Amazon: Penny Wise, Fortune Foolish

Today I packed my Amazon team jersey, pennant and foam “#1” finger and moved them to the dark corner of my attic, relics of a bygone era.

I was once a passionate cheerleader for Amazon. Sure, I was a bit distressed at first by the pressure they placed on the mom and pop book sellers. But there was little doubt that the internet was the marketplace of the future, and I appreciated Amazon’s courage to innovate. I also quickly found that I continued to shop at my local independent. Where Amazon was a tremendous help was in obtaining the hard-to-find or the discount it offered on the book I could not otherwise have afforded. And as they expanded beyond books, I had friends who benefitted greatly from the ability have goods delivered. Win-win.

And in those early days I didn’t begrudge Amazon for not collecting sales tax. The economy was good, tax revenues up, bricks and mortar stores had the market share, and establishing the world of e-commerce was a benefit I was willing to support with modest tax incentives (in the sense that Amazon was drawing business by not collecting sales tax). And besides, I was sure it wasn’t forever. Let e-tailers get established and then we’ll ask them to make their full contribution to the social good.

But Amazon is no longer David in this story, and yesterday, gave more evidence of liking the role of Goliath. Amazon’s decision over recent months to disown thousands of affiliates is both ironic and tragic: turning their back on those now trying to build their own e-businesses and doing so at a time when their market share is secure and state and local governments are desperate for income.

In their notice to affiliates, Amazon laments the difficulty of collecting taxes in so many jurisdictions and declares that the pressure on them to do so is the work of “big box retailers.” The technological challenge is too big. The costs are too great. And after all, they’re the little-guy. Really? Amazon can launch a Netflix-rivaling movies on-demand service, but can’t find a way to collect taxes? They have the creativity to change the face of retail, but don’t have it to help our larger society in desperate economic times? Can they really say with a straight face that they gain no competitive advantage by not collecting taxes? Really?

Amazon’s real argument, of course, is that there is a Supreme Court decision that absolves them of the responsibility. And to them this is the end of the story. Law doesn’t demand it; we won’t do it! (And we won’t put any of our innovative genius into finding a way to solve this problem long before state governments start passing laws. We’ll wait ‘til the ink is on the page and then appear stunned and oppressed.)

But by taking such an oppositional stance, Amazon is clearly telling us all that they are content to build entirely mercenary relationships. Amazon will trade us a product for a price. Good will, collaboration, the common good are not in the mix. Buyer beware…

It’s an all-too-common practice in business, and when thinking in purely utilitarian terms, appears reasonable. But by taking the stance of victim and completely disregarding the opportunity to build a fortune in goodwill, Amazon is placing all their eggs in the basket of price and convenience. A fine strategy until someone develops cheaper or easier way to shop.

The thing about mercenaries is that no one likes them. They may be necessary from time to time, but no one wants to hang out. We want our mercenaries to do their dirty work and then pretend not to know us. The minute we find an alternative, we choose them. And we feel good about ourselves for doing so. (Did Amazon learn nothing from Blockbuster’s rise and fall? All you need is one Netflix and it’s over…)

So will I keep my Amazon widget? For now… But I won’t feel good about it. I leave it there because I think the books I’ve suggested are important reads and Amazon’s plug-in is the easiest way to add them to my website. But the minute there is a better one, I’m out. The one who lives by the sword…


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