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The death toll of retail shopping is ringing, and the name in the wind is e-commerce. In the last 10 years, thousands of retail locations have closed their doors forever thanks in large part to the online juggernaut Amazon.
Sears, once one of the biggest corporations in America, and its smaller brand K-Mart, filed for bankruptcy back in December; this March, 80 more stores will be closing. Lowes, America’s weekend dad project store, is closing 51 stores in America and Canada. Mattress Firm is closing up to 700 stores after filing chapter 11 bankruptcy. The list goes on and on.
Retail is changing. In many ways, it’s changing for the better.
Retail is one of America’s largest job sectors accounting for over 10 percent of all jobs. It is also one of the job sectors that hires more women than men and is one of the few places people can get decent paying part-time jobs.
These jobs aren’t actually shrinking even though stores are closing. Economist Michael Mandel estimates that since 2008, e-commerce has created more than 355,000 jobs compared to the 50,000 it’s destroyed. These jobs are often better paying than old retail and warehouse jobs.
All these new jobs, added to the massive convenience of online shopping, seem like a dream come true. Well, everything has a cost. The cost for all of this will be paid when Amazon gets what it wants.
In 2016, Amazon controlled 34 percent of all retail sales made in America; by 2021, that number will be 50 percent. If their rapid growth continues at this pace within the next couple decades, Amazon will be able to bully their way to an online monopoly.
Once that level of market control is achieved, they will be able to out-price all competition, leaving them to be the only one who decides product costs. This makes it near impossible for any other company to rise to combat them.
Right now, Amazon is focusing on drawing in customers and making itself the most convenient option. So, they make shipping and prices cheap, and they throw in movies and digital content on Prime as a good extra. Due to these add-ons, their operating profit margin is currently extremely small. Once they have anything close to a monopoly, they won’t need to be so giving. They’ll be the only general store in a digital town and we’ll all have to shop there no matter the price.
Greg McFarlane, Co-Founder of ControlYourCash.com
Even today, having turned the corner, Amazon isn’t really that profitable in relation to its revenue. Its profit margin for the last quarter was less than one percent. Retail profit margins are traditionally lower than those in other industries, but still, a sub-one percent margin is remarkable.
It’ll be similar to how Standard Oil controlled the energy sector back in the early 19th century. Except this time around, there is little hope that Trump or politicians like him will do anything to stop this.
That doesn’t mean there isn’t anything to be done.
It’s as easy as canceling your Prime subscription and trying to go to more physical stores. When you do shop online, just try to buy directly from retailers and don’t go through Amazon.
Amazon is sometimes the cheapest option, and sometimes that means they’re the option you have to take. There is no shame in that. Just try to buy elsewhere when possible, and remember that these giant corporations are in no way friends of the people.
Fynn Bailey can be reached at letters@collegian.com or on Twitter @FynnBailey
