Amazon Is Worse Than Walmart
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President Barack Obama will visit an Amazon warehouse in Chattanooga, Tenn., today to talk job growth — but the speech comes at a particularly awkward time for the government to embrace the company. Or perhaps there’s no more apt time: a time when we need to ask whether Amazon’s growth will lead to the kind of economy or culture we actually want to have.
This isn’t the first time the administration has embraced Amazon: Obama’s Justice Department, in April 2012, went after publishers and Apple for price-fixing, leaving Jeff Bezos’ books-and-everything-else marketplace with what the New York Times called a “monopoly.”
But this visit comes at a time when Amazon’s clout in the book world, in Washington and on Wall Street seems increasingly unstoppable. Obama’s speech is the exclamation point on a whirlwind several weeks in which Amazon has consolidated its position. Barnes & Noble looks increasingly shaky. Amazon lost $7 million in the second quarter, but Wall Street yawned again, sending Amazon shares higher.
And Amazon felt confident enough last week — with Wall Street satisfied, bookstores reeling and the Justice Department going after publishers — to radically slash prices on many best-selling hardcovers to nearly unseen levels: $9.09 for Sheryl Sandberg’s “Lean In,” $11.65 for Dan Brown’s “Inferno.” That’s less than most paperbacks, and led one bookseller to call it a brazen “declaration of war.”
“They’ve devalued the concept of what a book is, and turned it into a widget,” said Melville House publisher Dennis Johnson, one of Amazon’s most prominent critics. He also alleged that major publishers were afraid to speak on the record about Amazon’s tactics for fear of retribution.
Amazon is evidently seen, by Obama and his administration, as the sort of American job-creating corporation that underpins the economy. However, unlike, for example, Walmart, a company with many deplorable practices but a massive ability to generate profit, Amazon uses everything (cheap, cheap books; distribution centers; the Kindle) as a loss-leader for everything else. Profits dropped again last week, though the company’s stock didn’t appreciably drop.
“Our discount cannot compare to what Amazon was setting their prices at, even before they started selling their books at 60 percent off,” said Carson Moss, the buyer for Strand Bookstore in New York. “There’s frustration that a company that hasn’t turned a profit continues to be rewarded with higher stock prices and they can make seismic shifts in this industry.”
A clue to Amazon’s plan may lie in its recent decision to raise the prices of small-press and academic books, as they’re among the only places such books can be procured. Though Moss said Strand is doing well thanks to its employees’ expertise, when many of the currently existing places to buy “Gone Girl” and “The Cuckoo’s Calling” are driven out of business, it seems fair to presume that the prices will go back up.
After all, Amazon U.K. recently announced that it was ending free shipping on many orders. As Johnson noted on his Melville House blog: “A price rise is inevitable, of course, whether it’s happening now or not. No monopoly in history has ever lowered prices. That’s not what monopolies do. That’s not why they exist. Amazon did not suffer losses for 18 years in order to achieve total market domination and nonetheless continue posting the kind of losses it posted yesterday … and the quarter before that … and the quarter before that, dating back to the company’s inception in 1995.”
Amazon’s also been painted as a pretty terrible place to work: A report on Gawkerdescribes a Tennessee warehouse where employees take forced overtime and perform monotonous work with minimal break time, while a 2011 newspaper report on Amazon’s warehouse in Allentown, Pennsylvania, told of over 100-degree temperatures and “a pace many could not sustain.”