The trouble with breaking up Amazon? Its online store is so good, Retail News, ET Retail
Amazon is a genie of consumerist wishes, and it keeps growing more irresistible. The company’s online store has always been convenient and plentiful, but in the last year, Amazon significantly increased the speed at which it delivers products, with many items delivered overnight to its Prime members. Investors on Wall Street are used to Amazon’s big spending, and many stock analysts had expected the expensive next-day shipping plan to be another loss leader. But late last month, Amazon released a stunning holiday-season earnings report that proved otherwise: Next-day shipping, the company said, had significantly boosted sales and driven many new sign-ups for Prime, which now has more than 150 million members.
The rest of Amazon’s businesses — including its cloud service, known as AWS, and its advertising arm, which is now the third-largest digital ads platform in the U.S. (after Google and Facebook) — also crushed Wall Street’s predictions. The company’s stock price just hit another all-time high — Amazon is now valued at more than 1 trillion dollars, and analysts are tripping over themselves with giddy expectations of its future.
As a fervent Amazon customer, I love that its platform keeps getting more convenient. But as a professional worrier about tech’s future, I’m nervous. Amazon’s growth should scare the critics — including yours truly — who worry about the size and scope of gigantic tech firms. The past year has been a boon for trustbusters in tech. Elizabeth Warren launched her presidential campaign with a bold call for breaking up large tech companies, including Amazon. Meanwhile a host of regulatory agencies are looking into tech competition; this week, the Federal Trade Commission announced a broad review of acquisitions made in the last decade by Amazon, Apple, Facebook, Alphabet and Microsoft.
But in Amazon’s case, it might be growing increasingly difficult to convince people that stringent regulation — and especially a breakup — will be a good thing. The trouble isn’t that it’s hard to make the case that Amazon is extremely big and powerful; the trouble is that even as Amazon gets bigger, it still faces relentless competition in the retail business and is therefore not slowing in any obvious way to act like a lumbering monopoly of yore. The company keeps innovating — and as it does, the possible harms critics have long warned about may look increasingly distant to its customers.
What consumers may come to see in Amazon, instead, is what I’ve started to notice — it’s an inescapable, all-consuming retail paradise. Today, in the retail world Jeff Bezos built, it’s possible to get nearly anything you want, very quickly, for not much money, just about anywhere in the country, and probably to return it for free for just about any reason. And because Walmart, Target, independent booksellers and others are all working furiously to match or exceed Amazon’s convenience, Amazon’s innovations are rippling across the retail industry.
Amazon is pushing a level of speed, convenience and selection in shopping that millions of customers are integrating into their daily lives. The more entrenched Amazon gets, the tougher the political case for breaking the company up becomes, especially if you consider the demographic makeup of Amazon’s best customers. Compared to Walmart (which still reigns as by far the largest retailer in the world), Amazon’s customers tend to be affluent, excessive consumers. Many Amazon devotees are exactly like me — they are part of the global elite in the media, politics, finance and tech, upper-middle-class consumers whose chief hardship is having more money than time and who may not take too kindly to their conveniences being snatched away in the name of corporate equality.
None of this is to suggest that Amazon’s growth is free of consequence. Last year The Wall Street Journal published a series of stories on the rising numbers of banned, unsafe, counterfeit or otherwise shady products flooding its store. A number of small companies have complained about Amazon’s efforts to copy their products or otherwise bully them into preferable terms. There are persistent reports about the dangers of Amazon’s delivery infrastructure — its contractors, racing to deliver packages as quickly as possible, have brought “chaos, exploitation, and danger to communities across America,” BuzzFeed reported last year.
Yet many of these harms tend to be out of sight — not obvious to shoppers and not clear to lawmakers or regulators. Meanwhile, for shoppers, the benefits of Amazon’s advancing platform are direct and salient.
To illustrate how completely Amazon is upending shopping, consider a recent product hunt of mine. As a result of the wintertime lethargy known as seasonal affective disorder, or SAD, I tend to become an unproductive gloomy Gus whenever the sun goes away. Late last year, I came upon a writer named David Chapman who’d rigged up a SAD treatment supposedly much more effective than the “light therapy” boxes sold to mitigate the condition.
Chapman had purchased a set of extremely bright LED lightbulbs from Amazon — lights “designed for off-road SUV driving at night” — and mounted them to the ceiling of his home office, illuminating his indoor space to nearly the brightness of the outdoors. Lightbulbs this bright would have been prohibitively expensive not long ago, but (thanks to environmental rules Donald Trump wants to do away with) energy-efficient LEDs have revolutionized indoor lighting, and Amazon has become a thriving marketplace for the new bulbs. On Amazon, Chapman had spotted a product opportunity not apparent to the market — thanks to cheap, widely available LEDs, it’s now possible to illuminate indoor spaces to a level so bright that it can reduce wintertime blues.
Naturally, I had to try it out. And so, over the holidays, I spent a couple hundred dollars buying loads of different very-bright LEDs from Amazon. Alas, the result was not too exciting: I got my office as bright as the sun, but after a few weeks of sitting in the glare, I noticed at best a minimal improvement in my mood.
Which brings me to the really amazing part: After using the lights for a couple of weeks, I packed them up and sent them back. Amazon is a trillion-dollar retailing phenomenon that has transformed almost everything about the way Americans shop, but sometimes it seems to operate as a charitable operation for well-off consumers who just want to try out this or that high-priced consumer fancy.
Consider all the resources Amazon put into my lighting purchase: The company had stocked its store with niche, highly advanced electronics; it had spent billions on a shopping infrastructure capable of shipping those products to me overnight; and it had spent heavily on marketing, including doling out affiliate marketing fees to bloggers like Chapman, in order to bring customers like me to its store.
Yet, after all that, I’d decided to use the company essentially as a kind of product lending library. I purchased a variety of expensive items I had only marginal interest in keeping for the long term, I’d opened the boxes and got my sticky hands all over them, and when I grew tired of them, I sent them back like so much used laundry.
How much had the company made on me? Not a penny — at least, not that time. Which, of course, is the bet: The more absurdly convenient Amazon is to me, the more likely I will be to spend more of my money there next time. And to balk, it hopes, when the next president floats a plan to break apart the everything store.