Long gone are the days when “Amazon” made you think of a river or a rainforest. While the geographic landscape that inspired its name may actually be shrinking, the more familiar Amazon is growing at a staggering pace. A new report from the Institute for Local Self-Reliance (ILSR) demonstrates Amazon’s growth and the worrisome impacts it has on independent businesses.
According to the report, Amazon sells more books, toys, and by next year, apparel and consumer electronics than any other retailer, online or off, and is investing heavily in its grocery business. Clearly, what started as a competitor to only Barnes & Noble and independent booksellers has since expanded into a far-reaching enterprise with an immense footprint on the American economy. A few statistics from ILSR’s report put Amazon’s size and power into perspective:
- Amazon captures nearly one of every two dollars spent online.
- Some 55 percent of people looking to buy something online start directly on Amazon.
- Half of all Americans are members of Amazon Prime.
Amazon’s power doesn’t just come from its eponymous online shopping platform. The company also owns recognizable brands such as Zappos, IMDB and Audible. Not to mention, its streaming service has now won multiple Golden Globes. Truly, Amazon touches more industries than the average Prime shopper may imagine, from filmmaking to shipping.
The problem with Amazon’s increasingly monopolistic ways are many, but ILSR’s Stacy Mitchell, who co-authored the report, summed it up on a recent episode of the institute’s new podcast, Building Local Power: “Our economy works well when it’s competitive and when we have a marketplace that is diverse – that is, there are lots of different kinds of businesses out there competing for our dollars.”
As Amazon grows, it doesn’t just remove competition from the marketplace. Rather, it becomes the marketplace, defining how smaller businesses can sell their products, and determining what prices consumers see and pay. Independent businesses facing competition from Amazon, according to Mitchell, face a tough decision:
“They can either continue to hang their shingle out on the web themselves where there’s less and less traffic or they can decide to become third party sellers on Amazon’s marketplace and thus become dependent on one of their biggest competitors.”
As small businesses are squeezed out of the free market, Amazon leaves communities weaker and workers less prosperous. So far, Amazon has reportedly caused more than 135 million square feet of retail space to become vacant, the equivalent of about 700 big-box stores plus 22,000 small businesses. In turn, that leads fewer dollars to be spent locally and fewer property taxes to be paid in the community. What’s more, ILSR’s research found that employees in Amazon’s warehouses make 15 percent less on average than other warehouse workers in the same region earn.
What’s more, Amazon’s growth seems likely to continue, unless legislators take action through policy or consumers dramatically shift their shopping to small and local businesses. The convenience of free, fast shipping cannot be worth the future of strong, vibrant communities. To draw your own conclusions, read the report for yourself at https://ilsr.org/amazon-stranglehold/.
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