As our collective shopping behaviors change to accommodate the COVID-19 pandemic, Amazon feasts on the misfortune of millions of Americans struggling to pay their rent and keep food on the table.
According to data gathered by Yelp, approximately 60% of businesses registered with the app that shut down when the pandemic first reached the United States will never re-open. Only including the 5.3 million active, claimed local businesses registered with the app, as of August 2020, nearly 100,000 American businesses have been forced to permanently close their doors.
Many corporations have also experienced varying degrees of drowning during the pandemic, with retail chains closing over 8,700 stores in America in 2020 according to the Coresight Research report. This number comes in just shy of 2019’s record breaking 9,300 closures that’s predicted to be broken in 2021, with over 2,000 closures already in the first month alone.
This downward trend of brick and mortar retail is an ongoing result of the 2008 real estate bubble burst. Combining a struggling economy with a rise in popularity of e-commerce – allowing customers to seek out the best possible deal through a variety of providers at the click of a button – brick and mortar retailers were forced to significantly discount their prices in order to convince an especially stingy consumer base to buy. With shoppers becoming accustomed to the new prices, retailers were forced to adjust or disappear. This phenomenon has gone on to become infamously known as the “retail apocalypse,” claiming over 1.3 million American retail jobs in the last decade alone.
The enormous gap in the market created by the retail apocalypse has been seamlessly filled in by e-commerce. While tens of thousands of brick and mortar stores have closed over the past decade the internet’s online shopping Goliath, Amazon, has massively multiplied in size, increasing their 2010 net income by a factor of almost 10 in 2018 and growing their employees by a factor of nearly 20 in that same amount of time. To meet the increased demand for online shopping created by the COVID-19 pandemic, Amazon hired over 400,000 new employees in 2020 alone, bringing their total employee count over 1 million.
Amazon has achieved such massive growth so quickly as the result of a business model that is essentially built around one core concept Jeff Bezos refers to as “customer obsession.” Amazon’s ultimate goal is to create loyal customers that won’t just return once, but hundreds and thousands of times. They do this with the assistance of a website the company has collectively invested billions of dollars and man hours into, in order to connect customers with as many possible items they’re interested in, in as few clicks as possible.
Providing additional incentive for customers to spend even more money and time engaging with the brand, Amazon’s Prime membership includes free shipping on all items and access to Amazon’s video and music streaming services for the price of $119 per year – a number small enough for almost one in three Americans to justify the purchase and large enough that they will be especially inclined to get their money’s worth out of their subscriptions. Combining the perks of membership with a consistent and vast stream of products that appeal to the consumer and a pricing model specifically designed to undercut the competition, they become unstoppable.
In order to consistently provide the best prices for a vast variety of products on the internet, Amazon trades off especially low net profits on sales for the increased business their prices attract. In fact, the majority of the corporation’s income is actually generated by the Amazon Web Services. Essentially, this means that Amazon has been reducing businesses to rubble left and right for the past decade, all so they could eventually capitalize on their popularity and finally make a decent profit from a virtual cloud.
With the pandemic stoking the fire of the retail apocalypse, as is the case with climate change, we are fast approaching a point of no return. While faceless retail corporations will continue to exist in some capacity for those who refuse to conform to the online platform, private businesses will someday become a thing of the past if we can’t collectively escape the “every man for himself” attitude our society has adopted.
We need to look past the immediate future and understand that helping others ultimately helps everyone in the long run. So, instead of outsourcing your next purchase for a cheaper price, whatever it may be, invest in a business from your local community. Take pride in watching your wealth spread, rather than sulking in the shame of knowing you’re feeding the beast that intends to devour the businesses your neighbors have devoted their lives to.
Author’s Note: This righteous rant brought to you by a shameless Amazon Prime member. Do as I say, not as I do and together we can save the small business.
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