Various commentators and political figures have accused Amazon of employing unfair business practices. They warn that it has a negative impact on the retail industry. A well-known economist named Ted Bauman recently shared his opinions regarding Amazon’s growing role in the economy and made predictions about its future. He expressed both positive and negative views on several aspects of the company.
The Banyan Hill Publishing editor began by pointing to a few major problems with Amazon. He notes that the corporation collects an enormous amount of data on its customers. This is an important issue for Bauman; he recently authored a lengthy guide to internet privacy and security. The finance expert also mentions that Amazon has contributed to the loss of many local shops.
Nevertheless, Ted Bauman frequently orders merchandise from the massive online retailer. He started using its website more than a decade ago because he wanted to buy niche items that rarely appear on the shelves of traditional stores. His purchases ranged from obscure movies to anime-related gifts for his daughter. Bauman praises the vast product selection, affordable pricing and rapid shipping.
Although the Seattle-based company focused on books and DVDs in its early years, this retailer eventually dominated the world of e-commerce. Ninety million people currently hold Prime memberships. Amazon sells almost nine out of every 20 products that Americans order online. It will control half of the online retail market within three years, according to industry experts.
Ted Bauman believes that this corporation will continue to dominate internet sales for a long period of time. Although a few exceptions exist in some locations and industries, small independent retailers can no longer succeed by selling mass-produced goods. Companies like Amazon, eBay and Netflix benefit from new technologies that give consumers a broader selection of products while cutting costs and boosting convenience.
Bauman has traveled the world, learning about several different economic and political systems in the process. He lived in South Africa for more than two decades and witnessed the collapse of apartheid. The renowned economist returned to the United States after working for multiple nonprofits and graduating from a college in Cape Town. These experiences helped him recognize the importance of protecting personal freedoms from authoritarian governments and monopolistic businesses.
Nevertheless, he disagrees with commentators who call Amazon a monopoly. Bauman remarks that Walmart produces about three times as much revenue. Jeff Bezos’ company generates less income than the Kroger supermarket chain, according to New York Magazine. Online shoppers still don’t order the majority of items from it. Walmart, eBay, Apple, Target, Macy’s and other rivals represent 56 percent of the e-commerce market.
Furthermore, Amazon’s sales haven’t had a tremendous impact on most conventional merchants. Less than one-twentieth of all U.S. retail income goes to the company. How is this possible? Although e-commerce has experienced rapid growth and attracted extensive media coverage, many traditional stores remain quite popular. They still generate more than nine-tenths of retail revenue in the United States.
Some critics highlight this company’s involvement in numerous industries. It sells items that range from cough drops to washing machines. Amazon also offers an assortment of computer-related services. Nonetheless, it faces viable competitors in most economic sectors. Target, Big Lots, Kohl’s, Dollar General, Home Depot and Walmart sell many of the same products at competitive prices. Specialty retailers like Apple and A.C. Moore compete with it as well.
The Seattle internet giant has sought to play a bigger role in the grocery sector. It introduced Amazon Fresh and bought Whole Foods. However, these actions haven’t enabled it to dominate this industry. Five other supermarket chains exceed the size of Whole Foods. It has failed to achieve significant price reductions, and some shoppers feel that quality deteriorated after the acquisition took place.
Despite occasional missteps, most Americans express comparatively positive opinions about Amazon. Bauman notes that real monopolies usually attract stronger criticism from the public. He mentions large telecommunications businesses as examples. Monopolistic firms tend to provide poor customer service and charge exorbitant prices. Bezos’ company still has enough competitors to prevent it from doing so.
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Rival merchants certainly feel less fond of Amazon than the public, but they normally don’t claim that it uses anti-competitive tactics. It hasn’t had ruinous effects on the in-store sales of most large, powerful retailers. Comparatively few shoppers choose it instead of the nearest grocery, hardware, dollar or drug store. Numerous local bookshops have closed their doors, but they have too little political influence to call for antitrust action.
On the other hand, Amazon has become far more unpopular with suppliers. The company regularly urges them to cut bulk prices. It removes manufacturers’ merchandise from product search results if they refuse to charge less, according to some suppliers. This behavior has the potential to provoke government action. Bauman comments that U.S. officials largely ignore the public but pay attention to the needs of manufacturers.
Amazon appears to negotiate with shipping services in a similar way. The postal service, FedEx and UPS can’t afford to lose this client, so they comply with its demands for lower prices. This practice has drawn President Trump’s ire; he criticized the company for avoiding taxes as well. Trump also expressed anger about negative articles in The Washington Post. Amazon’s CEO owns this newspaper.
After the president made harsh comments about Bezos and his companies, the value of Amazon stock tumbled. Several factors contributed to the sell-off. Bloomberg recently reported that the China-U.S. trade war could harm this corporation because Chinese workers manufacture its electronics. Meanwhile, various scandals and safety concerns caused the prices of numerous technology stocks to plummet.
Although it produces massive profits, Amazon doesn’t pay dividends. It uses extra funds to buy other companies and introduce new services. The Bauman Letter’s editor explains that this strategy could pose a bigger threat than any of the aforementioned problems. Why? Traders can only profit from this investment by selling it.
Consequently, stockholders are more likely to unload Amazon shares at the first sign of trouble. This makes the internet retailer quite vulnerable to tech industry scandals, new tariffs, presidential tweets and other unexpected developments. Ted Bauman warns that Amazon’s stock value could continue to drop in the months to come. This may also cause the share prices of numerous affiliated companies to fall.