Wednesday, February 12, 2020

What to Do about Amazon

I think Farhad Manjoo gets it right about Amazon: while the company's sheer size, not to mention its often shady business practices, call out for public intervention, "Amazon is pushing a level of speed, convenience, and selection in shopping that millions of customers are integrating into their daily lives."

Breaking it up would be wrong, since the essence of what Amazon offers is its potential universality.  For me, shopping on Amazon is almost like what I imagine shopping to be like in a socialist society, minus the lack of accountability and the astronomic riches of Jeff Bezos.  Let's fix it.  Make Amazon a public utility with proper protections for workers, consumers, and enterprises that use it as a marketing platform.  Why not?


Anonymous said...

Lately I noticed in a business publication that Amazon was considered the finest American company by surveyed consumers. As for me, I have never heard anything but praise from family or friends and I rely on and love the service. The older a family member or friend, the better the service seems to them. So, from an experience or selfish perspective, I would be reluctant to change Amazon in any fundamental way. How then would "you" change my "selfish" perspective?

Peter Dorman said...

Anon, your final question implies a hostility to discussion and possible persuasion, no? I have no intention of "changing" you with this blog post; I'm just expressing a point of view. Nor do I criticize people who appreciate Amazon's service. On the contrary, if you would take a moment to look again at what I wrote, I had a lot of praise for it, invoking my own personal experience.

Now take a look at Farhad Manjoo's piece in the NY Times. He too likes what Amazon does for him, but links to stories that also depict the dark side.

Maybe the one thing I *would* like to change in you is your capacity for acknowledging that good things can have bad aspects and bad things good aspects.

Anonymous said...

Anon, your final question implies a hostility to discussion and possible persuasion, no?

[ No, forgive me, I completely appreciate what you have written after a couple of careful readings. I also read Farhad Manjoo carefully a couple of times to be sure I understood the argument.

I was however being completely honest in my initial response. The service from Amazon makes me feel very protective of the company, which is selfish of me and possibly even irrational. I am also willing to set aside being selfish if the argument is strong enough, but not so far.

I will also present the post and article by Manjoo to students, and simply listen for responses.

I do appreciate the post and article, but I really do rely on and trust Amazon service.

Please know I am grateful for the post and response and there is no "hostility" at all in me about either.

Please forgive me, if I was not polite enough. ]

Peter Dorman said...

All apologies accepted! Thanks for elevating the blogosphere.

Kaleberg said...

I live in a small town with limited shopping, so I buy all sorts of things on Amazon. It's great having one and two day delivery of the kinds of things that local stores really can't stock. Despite this, I think Amazon needs to be broken into a number of business units.

For one thing, having someone control both the marketplace and being a seller in that marketplace is a conflict of interest. Anyone who has sold on Amazon knows that one's business can vanish overnight if Amazon decides to claim it or a change in algorithm makes it impossible for users to find unless one pays heavily for placement. From a user viewpoint, Amazon search has suffered from its pay for placement. I used to be able to type in a book title and find that book among the first few items. Now it is usually in the first ten, but sometimes can only be found if I add the author name. That's ridiculous.

Having grown up during the antitrust era, which I will note had higher growth and innovation levels than our current era, I'd propose a split into several parts:

- the warehousing and shipping logistics company
- the actual shipping and delivery component, the one that runs trucks, brokers ship space and operates flights
- the marketplace operator with an open API, including a search API, so that the store itself can be open for competition
- Amazon sales, now one of many online sellers
- AWS, the computing services supplier

I'm probably missing some pieces, and arguments could be made for leaving some pieces together. AWS is so successful because it was designed as a cluster of interoperable services and APIs with Amazon as its primary customer. Applying a similar restructuring of the entire company would probably make Amazon more effective and even more valuable, much as breaking up AT&T let the telecommunications business move into the late 20th century.

I think the biggest advantage for the consumer would come from splitting Amazon sales and the Amazon marketplace. This would help customers, sellers, Amazon and IP holders upset at Amazon's lack of trademark enforcement.

I think the biggest advantage for the overall economy would come from splitting off the logistics. Amazon has been experimenting with this with their Whole Foods purchase, but they would have done better to have opened their logistics to a supermarket chain instead rather than trying to learn a new business from scratch.

P.S. Antitrust has done this kind of thing before. IBM and Kodak were both forced to open their APIs in effect. Xerox effectively had to open its copying logistics, though they were allowed to retain their advantage in image fixing.

Anonymous said...

Thank you.

Reading about LED lighting in the column by Manjoo, my experience was simple and decidedly satisfying. I decided at some point to switch lighting. After all, a 60 watt bulb that could be replaced with a 6 watt bulb and the LED bulb would last for years... I bought 24 bulbs, and there was a fine white light but no glare and cool, cool to the touch. I had to rewire lamps a number of times because of the wear from heat, before the LED lights came. The 24 bulbs immediately multiplied to become an entire house lit by LED bulbs. I have never replaced a single bulb.

There is a chandelier in my bedroom, that had 12 40 watt lights. Now there are 12 4 watt lights of fine light quality. These lights are important comforts to me, and I think rationally so simply given the energy efficiency.

Anonymous said...

"with proper protections for workers, consumers, and enterprises that use it as a marketing platform."

You take this away and you lose everything you like about Amazon now.

Anonymous said...

Branko Milanovic just wrote another fine essay that explains what to me is a wealth effect in having Amazon:

February 10, 2020

What is wealth?

[ My LED bright-lit house has a luxurious feel to it. A guest who keeps a home that is darkish may remark on the lighting of my house and I suggest Amazon and sort of apologize, but I am pleased to have the light. A room heater that is always cool to the touch, that was delivered to me a day after I was cold on a bitter night a year ago, was another touch of luxury.

Yes, I am presenting a selfish attachment to Amazon and can be convinced to modify my attachment but Amazon has been me feeling more contented. ]

Anonymous said...

Kaleberg mentioned logistics and I am thinking about this but continually solving monster logistics problems is so far to my thinking critical to making Amazon what it is. So too Alibaba. To have a room heater at "my" door in a day during a bitter winter spell strikes me as remarkable.

pgl said...

A lot of focus on how consumers view Amazon. OK - one could also note that consumers love Wal-Mart. The two companies share something else in common - squeezing suppliers and having low wages for employees. Wal-Mart brags about always low wages and if you ask the employees of Amazon, the situation may even worse for them.

Then again raising the minimum wage would change some of this. Some want to raise it to $12/hour whereas others wants to raise it to $15/hour. Then there is Tom Steyer who advocates a $22/hour minimum wage!

Unknown said...

Today is what it is; we can't nor should not try to go back. But, we need to deal with the Facebooks and Amazon legislatively. TR's anti-trust measures don't apply but do provide a platform for thinking. Warren's done some good thinking in this area.

Unknown said...

An observation only, but one that applies, I think. Here, over Christmas, we saw Amazon flood the streets with new vans; walloping UPS and FedEx. It's hard to imagine another company with the resources to have done this. Certainly not UPS or FedEx; they would each need to find 20 ---30 $billion.

In a sense, it's their own fault; especially UPS. The next step is almost certainly factory to consumer. UPS had been an inovator with parts distribution, ... UPS could have moved on Amazon. Dodnm't see it.

Anonymous said...

About UPS and FedEx, I fail to understand how either could have become Amazon unless one or the other had started a retail business online about the time Amazon started. An allure of Amazon is the simplicity of shopping for myriad products, then getting them in remarkably short order from UPS or USPost. FedEx has been dropped as a carrier by Amazon as far as I know. FedEx was just not efficient enough.

Referring only to myself, I care little for store shopping beyond an adventure now and then with friends. Amazon makes shopping remarkably simple and even attractive and the website never ever ties me up so I can stop shopping in a moment.

I remember stumbling on a popular blog, about a year ago, whose owner disliked Amazon and was trying to buy presents from alternate stores only things always went wrong and she was complaining. I have no such problem with Amazon, nor do friends, nor evidently do my students.

Anonymous said...

Valentine's Day; I received gifts on the day by Amazon but the gifts from another company did not come. Amazon really does work from me as a consumer, and my students agree on the favorable experience with no suggestions from me.

Anonymous said...

Worth noting that my Valentine's Day present from other than Amazon has still not come and there is no explanation as to why being offered the sender. This may seem trivial, but there are neighbors for whom shopping is physically difficult who rely on simple and smooth grocery and drug deliveries. The point is that if Amazon is to be reconfigured, the terrific consumer benefit is going to have to be sustained to satisfy any number of knowingly content shoppers.