If the damaging effects of Amazon’s extensive business operations on the long-term health of the U.S. economy were both difficult to ascertain and under-appreciated, a recently released report on Amazon from the Institute for Local Self-Reliance (ILSR) has already made a difference.
Following the November 29 release of “Amazon’s Stranglehold: How the Company’s Tightening Grip Is Stifling Competition, Eroding Jobs, and Threatening Communities,” Amazon’s negative impact on communities across the country has garnered significant media attention. The report was covered in such media outlets as the Cleveland Plain Dealer, Slate, the San Francisco Chronicle, Time, and even Zimbabwe’s the Herald, among others.
ILSR’s report provides in-depth details on how Amazon’s market dominance is undermining job growth and weakening communities as well as policy recommendations on what can be done to address the harmful consequences across a growing number of marketplaces. While Amazon may be a dominant, perhaps ubiquitous, force in America’s economy, for all its size, its effects are surprisingly unexamined, ILSR said. This report aims to pull back Amazon’s “cloak of invisibility.”
Similar to the “Amazon and Empty Storefronts” study, the Civic Economics report that was updated this past September, the ILSR report clearly spells out the overall negative impact that Amazon has had on Main Streets across the country and shows that this impact is growing significantly worse.
The “Amazon Strangehold” report, co-authored by Stacy Mitchell, co-director of ILSR, and Olivia LaVecchia, a researcher with ILSR’s Community-Scaled Economy Initiative, notes that Amazon is now capturing nearly $1 in every $2 that Americans spend online. The company sells more books, toys, and, by next year, apparel and consumer electronics than any other retailer online or off.
Calling ILSR’s report “exhaustive,” Slate’s Henry Grabar wrote: “Like most companies of a certain size, Amazon plays aggressively with states and localities to get tax breaks, pitting politicians from neighboring municipalities against each other in a prisoner’s dilemma.” The article also noted that Amazon’s “success is sometimes said to be due to its unrivaled economies of scale in storage and distribution, which are presented to customers in savings of time and money. But the tax break bounty is another fruit of the company’s size. None of its Main Street rivals has the political influence or employment impact to negotiate such deals.”
ILSR’s “wide-ranging analysis details how Amazon, which recently saw annual revenue top a stunning $100 billion, has reshaped the way U.S. shops operate and radically altered the job market,” Zimbabwe’s the Herald reported. “After years of undercutting other retailers by selling products at a loss, funneling its customers into its super-convenient Prime service and essentially perfecting the art of online retail, Amazon is now synonymous with online shopping itself.”
The San Francisco Chronicle reported: “Amazon.com claimed record Cyber Monday sales this week…. [B]y some estimates, it may have taken more than a third of the $3.45 billion in online sales on Monday — a billion dollars in a single day.”
The Chronicle then questioned: “But at what cost? A report released this week by the Institute for Local Self-Reliance, a nonprofit that promotes equitable and sustainable local economies, took a dim view of Amazon’s methods of doing business, arguing that the company’s 46 percent share of the U.S. online retail market is not only stifling competition and displacing retail jobs, but also weakening community bonds.”
The Cleveland Plain Dealer quoted extensively from ILSR’s report as well as the ABA/Civic Economics study and interviewed Kate Schladerman, owner of The Learned Owl Book Shop in Hudson, Ohio. “Amazon’s business practices have been questionable for years and the concerns raised in this study are a continued topic of discussion at various bookselling trade shows and conferences that I attend,” Schladerman told the Plain Dealer. “With a new Amazon fulfillment center being built in Twinsburg, the threat is even more real and about to move in right next door,” she said, adding that the report “Amazon and Empty Storefronts” offers “a sobering view of what Amazon is doing to our country as a whole and state by state by avoiding $704 million in sales taxes and accounting for a net loss of 222,000 retail jobs in 2015.”
And Time’s Money article on Amazon’s dominance references the ILSR report. “A report released this week from the Institute for Local Self-Reliance says that nearly $1 out of every $2 spent online is funneled through Amazon — with purchases made directly through Amazon, or via the site’s many third-party vendors in the Amazon Marketplace.”
Look for more on this report in future issues of Bookselling This Week.