I think we sometimes tend to overlook just how important Amazon is to the Web. In all the buzz and hullabaloo of IPOs and venture capital funding, we take for granted that Amazon is basically the Wal-Mart of the Web. That being said, there are some issues that should be raised in regard to this retail superpower.
It wasn't so long ago that Amazon was just a simple little bookstore, in a pitched battle with Borders and Barnes & Noble for online literary supremacy. Now it's far more than a simple little bookstore -- and those "brick and mortar" stores are either dead or dying.
Amazon expanded its business to include music, movies, toys, and eventually just about everything else under the sun. It developed and patented the "One-Click" shopping process, and transformed the world of considered purchases into impulse buying, thereby lowering the barrier for decision-making adults on whether or not to buy a product. Its recommendation engine has blazed the trail for every data-targeting company that exists. The pedigree of the people who have worked at Amazon can be seen throughout the world of e-commerce, since those people represent the cream of the crop for the online consumer business.
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As a consumer, I start my shopping experience with Amazon; most consumers are willing to pay 5%-10% more and buy it from Amazon rather than buy from an online retailer they've never heard of. The brand is synonymous with customer service, fast delivery, quality products, and (for many people) free shipping. Amazon flooded the market with banners and buttons back in the day proclaiming free shipping to get trial - a strategy that worked, along with the industry best practice case study of the Amazon Affiliate Program, which every e-tailer has tried to emulate since it began.
Of course, Amazon also deserves to get some of the blame for what's happening to local business, in much the same way as Wal-Mart does. When Wal-Mart comes into a market, it's routine that smaller retailers go up in arms because they can't compete with the price and selection that Wal-Mart offers. Amazon has the same gripe against it; plus, it doesn't pay state sales tax. That third leg of the proverbial stool is having a profound effect on local business, and as a result I've started to see local marketing from groups of store owners and chamber of commerce groups practically pleading with consumers to "shop local" and "support your local businesses" so that tax money can be fed back into the local community.
I agree with this movement, and I think people should pay attention. It doesn't mean you have to stop shopping with Amazon -- or Wal-Mart, for that matter. It just means that every few purchases you make, try to buy something local. Support your local bookstore, or record store, or grocery store, or boutique clothing store. Support your local pet store, or your local toy store. The prices are certain to be higher than what you're paying at Amazon, but they won't be astronomical -- and these stores need your business. They need you to come in and peruse and buy, rather than come in, peruse, and then go to Amazon to get it for less.
I'm all for finding deals, but once in a while you have to support your local business, at least until Amazon and the government determine a way to work out the sales tax situation.
Don't you agree?
Local businesses don't want my donation. Tossing them an occasional bone means they starve more slowly, which is hardly noble. When the merchandise business model is broken, it's time to convert the local stores to something the web can't undercut, like service/repair, food, or merchandise that is not a commodity. That way the local businesses can still support little league teams. Times change; buggy whip makers had to find something else to sell and I suspect the days of local broadcast are also numbered. Even my career is threatened by online providers of higher education, once distance learning reaches the tipping point..
What is and what will be undercutting local profits are the growing number of group buying and discount sites. Retail is for fools, isn't it? The hell with all of the $8 an hour jobs !
This is a terrific point you make. I suspect many of us balance our consumption between the Amazon's and our favorite local shops but we may not know why.
I use local when I need real specific help, service or products. I want to be able to go to the local hardware, bike shop or haberdasher when I want buy a product that is unique, hard to find or specific to my tastes.
When I want convenience, selection or cheap - I shop online.
Both have their place in my life.
Your heart is in the right place wanting to support local bookstores but unfortunately the marketplace and normal consumer behavior patterns (especially in these difficult economic times) rarely work this way. It's kind of like having your cake and eat it, too. Sure, the person that actually still has some extra "disposable income" and a "support the little local guy" conscience may occasionally do what you are suggesting, but convenience and price are usually the top priority in today's world. And, in case you haven't noticed, Border's just went bankrupt and out of business and the major publishing houses are cutting jobs left and right while trying to adjust to the realities of the digital world that is causing major upheaval in their business model.
Cory, thought provoking as always.
Online merchants got a free pass on sales taxes early on to help the category get started. But now that they are so large and such a big piece of the economy, it is time to join the mainstream merchants, collect and remit state and local sales taxes. Amazon customers need local and state services.
Similarly, electric cars are getting a free pass on road taxes (built into gasoline prices) but that will have to change as well. Electric cars need roads too.
Why don't local stores utilize Amazon, or another shopping vendor, to create their own online stores? This could help them cut costs and be more competitive.
I still purchase more offline than I do online, so I fail to see the value of this discussion. I'm unlikely to alter my habits anytime soon, unless all the stores I buy from suddenly go out of business. I don't see that happening.
But if it begins to come to that, and I owned the store, I'd find someone who could help me automate larger portions of the business. Perhaps I could let people buy online, and stock fewer books, lowering my overhead. I could use the extra space to expand into another business which is less prone to be impacted by online infiltration.
One thing that is working well in my town are book clubs. The local town bookstore helps groups form, gives discounts on the purchase prices, and then buys the books in bulk. As a result, they have generated a new business where there wasn't one several years ago, allowing them to mitigate the impact of internet dilution.
This is the nature of competition - free thinking, trying new things. Diane Mermigas recently had an article discussing the unwillingness of people to accept failure as part of the process of reaching success. Our culture has come to fear and reject failure. Rather than accepting it as part of the process of growth, we view it as part of a process of decline. We don't choose to learn from failure and move forward, we are disheartened by it, feel cheated by it, and try to prevent it while punishing those who are successful.
There is nothing wrong with a conscious decision to support local businesses. I do it, but it's not a decision, it's habit and one I have a difficult time breaking. Just because Amazon or any other site has "deals" doesn't mean that is immediately where I go.
And every purchase is a choice, anyway. So if people want to buy locally, they should. There is a farmer's market 2 days a week in my town. I have never bought there. The food is expensive, it requires additional time to purchase, and frankly I'm not a believer in "organic" anything. But that's my choice. If people want to shop there, and it's turning a profit so it keeps coming every week, then it's a good thing - it's providing a needed service, fulfilling the wants of their customers.
On the other hand, if "Buy Local" becomes a bully pulpit (as I have seen other similar trends become), then it does a disservice to the concept. Whether I choose to buy locally or not is up to me, not the whims, desires, or beliefs of those who think it should be treated as a "must".
Since I mentioned it last week, I'll post a link to the concept of the "negative railroad". Frederic Bastiat is one of the most overlooked and underrated economists in history. His contributions are often ignored, his influence derided.
When, after the Revolution of 1848, many people in France came to believe the government "owed them a living", Bastiat responded:
"Poor people!" he lamented of the duped French populace in the same tumultuous year. "How much disillusionment is in store for them! It would have been so simple and so just to ease their burden by decreasing their taxes; they want to achieve this through the plentiful bounty of the state and they cannot see that the whole mechanism consists in taking away ten to give it back eight, not to mention the true freedom that will be destroyed in the operation!"
You cannot tax your way to success. The government cannot create wealth.
http://negativerailroad.com/content/bastiats-negative-railroad
Good observation, but less than revealing of the strategic nature of the recommendation. The BL for you, it appears, is the inevitability of OL/digital buying. Why support local business? Simple, when we don't local business will go away and take communities w/ them. If you think this is the future, and a better one, then your timid recommendation is sanguine.
A country w/o the local retailer is not an image I believe most would find to their liking. But hey, if "the deal" is all we're about why worry about the character of local communities. We can just recreate them on facebook, right?
Just look at what VC's and their MBAs are doing w/ "deal" ventures--groupon, etc. The "deal" is hurting local business, not helping it. Instead, it is training the marketplace to to grow a "hit and run" buying habit at the cost of "relationship" and a "good customer experience."
"Deal" buyers don't come back, and "deal" companies don't care. Next!
With pain, we're finding out what things need to cost. Sadly, in many cases a small shop where people do business face to face is a counter-competitive expense, like tens of thousands of laid off employees at the larger end of the scale. Pennies trimmed become jobs and communities lost...and biz school case studies of tech-driven societal progress notwithstanding, there's no auto industry to replace the blacksmith shops this time around. No judgment here, just wondering where it all leads.
Local retail will not fail, they just need to do more to be unique than offer the same products available cheaply online. The retail experience can be enjoyable too. There are days I know what I want and would like to simply shop online and have it sent to me. There are a lot of days I would rather browse a retail store to see if there is anything I am interested in. The problem with bricks and mortar bookstores is that they are selling the exact same book I could buy 1/3 cheaper online and also escape sales tax. I would not shop online to simply save sales tax, but Amazon is selling the books much cheaper as well.