Amazon is Killing Your Local Hobby Store
What’s your favorite hobby?
If it’s knitting, you can get a quality skein of yarn from a local retailer for $12.00, or you can get it on Amazon discounted to $6.00.
If it’s board games, you can purchase a copy of Settlers of Catan direct from the distributor for $55.00. Alternatively, you can purchase it from Amazon for $40.00.
If it’s jewelry, you can get a length of natural stone beads for $12.00 in a store… or $6.00 (with a 20 percent off coupon) on Amazon.
If it’s D&D, you can purchase a copy of the Dungeon Master’s guide for its MSRP — $49.95 — or $25.00, from Amazon.
Amazon is Openly Trying to Consume Small Business
It’s no secret that Amazon is cheaper. But why it’s cheaper is important.
Amazon is not a brick-and-mortar retailer. So, it should have lower overhead, right? For years, that’s been the old saw: Amazon can outcompete you because they don’t have overhead. They don’t have physical employees, utilities, and rent.
But in the last decade, Amazon has developed an extensive network of warehouses and drop-off points throughout the entire world, along with its own last-mile transportation company.
More than that, though Amazon can be competitive with its prices, it can’t be that competitive.
“There are two kinds of companies, those that work to try to charge more and those that work to charge less. We will be the second.” — Jeff Bezos
As a retailer, there are products that we get for a 50 percent discount. So, if a product is $50, we get it for $25. Amazon doesn’t sell these products at “low profit,” Amazon sells these products at no profit. Amazon will sell these products for $25 and make nothing.
Actually, it’s making a loss, because of its operational expenses.
Amazon’s goal is to consume the small business sector by running smaller shops into the ground. And it’s succeeding.
Amazon as a Distributor — The Only Distributor
Usually, the supply chain works like this. A manufacturer sells to a distributor. The distributor sells to a retail business. The retail business sells to the consumer.
Amazon cuts retail out of the equation, allowing manufacturers to sell directly to Amazon and Amazon to sell to the customer.
And it’s a great deal for the manufacturer. Amazon does all the fulfillment for you. More and more, companies like yarn sellers, board game retailers, and other hobby suppliers are just sending their products directly to Amazon rather than retailers.
“Amazon today remains a small player in global retail. We represent a low single-digit percentage of the retail market, and there are much larger retailers in every country where we operate. And that’s largely because nearly 90% of retail remains offline, in brick and mortar stores.” — Jeff Bezos (Amazon is currently 50 percent of the eCommerce Market)
There are many ways in which this is a good thing. Theoretically, it could reduce waste. In many ways (and this is coming from a retailer), the retail industry is terrible for the environment and the world.
But Amazon isn’t great for the environment either. Because Amazon promotes its one-day and next-day shipping so aggressively, it’s created a massive infrastructure that’s devoted primarily to last-mile shipping services. The ability to purchase one item at a time means a proliferation of excess shipping waste. And Amazon, itself, is not known for positive worker conditions.
Once Amazon runs all the other retailers out of business, it gains the power to control that market.
The Problems of Runaway Capital
Amazon is worth nearly two trillion dollars. We have reached a stage where certain corporate behemoths simply cannot be competed with. Amazon could operate its retail sector at a loss for years just to run the competition out of business.
In the next few years, we could see Amazon destroy not just small businesses, but:
- UPS and FedEx. Amazon has its own shipping, last-mile shipping, and courier services.
- Pharmacies. Amazon has recently launched a pharmaceuticals service to deliver medication by mail.
- Shipt and Instacart. Amazon is developing its own Amazon Fresh service.
- Spotify and Pandora. Amazon Music is swiftly growing and is included with Prime.
- Macy’s, Sears (already), etc. Amazon has effectively killed off big-box retailers.
- Barnes & Noble. Small book shops and book stores like Borders have already died.
- Etsy. Amazon Handmade is making a clear and present run for Etsy’s money.
In short, Amazon is hard at work trying to consolidate across all markets. There may come a time when everything you buy is from Amazon.
When that happens, Amazon is able to set its own price. It’s also able to control a significant portion of the job market.
Is Amazon Evil?
To a certain extent, consolidation isn’t bad. As mentioned, it makes things more efficient — if efficiency is the goal. If Amazon is able to push, for instance, toward sustainability and carbon neutrality, it will do so more effectively than 200,000 separate businesses.
But there aren’t checks and balances with such a large company. Not only can the company engage in price-fixing but there’s no one to stop it when it violates workers' rights.
That being said, Amazon is no eviler than Walmart, insofar as all major monopolies have a tendency to steamroll their opposition and, unfortunately, their employees.
In good conscience, you can’t ask people to spend more money than they need to on luxury goods. Perhaps in the fairest world, everyone would be able to purchase things directly from a distributor, and retailers themselves would die.
But people should be wary of the sheer amount of economic power Amazon has amassed. Today, Amazon is the second-most powerful company in the country — and the fifth-largest in the world. Not bad for a company that was founded in 1994.
