How Amazon’s ‘invisible’ hand can shape your city

Date: 2 May 2017 | posted in: Media Coverage, Retail | 0 Facebooktwitterredditmail

Curbed – May 2, 2017

By Patrick Sisson

It begins with boxes. For most people who order goods from Amazon—with nearly half of U.S. households enrolled in the company’s Prime program, that’s quite a few of us—interactions with the Seattle e-commerce giant start with a search and a click, and end with a delivery.

While the ubiquitous company—a retail and shopping juggernaut worth roughly $430 billion that personifies the rapid growth in e-commerce—has an extensive footprint, a growing warehouse network, and a nascent brick-and-mortar retail presence, most of us just see piles of boxes on stoops, on doorsteps, and in apartment lobbies.

But that passing perspective would be a gross underestimation of the way e-commerce in general, and Amazon specifically, has and will reshape cities and communities around the country. …

“Amazon has been able to ride this stealth presence and sink under the radar,” says Olivia LaVecchia, a research associate with the Institute for Local Self-Reliance, a nonprofit focused on promoting small business. “Their true power and influence have remained invisible. They’re reshaping our commerce, built environment, and even social interactions.”

But it may not be that way for long. As LaVecchia and other analysts have noted, Amazon has begun to enter the physical retail market with a handful of bookstores and Amazon Go, an in-the-works convenience store, the first steps in a rollout that could rapidly speed up their disruption of retail and shipping. Many analysts and former employees told the New York Times that Amazon might make the move to enter into markets that you “can’t digitize.”

Over the last two years, the company has expanded into major metro areas, building upon its massive hub-and-spoke system to the point where it can offer same-day (and in many cases, one- or two-hour) delivery to most major metro areas in the United States. In just the last year alone, for example, the company has doubled the number of facilities in its U.S. distribution network, according to the ILSR report Amazon’s Stranglehold, and the company is increasingly experimenting with ways to take over last-mile delivery.

According to LaVecchia, property taxes are the single largest source of revenue for state and local governments, and most of that comes from commercial landowners. Amazon’s incredible logistics operation significantly shrinks the footprint of a traditional commercial operation, meaning less taxes and revenue. And in many cases, especially in bigger urban areas, larger warehouses are outside of the main metro area (many Amazon warehouses serving Chicago, for instance, are located in Joliet, Illinois), in communities looking to subsidize new jobs: The Institute for Local Self-Reliance says the company has received $613 million in public subsidies for new fulfillment facilities since 2015.

The miracle of that Amazon box—bringing a world of goods to your doorstep in days, if not hours—has been transformative, as well as affordable. But the rise of online shopping, the unspooling of commercial districts, and the disconnect between shopping and the city have many unintended consequences. Planners and local governments need to be ready to grapple with them.

“The relationship between commerce and place has traditionally been a real strong link,” says LaVecchia. “Amazon is really throwing things on its head, and it’s something that we haven’t seen before. When commerce and shopping become disconnected from that sense of place, there are as many social implications as there are financial implications.”

Read the full story here.

Follow Nick Stumo-Langer:
Nick Stumo-Langer

Nick Stumo-Langer was Communications Manager at ILSR working for all five initiatives. He ran ILSR's Facebook and Twitter profiles and builds relationships with reporters. He is an alumnus of St. Olaf College and animated by the concerns of monopoly power across our economy.