Ama­zon: The killer of Amer­i­can busi­ness

The Weekly Vista - - Opinion - Devin Hous­ton is the pres­i­dent/CEO of Hous­ton En­zymes. Send com­ments or ques­tions to devin.hous­ The opin­ions ex­pressed are those of the au­thor. DEVIN HOUS­TON

Al­most ev­ery­one pur­chases some­thing on­line. The con­ve­nience is hard to re­sist; just type in what you want to buy and a list of sell­ers pops up. All you have to do is click on the cheap­est price, pay with your credit card and in three days the pack­age comes to your door. No driv­ing to the store or walk­ing through a mall for you, just sit in your lounger and click away. Con­sumerism at its lazi­est!

The big­gest on­line seller is Ama­, which lit­er­ally started in the garage of Jeff Be­zos in the 1990s by sell­ing books on­line. Since peo­ple still read hard­cover books back then, Be­zos made a lot of money. He then ac­quired a num­ber of other com­pa­nies that al­lowed him to ex­pand his in­ven­tory to CDs, shoes, knock-offs and liq­ui­dated stock. Ap­par­ently, Amer­ica’s ap­petite for cheap goods knows no bounds.

You may think this is just an ex­am­ple of Amer­i­can en­trepreneur­ship, just cap­i­tal­ism at its best. My opin­ion is that it sig­nals the end of brick-and-mor­tar re­tail shops. The era of walk­ing into a build­ing with shelves filled with goods and real peo­ple to help you find what you need is over. Why buy or rent a phys­i­cal build­ing and hire peo­ple to run a busi­ness when all you need is a vir­tual store­front, some stor­age space, and the abil­ity to stuff a box and af­fix postage?

Ama­zon is a threat to those who work in re­tail. At least 10,000 work­ers have been laid off at Macy’s. Some 4,000 work­ers lost jobs at The Lim­ited. Sears and Kmart have an­nounced that some 150 stores will be clos­ing. Ra­dio Shack and other out­lets have also down­sized. The past two years have seen over 125,000 jobs lost in the re­tail sec­tor, and those jobs don’t reap­pear in Ama­zon.

More dis­turb­ing is that Ama­zon wields a power never be­fore seen in busi­ness. Ama­zon has in­serted it­self into the in­fras­truc­ture of the Amer­i­can econ­omy. Its Web Ser­vices di­vi­sion pro­vides the cloud-com­put­ing plat­form for much of the coun­try, with in­flu­ences from Net­flix to the CIA. By con­trol­ling the in­fras­truc­ture, Ama­zon com­petes with other com­pa­nies and sets the terms by which ri­vals can mar­ket. It plans on in­volve­ment with pay­ment pro­cess­ing for other e-com­merce busi­nesses.

Ama­zon uses its power to elim­i­nate com­pe­ti­tion. Busi­nesses now must start Ama­zon store­fronts to be­come third-party sell­ers. Other store­fronts ob­tain prod­ucts from le­git­i­mate man­u­fac­tur­ers and sell at prices that un­der­cut th­ese busi­nesses. This forces a down­ward spi­ral of match­ing lower and lower prices, even­tu­ally lead­ing to loss of brand value and loss of profit for the man­u­fac­turer. Ama­zon en­cour­ages price com­pe­ti­tion. Value is noth­ing, only price.

I have ex­pe­ri­enced sell­ing on Ama­zon. I didn’t like it and tried to stop. Then I find other Ama­zon sell­ers sell­ing my prod­ucts on­line at steep dis­counts. You can’t find the peo­ple be­hind the stores to con­front them, and you can’t eas­ily stop them. If you do find them and com­plain, they of­ten post neg­a­tive re­views to pun­ish the man­u­fac­turer.

Be­fore you buy on Ama­zon, con­sider this. If price is your pri­mary driver, con­tact the man­u­fac­turer of the prod­uct and of­fer to buy the prod­uct at the Ama­zon price. More than likely, they will be happy to do so. They would rather sell the prod­uct to you at the lower Ama­zon pric­ing than sup­ply the Ama­zon seller with prod­uct at the much lower whole­sale price. You will also get a le­git­i­mate prod­uct with full war­ranty and re­turn in­for­ma­tion that is not al­ways pos­si­ble on Ama­zon.

More im­por­tantly, you may keep a busi­ness in busi­ness.

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