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Report: Amazon is damaging competition, SMEs and consumer choice

By Dan Wilson November 30, 2016 - 9:00 pm

According to a new report, Amazon is undermining competition, small businesses and workers, as well as reducing economic opportunity and consumer choice.

So says the US Institute for Local Self-Reliance. ILSR Co-Director Stacy Mitchell writes: “Our analysis suggests that Amazon represents nothing less than a new wave of economic dislocation and loss of local ownership following the earlier collapse of manufacturing and small businesses that devastated so many regions of the country.”

You can download the report called Amazon’s Stranglehold: How the Company’s Tightening Grip is Stifling Competition, Eroding Jobs, and Threatening Communities.

They say that Amazon now takes nearly $1 in every $2 that Americans spend online. They note that Amazon (and presumably its 3P merchant) sells more books, toys, and soon, clothing and consumer electronics than any retailer off and online. The report claims that Amazon has eliminated about 149k more jobs in retail than it has created in its warehouses.

Another attack the report makes on Amazon is that they are also getting considerable US government grants and subsidies to develop its fulfilment infrastructure. As the ILSR says: “Cities and states have helped finance Amazon’s expansion. The report finds that Amazon has pocketed at least $613 million in public subsidies for its fulfillment facilities since 2005, and more than half of the 77 large facilities it built between 2005 and 2014 have been subsidized by taxpayers.”

  • Mac
    3 months ago

    Buyers wanting goods cheap and quick – what exactly is the downside for the consumer of them choosing to spend half their online money at Amazon?

    • John
      3 months ago

      Amazon is using marketplace sellers, government (that’s your money squire)and shareholders cash to undercut competition whilst exploiting workers (especially in the UK). Once the competition is gone then the prices go up. For further information on general economics read Basic Economics by Thomas Sowell.

    • Mac
      3 months ago

      John, how will amazon putting their prices up stop you selling at the price you want? They won’t stop me selling at prices I want.
      What exploitation of workers are amazon doing? Are the workers paid less than minimum wage? Are they working harder than elsewhere in logistics?

  • Gary
    3 months ago

    Retail does nothng to add to gross domestic product. If those who lose their jobs in retail move into an expanding manufacturing environment and make things rather than sell things then that builds wealth for the economy rather than eroding it. So a loss of unproductive retail jobs is a good thing as long as manufacturing can take up the slack.

    • Stuart
      3 months ago

      That’s hilarious. Wait, were you being serious?

      If manufacturing is the source of GDP growth, then why are the long-term trends showing GDP growth and manufacturing decline? And how can manufacturing possibly take up the slack of anything?

    • Mac
      3 months ago

      Gary, great go and make things. Who will you sell to? What if they don’t want what you are making?
      Britain has a great manufacturing industry, it just doesn’t need as many people as decades ago.

    • Gary
      3 months ago

      Surely the biggest benefit of online retailing is that it is hyper-productive which bricks and mortar retailing tradionally is not. The UK is suffering a productivity gap and paying employees to hang out in bricks and mortar stores stock and code checking, etc, when not actually selling does nothing for productivity. Better to have these non producers making things which adds value to the economy and use the hyper effieciencies of online retailing to sell these goods. Ask yourself why the bricks and mortar discounters in the UK are booming at the expense of traditional staff heavy retailers. Lower cost base perhaps with savings passed on to customers? Only a very small proportion of the population can afford the Harrods experience and are willing to pay a premium for this service. Raise living standards by removing employees from low wage retail to higher wage manufacturing and more will be able to afford the Harrods experience.

    • Sam O'levski
      3 months ago

      Interesting article on bbc today about disappearing high streets – http://www.bbc.co.uk/bbcthree/item/792c8350-b7eb-4234-addc-a055e1e3676a
      You’re talking about larger retailers and not mentioning the smaller family businesses which often made our local high streets individual, but which cannot compete.
      These family businesses usually cannot afford staff, so only the owner is hanging around waiting for customers.
      If you look at the grocery trade, it’s a classic example of where huge corporations have tried to corner the market, and in doing so have forced smaller places to close, as well as reducing the consumers choice. It started in the 1960’s I believe when retail price maintenance was abolished, allowing Tesco etc to thrive.
      A look in depth at some Eastern European countries will also show how raising wages doesn’t always lead to improvement – some cities have lots of malls with high priced goods which ordinary people cannot afford, but the smaller businesses elsewhere have been forced to close when people were attracted to the malls with their flashy shops and advertising.

    • TINKER
      3 months ago

      never mind tesco etc
      what about the massive high st charity operation on an industrial scale that uses tax and overhead deals to undercut and compete with legitimate fully regulated and taxed business

    • Gary
      3 months ago

      More choice than ever. Convenience stores run by locals on every corner and in every high street selling fruit and veg often far cheaper than supermarkets. Agree with Tinker about charity shop scam. This is main cause of high street demise. If every high street shop owner had business perks of charity shops it would big supermarkets saying they cannot compete! When will Amazon go into the charity shop business I wonder as they no doubt will want a piece of this action.

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