Amazon; what a bitter-sweet word. This company has revolutionised the way consumers shop online. With over 12 million products, 36 categories and thousands of subcategories, it’s no wonder millions of shoppers rely on its service to get everything they need. From gardening tools and electronics to food and fashion (and everything in between), Amazon has become the one-stop-shop that many depend on. But shoppers don’t only love its versatility. Its affordable prices, quick delivery and the many benefits that come with its Prime membership subscription have allowed Amazon to hold 30% of the UK (and 40% of the US) e-commerce market share.
But there’s a darker side to this multinational business. This company may be considered a shopper’s paradise, a haven and a life-saver. Yet, we hear a completely different story from those on the other side of the tracks. Amazon adverts portray working for the business as an enjoyable place with a great sense of community. But third-party authoritative sources and employee testimonials juxtapose this fairytale-like job.
The darker side of Amazon doesn’t stop there. Amazon sellers and independent businesses are also suffering from Amazon’s dominance. So much that whilst this corporation keeps growing, smaller companies are desperately fighting to stay afloat.
Let’s take a deep dive into Amazon’s workings, and find out the good, the bad and the ugly of this e-commerce giant.
The Good: Amazon Shoppers
What should I get for my brother’s birthday? Where can I get cheap books? Where can I buy a tent for my camping trip tomorrow? There’s usually one place that jumps to mind: Amazon. No matter the shopper’s need, Amazon will always be there to save the day. Indeed, 93% of UK online consumers have bought from an Amazon website in the past year.
The One-Stop Shop
Anyone who has ever shopped on Amazon knows how simple, efficient and time-saving it is. Whatever your heart desires can be found there. Unsurprisingly, many choose Amazon over other e-commerce businesses as it’s a one-stop shop. Especially when covid first hit and many stores closed their doors, Amazon was there to cater to those that couldn’t find what they needed elsewhere. This shift has led millions of shoppers to rely on its service, even today when shops are running as usual.
What is the point of looking elsewhere when you know you can find it on Amazon? Not only that, but the platform will offer several choices of what you’re looking for to make your shopping experience even more personalised. It gives you a sense of freedom and control knowing that based on personal preferences, you can choose one product or another. Amazon will personally suggest certain listings by placing ‘Amazon’s Choice’ or ‘Best Seller’, but ultimately, it is the shopper who has the final decision.
No matter what you are looking for, 99.9% of the time you will find it on Amazon.
We want it here and we want it now! Well, Amazon has that figured out. Everyone who has ever shopped from this online marketplace knows how fast their delivery is. If you choose the free delivery option and it says your parcel will arrive in 4 days, it will either be on time or come one or two days early. The same goes if you pick another shipping option.
But none benefit more from Amazon’s fast delivery than Prime members. One of the advantages of this subscription is the one-day and same-day parcel delivery (and other options) at no extra cost. So, if you wake up in the morning and fancy a new saucepan, it will be at your doorstep before you can cook dinner.
Fast delivery is not the only benefit that comes with the Prime membership.
From a streaming and digital perspective, Amazon membership allows you full access to Prime Video, where you can stream thousands of movies, TV shows and Amazon exclusives. Also, with Amazon Music, you can listen to over 2 million songs with no ad interruptions. Not bad, right?
Another benefit of having a Prime membership is that you can use Prime Reading and have access to thousands of ebooks, magazines and more. You can even take advantage of Amazon First Reads and have early access to a selection of new books.
There are also many shopping benefits, such as exclusive deals, Prime days (shopping events for prime members with additional discounts) and try before you buy women’s and men’s clothing.
You can even share Prime exclusives with another individual.
So many advantages come with one subscription. It almost seems too good to be true. It’s no wonder Amazon Prime has over 200 million subscribers, which is three times the UK population!
What differentiates Amazon from some other smaller e-commerce companies is the fact that it has product reviews. As you may have seen and even experienced, customer reviews and testimonials have become a pivotal part of a shopper’s purchasing experience. People trust this feedback as much as personal recommendations and will be influenced by what others say about a brand or specific product.
Amazon uses this shopping habit to its advantage on its platform. Indeed, consumers can browse different products, each with its reviews, and through the information gathered, they can make an informed purchasing decision.
By displaying product reviews, Amazon shoppers are more likely to keep using its site rather than look elsewhere.
Last but not least, Amazon is known for its affordable prices. What’s the point of buying elsewhere when you can find the same product for a better price on Amazon? The company adds discounts to several products on its site to encourage impulse purchases and stand out from the competition.
For instance, let’s say you need some new headphones. When you search for Marshall headphones on Amazon, one of their products has a 43% discount, going from £69.99 (which is what it costs on the Marshall website) to £40.02. Will you buy it on Amazon or on Marshall’s official website?… Exactly.
The real question is, how can that be possible and how can it be profitable to Amazon? That’s something we will discuss later on.
What can be said, however, is that Amazon and the benefits that are attributed to this company are the leading reason why millions of shoppers choose its service instead of other e-commerce businesses.
The Bad: Amazon Workers
Amazon’s portrayal of its employees looks almost idyllic. With so much fun, laughter and a strong community feel, who wouldn’t want to work for this multinational business?
Well, let’s take off those rose-coloured glasses, shall we?
This utopian advert couldn’t be further from the truth. Many Amazon employees feel like cogs in a machine, having to do the same task hour after hour, day after day. Karl Marx defined it as work alienation, the isolating and dehumanising effects that arise when work disconnects you from the production process, others and yourself.
Various factors are causing Amazon workers to feel like this, including injury rates, insufficient breaks and anti-union forced propaganda. It’s no wonder that the average employee leaves after only eight months.
Last year, there were around 6.8 serious injuries for every 100 Amazon warehouse workers. This is extremely high considering the average rate for other warehouses is 3.3%. Not to mention Amazon workers accounted for 49% of the overall warehouse injuries within the United States.
Even though Amazon’s warehouse serious injuries have recently decreased, the number of overall injuries has not.
In theory, Amazon is aware of this issue and its goal is to cut these injuries by half by 2025. However, the company also said they planned to invest hundreds of thousands of dollars in 2021, $300,000 to be exact, on safety projects, but that didn’t seem to improve the overall injury statistics. Also, this future commitment doesn’t change the fact that presently Amazon workers are still impacted by accidents that can affect their ability to do their job.
Working Hours and Rest Breaks
Another issue Amazon workers are facing is insufficient breaks. Employees are allowed a 30-minute (unpaid) break for every 5 hours of work. They also get an additional 10-minute break for every 4 hours of labour. These mirror the standard warehouse breaks in the US.
Even if this is not an issue per se, it’s the reality of these breaks that are making Amazon employees leave their job.
For fear of not meeting quotas for packaging merchandise, some employees don’t take their rightful breaks. Also, they feel like they don’t have enough time to go to the bathroom without getting demerits due to the sheer size of Amazon warehouses.
We can’t talk about the lack of bathroom breaks without mentioning the tweet from the Democrat Mark Pocan, saying Amazon drivers urinate in bottles. Amazon denied this but subsequently apologised to the politician after several news outlets published quotes from Amazon employees confirming this statement.
Even when employees take breaks, they can’t seem to use all of their time. A former Amazon worker said the company didn’t let them finish these intervals and were forced to go back to work. Also, they were told to keep their walkie talkies with them at all times, even during their breaks.
Not only do Amazon workers fail to get their rightful breaks due to fear of not reaching their quota or feeling forced to cut them short, but they even do extra hours when needed.
During busy seasons such as Thanksgiving and Christmas, Amazon obligates its staff to extend their shifts and work overtime, usually with little notice.
With so much stress, constant monitoring and minimal rest breaks, it’s no wonder Amazon workers last on average eight months.
Amazon and Anti-Unionism
To say Amazon is against unionisation is an understatement.
Amazon seems to be doing everything in its power to block unionisation. Several news outlets have reported the company calling the police, firing workers, giving out anti-union propaganda, confiscating pro-union literature and having anti-union presentations.
Amazon’s anti-union views couldn’t be clearer. However, these actions juxtapose Jeff Bezos’ idea of making Amazon the world’s best employer. How can you be the best employer when you’re not giving your employees a voice?
Their actions haven’t been in vain. Amazon’s anti-union campaigns have managed to avoid warehouse unionisation for 28 years. This was until the legendary victory in the Staten Island JFK8 warehouse who joined Amazon Labour Union in April 2022. But this doesn’t seem to be the end. Last month, Amazon went before a judge to try and overturn this historic win.
The company has even strengthened its anti-union propaganda. Indeed, the second Staten Island warehouse (LDJ5) election rejected the union bid. CNBC stated that before voting, Amazon required its employees to attend an anti-union presentation.
The Ugly: Amazon Sellers and Independent Businesses
Amazon Dominates the Online Market
As we’ve seen, shopping on Amazon has many benefits. Between fast deliveries, affordable prices, product reviews and its prime membership, it’s no wonder Amazon holds almost a third of the UK’s e-commerce market share. However, what does that mean for independent businesses?
Its success has allowed Amazon to control access to the online market and become a gatekeeper. Indeed, in order to reach the online audience, independent businesses have little choice but to become an Amazon seller.
Nicholas Dennison, the Vice President of Small Business at Amazon, has said that their goal is to help businesses thrive by giving them tools to achieve more sales, exposure and engagement. Yet, Amazon’s actions tell a different story.
Amazon Exploits and Undermines Its Sellers
One of the ways Amazon undermines independent businesses selling on its platform is by removing their brand identity. If you’ve ever been on Amazon, you may have noticed how all product listings look the same. There is almost no brand identity that could help a consumer remember that company. This way, Amazon can ensure that shoppers will continue to come back for more instead of heading to its competitor’s website.
Another way Amazon increases businesses’ dependence on its platform is by preventing customer relationships. The e-commerce giant limits contact between shoppers and sellers and even blocks the company from seeing the name and addresses of those who have purchased their products.
The truth is that Amazon doesn’t care about seeing businesses flourish. All it cares about is how these businesses can help Amazon grow.
Firstly, the company charges 30% of each sale made. 30%! Plus, Amazon sells extra features to “help” these companies become more visible on its platform. Without it, Amazon sellers would find it extremely hard to make any sales.
With so many expenses, how can anyone maintain a profitable business?
But that’s not even half of it. Amazon’s Fair Pricing Policy forbids businesses to sell their products at a cheaper price on other sites. If Amazon’s bots find this is the case, the business’s products will be suppressed in search results, making it almost impossible to make a sale.
Once Amazon gets hold of a business, it’s very difficult to get out of its grip.
Crushing the Competition
Unfortunately, the exploitation doesn’t stop there. Through authoritative sources and our own accounts, we’ve seen that Amazon, through its data, learns about its competitors and their best-selling products and then creates its own versions and sells them at a cheaper price.
One ex-Amazon seller told Psydro that they were selling thousands of products on the platform and had 3-4 bestsellers, one of them being batteries. However, overnight, the owner saw sales dramatically fall. He found out that on the batteries listing, Amazon had produced its own version and was promoting it on this page at a cheaper price.
So, not only does Amazon steal product ideas from its sellers, but it also uses predatory pricing to further destroy its competitors.
Not surprisingly, Amazon denies this practice, but how long can they keep it going? There have been numerous charges, both in the US and EU, of breaking antitrust rules and exploiting its sellers. The UK is currently investigating Amazon’s practices.
Amazon is a threat to the survival of small businesses. No wonder the number of independent businesses has fallen whilst big corporations such as Amazon continue to grow and dominate the market.
Previously, we talked about Amazon’s affordability. The company is known for having some of the best deals online. If you’re looking for something, chances are, you will find the best price on Amazon. But how can this be profitable to the business?
The strategy Amazon uses, predatory pricing, allows it to set its prices low enough to eliminate the competition. It’s not profitable short term, in fact Amazon can lose millions, but it’s a sure way to become the go-to place for most shoppers, crush other companies and ultimately become the only viable option on the market.
Amazon vs Diapers.com
Over 12 years ago, there was a price war between Amazon and Diapers.com. But how and why did it start?
In 2010, Diapers.com was a very profitable business, making $100 million in revenue and being valued at $300 million. It was the go-to for many parents, as they could choose from a wide variety of baby supplies and benefited from free shipping. Seeing this success and selling diapers themselves, Amazon tried to acquire the business, but Quidsi, the parent company, refused to sell.
From there, the price war began, and Amazon used predatory pricing to crush the e-commerce competitor. They would sell a case of Pampers at $39, knowing that Diapers.com sold it at $45. Amazon even offered additional discounts to Prime members wanting to buy this product. How could anyone compete with that?
To stop Diapers.com’s growth, Amazon lost around $200 million, but not in vain. Quidsi founders were forced to sell the company to Amazon at $545 million, including Diapers.com.
Almost seven years later, in 2017, Amazon shut down Diapers.com and all the other businesses under Quidsi, stating that it wasn’t profitable enough for the e-commerce giant.
This is just one example of how Amazon uses predatory pricing to destroy the competition. If you’re a threat to Amazon’s growth, you’ll most likely be chewed up and spat out.
Shedding Light on Amazon’s Workings
Amazon might seem like the perfect place to shop. However, not enough people realise the inner workings of this e-commerce giant and how it’s negatively impacting its employees and independent businesses.
When something seems too good to be true, it usually is, and this is definitely the case with Amazon.
Whether you’re an online business or a shopper, it’s vital to find a third party that wants the best for everyone involved. For this reason, we have created Psydro Marketplace; a user-friendly space where companies can easily sell their products online whilst maintaining a profitable business.
As opposed to some other marketplaces, we are not a retailer and thus won’t compete against our sellers. Instead, we will always and only act as a middleman between businesses and consumers.
If you would like to learn more about Psydro Marketplace, please visit our information page or book a demo with a member of our team. We’d be more than happy to answer any questions you might have.