What’s Not To Like?

Killing me softly, killing me softly,
with his song…

–Roberta Flack

It’s September 14th. Cindy’s birthday is the 18th. I think, “You know what? I’d love to give her the new Amazon 8″ Kindle Fire with built-in Alexa.” Did I put the order in? Or just think about it? Either way, it’s on my doorstep in two days. I’m mildly distraught about this because, of course, I’ve come to expect next day delivery from Amazon, even though Hurricane Irma is still raging over my house.

Fucking Jeff Bezos, strumming my face with his fingers.

Without question, Amazon is the retail industry disrupter non pareil. On price (the Website said $79.95, but when I entered the order it was discounted to $59.95 for Prime members), on delivery speed, and on follow up service, the globe has never seen its equal. As a consumer, ya gotta love it, until you peak under the hood and see how it’s done.

How do you sell a twenty-seven dollar book for seventeen bucks?

  1. You persuade your investors to accept a business model that generates no profits for years in order to push thousands of neighborhood booksellers into bankruptcy.
  2. You squeeze both the authors and publishers unmercifully, forcing them to go along or get left off the juggernaut that is scooping up all the business with predatory pricing.
  3. You treat your employees callously, making them work in un-air conditioned fulfillment centers for lousy pay with the assurance that robots will take their place as soon as available.

Not a new story. Wal-Mart on steroids, actually. But I’m elitist. I have no problem hating WMT. I’d rather be horse-whipped than venture into one of their smarmy stores and deal with their surly, morbidly obese employees, just to pay less for my Fruit Of The Looms.

My bookseller? That’s another matter. Used to be, I’d be in every week to browse and buy. But as time has gone by, I have come to realize that I go local maybe two-three times a year. Always buy a book or two, but, Jeez, it’s a crime!

So, do I resist? Do I insist on paying full-boat in order to keep my local indie afloat? No. Commerce is Darwinian. The vitality of free markets depends on innovation, and the innovator wins, at least short term. So my store adapts by hosting authors for book signings, keeping an eye out for the books his local clients favor, and giving excellent service. Still, it’s a shrinking enterprise and it makes me sad.

The steady concentration of business, where a few companies, through innovation, financial heft, and/or political influence get the lion’s share is a normal feature of rising economies. Monopolies flourish late in the cycle, contributing to the ultimate weakening of the economy when competitors fail and put their workers on the street. Trust-busting follows, causing even more unemployment. It’s a mess, but that’s how it works.

Strictly speaking, Amazon is not a monopoly, in that it does not create content or manufacture products. It is a platform to distribute the produce of other entities. In traditional economics, Amazon is a classic rent-seeker. It derives its income by controlling a scarce commodity, the ability to distribute vast amounts of product, skimming profits off the top at the expense of the producers.

Rent-seekers have a shorter life than the average corporate entity. They wreak so much havoc on the general economy that they force the next wave of innovation as producers figure out a way to get their product to market more profitably by circumventing the rent-seeker’s channel of distribution.

Amazon is one of the most widely held stocks in the world. They are held to be a great company today, but as markets and social mood turn down, we can expect to see Amazon treated in an increasingly negative light. For now, I will enjoy my Prime Membership, but I damn sure wouldn’t own a stock this popular. Who’s left to buy?

Cheers,

Rod

 

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