Amazon has always had a love-hate relationship with small businesses. For some, it provided a well-needed online platform to sell their products, while for others it created a competition that drove them out of business. Now, with Amazon’s new price comparison app, which was promoted last Saturday with further discounts for anyone who goes to brick and mortar retailers, but chooses to buy at Amazon, it looks like things are changing. Amazon is becoming the new villain retailer threatening the future of local economies, a role that Wal-Mart filled until recently.
The main character of our story is an app. It is a free app Amazon created to help consumers compare prices while shopping. This app enables you to search for Amazon products quickly using barcode, picture, voice, and text search, and access product descriptions and prices on Amazon “to guide you in making informed purchase decisions.” On its face, it looks like a great tool that can help consumers makes better and informative shopping decisions, while shopping offline, just like using Google Product Search or PriceGrabber when you shop online.
Yet, Amazon knowingly or unknowingly hit a sensitive nerve with this app. If the app was just released with no fanfare, it would have made some small retailers angry and that was it. But Amazon decided to promote this app and the backlash has begun. Amazon’s special offer was a 5 percent discount (up to $5) on select items in electronics, toys, sports music and DVDs for one day (Saturday). Consumers had to go to a store, provide the in-store advertised price of a qualifying product with the app and place an order for the same product on Amazon. You could do it with up to 3 products and receive a discount of up to $15. Not bad for a Saturday afternoon of shopping, right? Well, not from the perspective of small businesses.
With many local businesses struggling in this economy and hoping holiday sales would help them keep their head above water, it wasn’t surprising that this promotion made small retailers furious. “It’s kind of evil,” Blair Elliot, owner of Siren Records in Doylestown, PA told a local newspaper. Pat Gerney, owner of the Doylestown Bookshop, added that “It’s predatory, really. It sounds like they’re out to squash all small businesses.”
Amazon tried to defend itself, making a point that it’s not the small businesses it's after. An Amazon spokeswoman told the New York Times that the promotion was not directed toward small competitors. Instead, she said, it was “primarily intended for customers who are comparing prices in major retail chain stores.” She added that Amazon’s third-party sellers — “more than two million individuals and businesses of all sizes that sell on Amazon” — also benefit from the new app. Yet, it wasn’t very convincing. After all, Amazon could limit the promotion to large retailers like Wal-Mart or Best Buy, but it chose not to. This shows it didn’t really care if you went to Best Buy or to Siren Records in Doylestown, PA to check the price of a DVD before buying it on Amazon.
The question is, why should it matter to us as consumers as long as Amazon doesn’t do anything illegal? Why not just enjoy the advantages of this new tool? The answer is that even though Amazon’s new app seems to comply with the law, it is unsustainable. It’s true that it enables shoppers to make informed decisions, but at the same time it also encourages shoppers to ditch local shops and buy from Amazon.
You might argue that this is a fair practice and whoever provides the best price should win, but price isn’t everything. You probably wouldn’t like to buy products that were made in sweatshops, using child labor, or made of trees from endangered forests, no matter how cheap they are, right? So there are cases where morality, justice, and/or sustainability enters into the equation and becomes a substantial factor. This is one of those cases.
Hurting local businesses is unsustainable on all levels. On the social sustainability level, for example, local businesses are important for creating a socially sustainable community that takes human and community needs into account. These are needs like employment, social justice, sense of place and culture, social capital, well-being, safe environment and social capital. As the Business Alliance for Local Living Economies (BALLE) notes, when enterprises are locally rooted and owned by stakeholders there’s a much better chance that these needs will be met.
Local small businesses have also important contributions to the environmental and economic components of sustainability, but the social component on its own should give us enough reason to support main street businesses. After all, small businesses are the fabric of vibrant and prospering communities, towns and cities, not Amazon.
I’m not sure how many people took these issues into consideration last Saturday, but the point is that we should. Amazon might be a great company, but it needs to look more carefully into its relationship with local brick and mortar stores. The company should remember that this is a symbiotic relationship, not a zero sum game. It should also be in Amazon's best interest to keep local economies alive and well. If Amazon forgets it from time to time, it’s our job to remind Jeff Bezos that hurting small businesses is wrong.
Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is also an adjunct professor in the University of Delaware’s Alfred Lerner College of Business and Economics.
Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.