Amazon has now surpassed Walmart as the nation’s leading retailer, purchasing more than 100 companies since its inception. They own portions of many other companies and have plans to purchase more in the future. It seems like they sell everything. We are addicted to ordering from Amazon due to low prices, vast choices and fast delivery.
During 2020, the Covid “lockdowns” caused many businesses to close their doors. At the same time, Amazon’s sales increased by 38%, making $386 billion dollars. Many local businesses were deemed “non-essential” and had to close their doors for a period of time – some never to reopen.
Now you might say that’s just retail and not the main focus of economic development. I would normally agree. Economic development is about creating high-wage jobs, retaining and attracting companies that pay those higher wages. It’s about working with educational institutions to make sure we have a trained workforce for those companies. It’s about helping to create safe and desirable communities.
A couple of points to consider. It is important to have retail in a community to provide entry-level jobs for the workforce. Younger people learn work ethic and other soft skills at these kinds of jobs.
If Amazon drives out local retail it will also affect the sense of place. Do we really want to shop totally online and never interact with our neighbors who are the owners and customers of these brick and mortar shops? These neighbors also put their dollars to work in the community. They pay taxes which help municipalities provide services to all of us. If they are driven out of business, the tax base is affected.
But let’s look a little closer. Amazon is going after the food market. They purchased Whole Foods. Amazon is now dominating the top retailers of food and consumables along with Kroger and Walmart. There is Amazon Fresh, Amazon Go and Amazon Go Grocery.
Amazon is getting into healthcare and pharmacies. They are heavily involved in shipping and renewable energy.
So much control over so many aspects of our lives and economy makes competition increasingly impossible. Competition breeds excellence, innovation and competitive prices. Competition also allows for safeguards to be in place. If there is competition, then everyone competes on all levels including safety and quality. If one company controls everything, will they be as concerned about those things or will growing bigger and bigger and making more and more billions be the driving factor?
How will food distribution be affected if only a few are able to distribute? What about the local farmers? Will they only be able to sell to giant corporations? Will they be compensated fairly? How fresh will food be delivered by drones from Amazon warehouses? Will it be of high quality?
How will entrepreneurship be affected? Will it be feasible for people to startup companies in the environment of huge corporations controlling the marketplace? Not only the physical marketplace but the marketplace of ideas.
Then there’s the question of censorship. Amazon has a huge share of the video and publishing market. They have removed books they don’t like from their site. I wonder if Amazon plans to get into education next and only provide information with which they agree?
How will healthcare be affected in the long run? I want to see my doctor in person, not on a computer screen. Is telemedicine really that effective as a permanent mechanism? I like going to the pharmacy where people know who I am. Is the local doctor going to find it too difficult to compete? They already are under burdens from insurance companies and government healthcare.
How will utilities be affected? Is big tech going to have more control over local water and power? How will that affect pricing? How will that pricing affect businesses?
I mentioned younger people having startup jobs. If everything is online, how are they going to learn to interact with people? How will they learn the soft skills needed to provide value to businesses needing qualified employees?
There are more questions than answers. But one thing I feel is certain. Too much control by a few giant corporations is not good for anyone.