When the Amazon tyranny turns inwards

Amazon is relentless

Tyrannies always turn inwards. A bridge gets crossed and the relentless troops storm the other side, which, as it happens, we are all on.

Beware that Amazon is a country, Jeff Bezos is its tyrant and we are the useful idiots.

Amazon revenues rank #1 Among online/Internet companies, generating $136b in annual revenues. They have 34% of Internet/online economy market share. They are the dominant online retailer, with $86.8b, which is 65% more than the next nine top U.S. online retailers combined

Workforce

Amazon employs almost 150,000 workers, and WholeFoods will increase that count by 91,000 and is currently number one with 49% of all Internet/online economy jobs

Full-time, part-time, and temporary employees on Amazon’s payroll in the U.S. = 145,800

  • Displaced jobs at brick-and-mortar stores -294, 574
  • Net job losses at the end of 2015 -148,774

Food supplies

They’re number one with 22% share of the U.S. online grocery market

Amazon Prime Platform 

Amazon increasingly controls what products make it to market and appear before us as we’re browsing.

It has the power to pick winners and losers, leveraging interplay between the retail and platform to maximize its dominance over suppliers. As it extracts more fees from them, it’s hollowing out their companies and reducing their ability to invent and develop new products. Amazon’s dominance is already reducing their ability to invent and launch new products.

As a consumer, how would you even know that something was missing?

By operating as both a direct retailer and a platform for competing sellers, Amazon can toggle back and forth, leveraging the interplay between these two parts of its business to maximize its market power.

Everything you buy, starting with your weekly groceries, will be flowing through one pipe called Amazon

Logistical Support 

As Amazon grows its logistics empire, it’s also manufacturing more of the goods that are moving through it.

Amazon has unveiled 7 of its own fashion lines, offering more than 1,800 items of apparel, furnishing a wide range of household items, from computer cables to swivel chairs. On Amazon.com, many of these products rank as top sellers in their categories and show up first in search results. Amazon publishes books too, and it’s not uncommon for as many as half of the titles on its Kindle bestseller list to be its own

Finances

Between 2010 and 2016 Amazon’s net sales exploded from $34.2 billion to $136 billion. But its pre-tax margin, which was already thin at 4.4% in 2016 clocked-in at just 2.9% in the year just completed

On sales growth of $102 billion, Amazon posted only $2.5 billion of pre-tax profit gain. Indeed, apart from its cloud business (AWS) Amazon is essentially not a profit-making institution at all. Amazon has managed to avoid its share of taxes and tax collection. They had a pre-tax income of $3,512 million but paid only $152 million in taxes for an effective tax rate of 4.33%, The IRS is currently suing for 1.5 billion in unpaid taxes and in the EU, regulators are challenging the legalistics of certain tax structures in Luxembourg and elsewhere.

…and the taxpayer

Since 2005 Amazon has received approximately $900 million worth of subsidies to construct and operate its facilities, with $241 million awarded since the start of 2015, a staggering sum considering these facilities, regardless of any potential subsidies, had to be built  The Postal Service is also subsidizing Amazon package delivery with first-class mail. If costs were fairly allocated, on average parcels would cost $1.46 more to deliver. Two-thirds of Amazon’s domestic deliveries are made by the Postal Service.

Propaganda 

Counter arguments and inquisitions of Amazon has been evaporated. Amazon, aligned with other technology un-employers have crafted a well marketed, PR/propaganda campaign that tells the world that the Robots and Artificial Intelligence usurpation of humans is inevitable. 

Critics are dismissed as #LudditesWhoOpposeTechnology.

Bezos has levered Universal Basic Income as a political tool to ease societal scorn for the increasing use of robotics.

That PR/propaganda narrative is being amplified by journalists following the tech and finance industries who self evaluate as an avatar of economic progress and embrace Amazon’s framing of a heroic battle against backwards industries.

The resistance

Half of its retail revenues come directly from consumer-customers, and the other half of its retail revenues come from its MarketPlace offering where Amazon is the mall and gatekeeper for around 15 of its top 20 grocery competitor-customers.

Amazon’s retail intermediary model

Amazon is simultaneously a direct retail competitor and the dominant online broker. In that broker role they are not an “honest broker.” 

This makes Amazon Prime the tie that binds Amazon’s online and offline market power.

And it should be stopped. 

The End?