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It’s Lonely at the Top – Amazon Faces Scrutiny, and That’s a Good Thing

Peter Reville by Peter Reville
January 5, 2021
in Analysts Coverage, Commerce, E-commerce
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It’s Lonely at the Top – Amazon Faces Scrutiny, and That’s a Good Thing
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In Shakespeare’s Henry the IV, King Richard IV says, ‘uneasy is the head that wears a crown’ which over time, has been paraphrased to ‘heavy is the head that wears the crown.’ It has come to mean that those at the top have a particular burden for being at the top. The clear crown wearer in the ecommerce space is Amazon. Amazon is the clear leader in the ecommerce and this has exposed them to hyper scrutiny. Both praised and vilified for its business model, Amazon holds a very precarious position. The pandemic that we have all been living through for the past 10 months has only shined a brighter spotlight on the king and the crown.

Critics have called Amazon a monopsony – a market where only one buyer exists, or where a single buyer dominates the market. They have said it stifles competition and has “trained” shoppers to a set of expectations that cannot be met by their competition (shipping, product availability, etc.). They have also be accused of strong-arming suppliers and a whole host of other tenets of the free economy along with a host of other detrimental monopsonistic and monopolistic behaviors.

This morning, I read an article in GOBankingRates.com  that highlights some of the negative influences Amazon has placed on the ecommerce vertical and the retail sector as a whole. On one hand as the article points out, Amazon has put an incredible amount of freedom in the hands of the consumer.

“Amazon is fueling the era of ‘empowered consumerism,” said Kimberley Ring, a professor at Suffolk University in Boston who specializes in consumer behavior and digital marketing at the graduate level. “They’ve taken powerful personalized shopping experiences to the next level. Not only do they predict our next purchase needs, they also give us the freedom to comparison shop without having to leave the app or site.”

The COVID-19 pandemic managed to take this sense of empowered consumerism up a notch as our shopping needs changed overnight (calling for the purchases of hand sanitizer and PPE), and, largely housebound, our online spending skyrocketed.

In the same article Amazon is criticized for such transgressions as:

  • Making consumer unethical because they tolerate the way Amazon pressures its suppliers
  • Forcing consumers to an on-demand, instant delivery mindset
  • Forcing consumers to overspend by making shopping too easy
  • Killing competition by making shopping too easy
  • Destroying in-store retail

Every economic cycle has its dynastic brands, and when they become dynastic, the critics come out like they have for Amazon time and again. That is the heavy crown they have to wear. At the end of the day, close examination of the top brands is a good thing. If for no other reason than to remind them, and to remind all of us, that they are not beyond scrutiny.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

Tags: Amazonbusiness modelcommerceCovid-19e-commercein-store shoppingMarketonline shoppingRetailRetailers
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