Amazon is just Walmart on digital drugs: Douglas Rushkoff on a sustainable economy


#1

[Read the post]


#2

I think of Amazon, as digital Sears and Roebuck…


#3

It’s like a waffle iron with a phone attached


#4

In our grandparents’ day, people bought shares of Bell or IBM and held them for life. That’s pretty good sustainability. Anyone taking bets on Amazon being around in 20 years?


#5

Sure, I’d take that bet. They’ve been around for longer than that already. But I wonder what the Amazon.com of 2036 will look like?


#6

I do find myself wondering how warranted Rushkoff’s comparison of Amazon and Walmart are. I’ve always thought of Walmart as wreaking local devastation on a given town’s economy, by pushing down local prices and (inadvertantly/parasitically) winning an end game with other local vendors who are limited in number and influence. I don’t know if Amazon pushes prices down or not (for all I know their game might be convenience/variety), and if they do push down prices then it’s on a geographically large scale that I have trouble mapping to as direct a kind of damage as I do a given Walmart.

I’ve thought about this for about 30 seconds, so I’m actually hoping anyone who can extend (or refute, or whatever) Rushkoff’s particular choice of Walmart as the Amazon analogy…


#7

Amazon, like Walmart, has the size & efficiency advantages over local businesses for purchasing power to keep prices low (though I don’t know that Amazon puts the same price pressures on suppliers like Walmart). There’s also the potential harm of reduced local sales tax revenues impacting infrastructure, education, etc.

There is something to be said for reducing the amount of people driving around just to pick up one or two items and using postal/freight carriers on regular routes to make deliveries of goods. But I don’t think that necessarily offsets the negatives…yet.

The other side of the issue is the financialization of the economy. More and more resources are now geared towards extracting profits from every transaction (as well as inventing new transactions for the sole purpose of increasing revenue for no/low-value services that used to be considered normal business operation expenses). Instead of industries, Investors (big “I” - long-term speculators), and individuals inventing new ways of creating goods and services being a driver of financial services, the finance industry has become the inventors of ways to drive business and “investors” (little “i” - arbitrage/short-term speculators) to use their services. We’d be better off treating certain types of finance as a utility.


#8

Amazon drives prices down two ways:

  1. By using its enormous purchasing power to negotiate unbeatable discounts with manufacturers, then pricing those goods at a level that drives competitors out of the market. In instances where manufacturers seek to implement Minimum Advertised Price policies, Amazon flagrantly disregards them.

  2. By encouraging cutthroat competition between independent sellers on the Amazon platform. This means that if I create a brand new listing on Amazon for a widget, and that widget sells well, Amazon will automatically send notifications to other sellers encouraging them to offer the same widget for sale on Amazon. These internet sellers have very low overhead, and will use automated tools called repricers to compete for the “Buy Box” on Amazon. Those repricers reduce a seller’s offer price until that seller has the lowest price. When no other sellers are active on a listing, the repricer will increase the item price to a preset ceiling that is usually unreasonable.

You can probably imagine the impact these techniques have on small local businesses, especially if they’re not savvy enough to sell online.


#9

That can be fairly easily verified by taking a walk down to your local, independent book seller – if your town still has one – and comparing.

IME Amazon has been pretty devastating to local economies, at least in the book trade.


#10

WalMart dreams of putting all local business out of business.

Amazon dreams of doing the same to all other businesses.

Both drive towards the bottom line by cutting costs at every step, starting with employees, and moving on upwards to making manufacturers use cheaper components to sell the same item more than once instead of not having the first one break.

Their game in both cases is to be the one store in town everyone has to use. That’s it. Not convenience. Not variety. Not improving the American workforce or conditions, but just becoming the only place to go.

I don’t shop at either and I’ve been working towards not shopping online at all except for smaller stores that have an online presence. It’s remarkably less difficult than you’d think, it just involves planning ahead a little more and not depending on next day shipping.


#11

And in case you want to learn more about how Amazon is evil, the post links to the book’s product page on Amazon.


#12

For the same reasons, I have been doing as you are doing, for about the past 8 years.

I agree that trying to keep one’s money local or at last in-country is key to keeping jobs here. A friend explained it to me as the Multiplier Effect:


As a small business owner who has consistently had to bid IT jobs above “the China price” and “the India price” in order to have a living wage here in the States, it’s extremely clear to my partner and me just how cost-cutting and a race to the bottom (price-wise) endangers our ability to live even in a very small duplex, driving decades-old cars, eating vegetarian/cheaply. Ye gods, if we lived a San Francisco or Austin lifestyle, we’d go broke. It’s not even a question of “go big or go home” because we wouldn’t even be able to keep the home we have. I suppose there’s cheap real estate in Missouri and Alabama.

Not to mention the crappy wages Amazon, Walmart et al. pay their employees. At least none of our employees have ever had to go on food stamps just to survive.

Yet.


#13

@frauenfelder Your download the mp3 link is broken.


#14

This. I had it explained that for every dollar I spend at a local coffee shop, 70 cents stays locally to buy cups, sugar, milk, whatever, keeping other people employed locally. That same dollar at Starbucks sends seventy cents back to Seattle headquarters.

Our NJ county is the only one without a mall. Every town in it has quaint, vibrant, walkable downtown areas with locally-owned stores for the most part (my town just got a Starbucks). What a weird coincidence.


#15

I haven’t done the book comparison (and can’t tell if you’re implying you have or not), but I have done quite a few price comparisons for things like hardware and electronics, and (again, this is just my anecdote) don’t yet have the impression that Amazon reliably has the lowest prices.

But price isn’t even the most important part of the issue, to me. One can buy coffee at the grocery store way more cheaply than one can at Starbucks, yet people flock to Starbucks. My guess is that despite being way pricier per sip of coffee, Starbucks is selling some combination of atmosphere and short-term convenience (“I want coffee right now rather than waiting til I get near a machine to make my own”).

For the atmosphere reason, I similarly hang out in bookstores when I get a chance, and would even pay higher-than-online prices for books as part of that experience. I don’t know what portion of the population happens to feel the same way about bookstores, but the analysis isn’t as simple as checking out whether they’re cheaper or not.

Where the analogy with Walmart really falls down for me: Walmart is an awful shopping experience. It pretends to be the universe of what people could want, but that universe is narrowly framed, and populated with low-quality crap, and their atmosphere is less interesting than a morgue. Walmart’s ONLY draw, for me, would be price, and that hasn’t pulled me into their store in ten years.

There are limits on what Amazon offers, and I often find myself wandering the halls of etsy. That said, Amazon offers so much more variety than Walmart, better quality, and is a much, much more pleasant shopping ambience.

As much as I love book stores, and am willing to pay higher prices in bookstores, that’s not the only dimension of competition. Bookstores could be CHEAPER than Amazon, and I’d still likely buy a lot of my books on Amazon… because bookstores so often don’t have the title I want, and – these days – I’m doing a lot of Kindle reading, and I’m getting acclimated to getting my books instantly. Bookstores can’t compete on those fronts, and if that drives them out of existence then I’ll mourn them deeply, but I won’t pretend that I’m a drone being drawn to Amazon just because I’ll go to the lowest price like a fly to vinegar. I am actually getting an improved quality of life out of the Amazon experience. For me, that’s a huge point where the Walmart analogy to Amazon falls flat on its face; Walmart never made me feel good/better for having gone there.

I want to be clear that whether Amazon is comparable to Walmart is not critical in whether I embrace Rushkoff’s larger thesis. I wholeheartedly buy into what he’s saying, and this Amazon/Walmart thing is a detail to be figured out and (if relevant) acted on.


#16

The one difference between Walmart and Amazon is that Walmart had the power to destroy companies that supplied them. Amazon takes pretty much all products where as Walmart has limited floor space, so a featured product can make or break a company that supplies to them.

Second thought, drones are going to level the playing field in the sense that, imagine being able to order from a local box store and get the product in an hour. Local box stores will become warehouses and display spaces. If Amazon was to build so many locations they’d lose one of their biggest advantages.


#17

With books at least they seem to always sell at a discount (at least a lot of the books I look at), whereas brick-and-mortar stores seem to always sell at the cover price. When I’ve checked often the discount is big enough so that even with shipping its cheaper.

But yes, price isn’t everything, so I often research a book an Amazon but then order it through my local bookstore (fortunately my town still has one, but it’s a small, tourist town so the summer foot traffic helps keep them going). Fortunately Amazon and Wal*Mart haven’t starting taking our day trips for us yet…


#18

Mark, the “Download MP3” link is munged.
http://%22http//feeds.soundcloud.com/stream/262192374-blockchainfutureslab-amazon-is-just-walmart-on-digital-drugs.mp3
just fails on so many levels.

This one below, sans the ‘http://’ works:
feeds.soundcloud.com/stream/262192374-blockchainfutureslab-amazon-is-just-walmart-on-digital-drugs.mp3


#19

Yeah, I pointed that out a day ago… :slight_smile:


#20

A corporation with morals and ethics?! What a concept!