In the News: Stacy Mitchell
April 24th, 2018
Media Outlet: The Guardian
From Whole Foods to cloud computing to manufacturing commonly bought household goods, Amazon is everywhere in our economy. This article from The Guardian from Olivia Solon and Julia Carrie Wong details the reality of the e-commerce company’s domination. For their story Solon and Wong reached out to the Institute for Local Self-Reliance’s co-director and Community-Scaled Economy initiative director Stacy Mitchell for her perspective on the subject.
Her contributions to the story are below:
Customers might be getting super-fast deliveries of cheap laundry detergent and binge-worthy TV shows, but the same company has also been accused of displacing jobs in the locations where it builds its fulfilment centres, treating warehouse workers like robots, aggressively undercutting rivals and squeezing suppliers and producers.
“The algorithms are designed to serve up things that best serve Amazon, steering us to some books and not others,” said Stacy Mitchell, co-director of the Institute for Local Self-Reliance. “You have a company that can shape whether a particular author is able to find an audience, and whether they can even get published.”
That power means that “people don’t know if there’s something they’re missing”.
The company doesn’t even shy away from competing with its own investments. After pumping $5.6m into the startup Nucleus and its Alexa-powered video-conferencing tablet, Amazon turned around and released its own suspiciously similar device, the Echo Show.
“They probably copied us,” the Nucleus co-founder Jonathan Frankel said last year. “When they had the opportunity to extend their tentacles into millions of homes, they had to do it, even if it means throwing us under the bus, even if it means putting their whole ecosystem at risk and letting people know that they’re not necessarily a trusted partner.”
Amazon declined to comment on its investment into Nucleus or on the design of its laptop stand, but noted that Rain’s design remained the bestselling stand on the site.
The company’s success has produced panic among investors. When Amazon bought Whole Foods, grocery chains’ stock prices crashed. Two months later, when Amazon announced it would cut Whole Foods’ prices, grocery stocks plummeted again. The meal kit maker Blue Apron’s stock price fell 11% after the news that Amazon was filing for a meal kit trademark. A vague announcement from Amazon that it was collaborating with JP Morgan and Berkshire Hathaway on some kind of non-profit healthcare venture sent healthcare stocks on a downward slide.
Since 2012, Bespoke Investment Group has been tracking an index of 54 retail stocks, known as the “Death by Amazon index”, that it considers most vulnerable to Amazon. “It’s a somewhat melodramatic title, we admit,” said George Pearkes, a macro strategist with Bespoke. “But it encapsulates what is going on in retail quite well.”
Between February 2012 and January 2018, Amazon’s value rose 560%, the S&P index rose 102%, and the Death by Amazon index grew just 42.8%.
Amazon still has a lot of room to grow. It dominates e-commerce, but that’s only about 9%, (according to eMarketer) of the total retail market in the US. With the acquisition of Whole Foods and the launch of the concept store Amazon Go – which has no cashiers and no checkouts – the tech giant can start to take on the other 91%.
And it wouldn’t be surprising if Amazon were to sell the technology that powers the futuristic stores to other retailers so that they too could automate their stores and cut jobs. Doing that would allow the company to keep track of the sales made by its competitors – just as it does on Amazon.com – and use that data to inform its decisions about other retail categories to move into.
“Amazon is just getting started,” said Govindarajan.
Another huge growth area is healthcare and the pharmacy business, according to Khan, who sees the health insurance joint-venture Amazon launched with Berkshire Hathaway and JP Morgan as a way to “get experience in the sector and then double down”.
The company, which is already taking payments and making loans to third-party sellers, has also laid the foundations to push further into financial services. “It wouldn’t surprise me if they tried to look at the option of obtaining an industrial bank charter,” said Mitchell.