Story Behind Amazon.Com – True Success or an ‘Evil Entity’

Posted on 12 Dec 2012 at 5:43pm

Story Behind Amazon.Com - True Success or an ‘Evil Entity'

A report Sunday on CNN’s “In Focus” briefly chronicled the rapid rise of the company, which seems to sell any and every product imaginable. Based in Seattle and headed by CEO Jeff Bezos, Amazon controls 20 percent of all online retail and is reportedly worth $100 billion.

Started in the mid-1990s, the online behemoth is likened to “The Godfather” and called “a wolf in sheep’s clothing” by Sucharita Mulpuru, an analyst at Forrester Research. Mulpuru said that Amazon is crushing even those companies it deems partners by making them “an offer they can’t refuse.”

Apart from gobbling up smaller companies, this monster is covertly trying to squeeze the life out of brick-and-mortar stores now by offering same-day delivery, which would take away the one advantage these local stores have. By removing the immediate availability consumers enjoy when actually walking into a store to buy a product, Amazon can control even more of the retail market.

Moreover, by offering same-day delivery, Amazon may be looking to expand into the delivery business, extending its retail monopoly. Companies like UPS and FedEx, as well as the US Postal Service, will take a hit if this becomes a reality. Amazon’s dominance seems to have no limit—which brings us to seedier side of this incredible success story.

According to an article on upworthy.com titled “The Truth Behind Amazon’s Success? It’s Kinda Evil,” there is a sinister side to the company’s ever-expanding “tentacles,” namely its alleged unfair business and labor practices. The writer, Rollie Williams, notes that although Amazon started as an online book-selling outlet in 1995, it has morphed into a colossal all-consuming retail entity spanning three continents (North America, Europe and Asia).

Along with this march for world dominance come complaints of abuse—abuse of power with their employees and competing smaller companies. Whereas CNN approximated Amazon’s retail control at 20 percent, Williams says it is more like one-third of all online sales worldwide.

Because the company’s growth is so rapid—reportedly doubling its size every couple of years, four times faster than e-commerce as a whole—they are projected to surpass Walmart by the end of this decade.

Compared to big-box and independent competitors, which have five and eight workers per $1 million in sales, respectively, Amazon reportedly employs one worker per that amount in sales. It even is alleged to have an ambulance and paramedics at one of its 69 warehouses in case employees collapse from heat, exhaustion or another work-related illness.

Lawsuits are also piling up from unhappy workers who complain of dangerous working conditions at those many warehouses. To crush the competition, Amazon would rather match the cost of items or even sell the same products at a loss, offering rebates to beat out those smaller outlets. Another way to grow its monopoly is to find out what those brick-and-mortar stores sell and offer the same or similar items. One more advantage is that, while these stores are required to collect taxes on purchases, Amazon is exempt in most states—a bonanza of a gift from the federal government.

A big way to lock down the market on items is Amazon making it so that consumers cannot get a certain product anywhere else but at amazon.com. The company does this by cutting exclusive deals. For example, want to buy a Batman comic? Well, you can only do so by purchasing a Kindle and getting the comic from Amazon because it has secured those rights. Amazon now reportedly controls 75 percent of online book sales and 61 percent of e-book sales.

Amazon.com even acts as a search engine because many retailers go directly to the site to look for products. Capitalizing on this trend, the company now takes a cut of each sale from other retailers now using them to market their wares. On top of that, Amazon gets to learn about their competitors’ hot-selling products, while hoarding their customer information.

The federal government blocked communications giant AT&T from gobbling up T-Mobile, citing fears of a monopoly. So how about an online monster like Amazon? I know capitalism thrives on free and open markets, but can there be too much of a good thing turning ugly?