Amazon’s Dominance Not Good For Small Towns

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By Reed Anfinson
Publisher
Swift County Monitor-News

We recently met a driver for UPS while dining out who gave us some insight into just how pervasive Amazon’s sales are in rural Minnesota. He said that 60 percent of the deliveries he makes are Amazon packages. Now multiply that percentage across rural Minnesota and rural America. It will give you some insight into the online retailer’s dominance and growing impact on the health of small businesses.

Amazon isn’t content with its current market share and what it offers customers. It wants to grow. It seeks to overwhelm its competitors, large and small. It wants to spread from retail, to groceries. It seeks to replace UPS and FedEx with its own delivery system.

It is stunning to realize just how vast its retail empire has become. It is troubling to think of how it could eventually destroy main street retail sales in small town America. Nearly every retail item we buy can be purchased from our phone, laptop, tablet or desktop computer. It is then delivered to our house a day or two later -for free.

Walmart, Target, Menards, and Home Depot, and other big box stores have already done a number on small town business and continue to draw our residents through their doors. Now it appears it is their turn to take a hit. Walmart has closed at least 17 of its stores in the U.S. and Canada. It recently announced the closing of its only super center in St. Paul in September. Of course, those closings don’t put much of a dent in its more than 4,700 stores in the United States.

Now we know President Trump doesn’t like Amazon’s owner Jeff Bezos, and what and who Trump doesn’t like, his cabinet members make their targets as well. However, once and awhile, in rare instances, their targets become aligned with our needs.

Bezos is the owner of The Washington Post, a newspaper that has often written stories raising questions about the ethics, competence, and policies of the Trump Administration. It is among the newspapers he repeatedly calls an “enemy of the people.” It keeps a tally of how many misleading statements, fabrication of facts, and outright lies Trump has told since taking office in January 2017. That total is now over 12,000.

In going after Bezos’ Amazon, his administration may be helping out small retailers throughout the country. In July, he asked his Justice of Department to look into the dominance Amazon has in the retail online sector and its impact on brick and mortar businesses.

 “I think if you look at Amazon, although there are certain benefits to it, they’ve destroyed the retail industry across the United States, so there’s no question they’ve limited competition,” Treasury Secretary Steven Mnuchin said during an interview on CNBC. “There’s areas where they’ve really hurt small businesses.”

Amazon, of course, argues that it is good for small businesses citing all those it acts as a vendor for as it channels their products through its web site. “Today, independent sellers make up more than 58 percent of physical gross merchandise sales on Amazon, and their sales have grown twice as fast as our own, totaling $160 billion in 2018,” an Amazon spokeswoman told The Washington Post. She doesn’t mention how much of the share of that small businesses’ income Amazon siphons off. The statement also doesn’t acknowledge the impact on those businesses that don’t become part of the Amazon “team.” In rural Minnesota, those small businesses are often too small to get any benefit from an Amazon partnership – they simply see their customers siphoned off by the online giant.

Amazon’s threat to the health of America’s retail sector isn’t just to small towns. Here are a few of the businesses Amazon could eventually put out of business, according to the Kiplinger newsletter:
- Advance Auto Parts, AutoZone, O’Reilly Automotive
- Albertsons, Kroger, Walmart Grocery
- Barnes & Noble, Joseph-Beth Booksellers
- Best Buy
- Etsy
- FedEx, United Parcel Service
- Jo-Ann Fabrics
- Lululemon, Athletica, Under Armour
- Office Depot, Staples
- Pandora, Spotify
- Sears
- Trader Joe’s
- Target.

Back in March 2017, Rex Nutting of Market Watch wrote that Amazon could destroy more American jobs that China did with its cheap manufacturing costs of everything from clothing to steel.

“For retail workers, Amazon is a grave threat,” he wrote. “Just ask the 10,100 workers who are losing their jobs at Macy’s. Or the 4,000 at The Limited. Or the thousands of workers at Sears and Kmart, which just announced 150 stores will be closing. Or the 125,000 retail workers who’ve been laid off over the past two years.”

He points out that employment at retail department stores in America has “plunged by 250,000 since 2012. Employment at clothing and electronics stores is down sharply from the earlier peaks as more sales move online.” That was more than two years ago, and the steady declines have continued.

Some may think that the jobs lost to Amazon and other online retailers will simply be picked up by those businesses. That isn’t the case, he said. “Amazon needs about half as many workers to sell $100 worth of merchandise as Macy’s does. Macy’s has floor walkers, and saleswomen at the makeup counter to give personal attention, and cashiers, if you can find one,” he writes. “By contrast, Amazon has ‘pickers’ in warehouses who grab hundreds of items off the shelves every hour.”

But how long will those jobs last as Amazon researches to robotize the tasks pickers are now doing? Meanwhile, Amazon continues to grow with its percentage of the retail market steadily rising.

For small town America’s way of life to not just thrive, but survive, the residents of those communities are going to have to develop a sense of loyalty to their local merchants.

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