, and others like Barnes and Noble have had to drastically reduce their operations. From Bezos’s point of view, Amazon opens a platform for small and medium sized companies to sell their products and grow. Some even argue that Amazon has democratized retail and given an equal shot to businesses from all locations and backgrounds. However, since Amazon has dominated so many industries, its suppliers must follow its demand to lower prices and churn out products. Since Amazon’s business model is based on guaranteed low prices and fast shipping, it has destroyed the opportunity and incentive for small businesses to be creative and innovative with their products.
Amazon publicly claims to be environmentally conscious, but it actually works against environmental interests. As Amazon grows, its sustainability practices diminish, despite surface level claims of decreasing fossil fuel emissions. It’s unclear when Amazon will follow through on its promise to become environmentally friendly, but it’s unlikely to happen anytime soon. To fight bad public relations, Amazon publicizes many of its efforts to transition to green energy, such as building wind turbines or donating money. Despite Bezos’s extraordinary contribution of $10 billion, many environmentalists complain that there is no amount of money one can pay to remove the irreparable damage that Amazon has caused and will continue to cause to the environment. Since Amazon is such an influential company, if it switched to more environmentally friendly packaging, manufacturing, and means of transportation, it could inspire many other companies to follow suit.
Just as Amazon has drawn criticism for destroying many companies and hurting the environment, it has gotten a lot of backlash for the treatment of its workers. Known for making it difficult to unionize while barely maintaining livable wages, Amazon has come under fire for its lack of fair labor policies. Its Exploitation of low-wage workers has renewed the debate that capitalism benefits mostly the wealthy. In the beginning of the pandemic, like many other large corporations, Amazon ignored its warehouse workers’ demands for increased safety precautions, and only eventually relented because of the threat of a lawsuit. Immediately after Bezos stepped down from his role as CEO, Amazon had to pay fines and penalties of $60 million to settle allegations that the company was not giving tips to its delivery drivers. There is a suspicion that Bezos stepped down from his top role to avoid the onslaught of negative attention to Amazon.
It seems hard to imagine that a company as powerful and wealthy as Amazon would endure so much negative media coverage just to save some money, but it gets worse. Companies like Apple, Facebook, and Amazon pay a significantly smaller percent of their income in taxes compared to most smaller companies. In fact, the company was deliberately designed to avoid paying taxes. Because it was not a brick and mortar store and, until recently, did not have a physical storefront, Amazon was not required to pay sales tax in many states (as is true of other online retailers). The company also reinvests much of its profit back into the company, which mirrors the tax-avoiding strategy of non-profit organizations, except Amazon was built for profit.
Should we boycott Amazon? It is not easy. Amazon’s influence extends through many parts of our lives, much of which we don’t even realize. It is difficult to avoid engagement with the company. Their cloud computing service, Amazon web services (AWS), is used by many organizations. Pledging to avoid Amazon would mean never going to Whole Foods; not using Amazon Prime to stream movies; and avoiding Twitter and Netflix because they rely on AWS. And even unplugging your Alexa. You would have to avoid industrial giants like General electric...
So what if we all decide to boycott Amazon? At this point, that’s relatively impossible. Amazon has extended its influence into parts of life that you never would expect, making it virtually impossible to avoid engagement with the company. They have created a cloud computing service called Amazon Web Services (AWS), which is used by numerous other platforms and companies. Pledging to stop supporting Amazon would mean never going to Whole Foods again, not using Amazon Prime to stream movies, avoiding Twitter and Netflix because they both rely on AWS, and unplugging your Alexa. Even if all of that seems doable, you also have to avoid industrial giants like General Electric (and every service that stems from that), news sources like the Guardian, and stores like Zappos that appear on the surface to be worthy competitors to Amazon, all because of Amazon’s cloud service.
It seems to be an impossible task to take on this industrial giant. However politicians, labor organizations, and public opinion are beginning to affect Amazon’s policies. Elizabeth Warren and Bernie Sanders have achieved success in pushing for fair labor policies within Amazon and exposing its monopolistic practices. Sanders has attacked Bezos for not providing adequate sick days and higher wages for his workers, and Warren has even gone so far as to say Amazon should be broken up into separate companies. As with most issues, public opinion carries the most influence in changing Amazon’s practices. Last year, Bezos created a highly publicized contest between cities to host Amazon’s new headquarters. Despite the enticing new job prospects and economic stimulus that the chosen cities would receive, New Yorkers rejected their “win” because of Bezos and Amazon’s arrogant display of power.
Amazon has brought many issues of the corporate world to the forefront of media and politics, and it has made unprecedented strides for the American industry. Jeff Bezos is a symbol of hard work and success to many, but a symbol of greed and tyranny to others. Whether he is seen as a capitalist hero or a menace, one can not deny his enormous influence on how companies around the world conduct business and on the expectations of the average consumer.