As readers of PJ Media’s daily feature, Hot Mic, are aware, I’m not a big fan of Amazon. In the guise of ease, efficiency and allegedly low prices, it’s crushing the life out of the retail section in the United States, demolishing bookstores, big-box stores, department stores, grocery stores, record stores, and even smaller retail outlets, putting small businessmen, struggling authors and garage bands out of business. In so doing, it’s also killing job prospects for entry-level workers who might actually not want to work at McDonald’s.
In their place, it offers you Alexa, your very own electronic monitor and spy, sleeping right next to you on the nightstand in the innocuous guise of your smart phone or your tablet, monitoring your porn searches while it pretends to buy you Doris Kearns Goodwin’s latest book or a tin of Acai berry powder.
In publishing, where I earn part of my living, it forces authors to compete with themselves, offering marked-down used versions of works still in print, thus depriving us of royalty payments. At a time when advances — except to celebrities famous for something other than their literary skills — are a tenth of what they used to be, working writers must now depend on quickly earning out the initial advance (based on — you guessed it — royalties) and then getting subsequent paychecks at six-month intervals for as long as the book continues to sell new copies.
Don’t even get me started on Hollywood.
Well, you say, that’s my — and Roger’s and Richard’s and Drew Klavan’s and Roger Kimball’s and David Goldman’s and VDH’s and Andy’s, among other PJ colleagues — tough luck. True enough. But, wait — you’re next.
The market cap loss in Home Depot, Lowe’s, Whirlpool and Best Buy was about $12.5 billion by the end of the day, after falling to more than $13 billion. Amazon stock was up slightly, and Sears closed up about 10 percent.
But the early read from some analysts was that the sell-off has created a buying opportunity for home improvement retailers Home Depot and Lowe’s, which have proven themselves to be somewhat “Amazon-proof” and among the best performers in the sector. Best Buy, already battling Amazon in electronics, ended the day about 4 percent lower.
Sears, which has been losing share in appliance for years, saw its stock rally as much as 25 percent early Thursday, soon after it announced it would sell its Kenmore-branded appliances on Amazon.com. The products will be compatible with Amazon’s Alexa platform.
God knows, Sears can use the help, as the pictures at the link show. Even if it comes via the Trojan Horse of Alexa. Having been beaten nearly to death by its own ineptitude and electronic retailing, Sears has finally decided that if you can’t beat ’em, join ’em.
The department store chain announced plans on Thursday to sell Kenmore-branded appliances on Amazon.com. Sears also said its Kenmore Smart appliances will be integrated with Amazon’s Alexa platform. Shares of Sears’ stock were climbing more than 25 percent at one point in trading before the market’s open following this news.
“The launch of Kenmore products on Amazon.com will significantly expand the distribution and availability of the Kenmore brand in the U.S.,” Sears CEO Eddie Lampert said in a statement. “At the same time, Sears Home Services and our Innovel Solutions unit will benefit from the relationship as more customers experience their quality services for Kenmore products purchased on Amazon.com.”
Sears said a new “Kenmore Smart” skill for Amazon Alexa will allow customers to control their appliances — changing the temperature on an air conditioner without leaving the sofa, for example.
Now there’s progress for you — progress toward the further coach-potatoing of America, perhaps, but progress. Naturally, there’s a downside for Sears:
In partnering with Amazon, Sears is looking to expand its reach and grow the Kenmore nameplate. However, the move is a double-edged sword, because it also gives shoppers another reason to avoid heading to a Sears store.
But hey — in the brave new Amazonian jungle, there’s even an upside to the downside!
Appliances are one of the categories that have helped draw customers. Just last month, Sears opened a store — the first of its kind for the company — that only sells mattresses and appliances. Plans are also underway to open additional freestanding Sears stores dedicated to these two categories — what Sears has called “two of its strongest.”
“This is consistent with Sears’ aim of becoming more of a remote seller of strong brands without the encumbrance of expensive real estate,” GlobalData Retail Managing Director Neil Saunders told CNBC. “The move makes sense as it puts Sears’ brand products where customers are shopping and gives them a better chance of selling.”
“That said, in the short term it may create even fewer reasons to visit Sears’ shops, which could put further pressure on that side of the business,” Saunders added. “It also puts Sears into a marketplace which is very price competitive and where fulfillment costs are high; this is something that may be challenging for margins.”
Translation: Sears is doomed, but this will prolong the death throes for a while longer, while the last generation of Sears execs can pull the cords on their golden parachutes.
Now, in many ways, Amazon is the logical successor to Sears, which invented the concept of the department store and, through its mail-order catalog, delivered goods and goodies across a rapidly expanding America; you could even buy your house out of a Sears catalog. On the other hand, there’s an important difference: with Sears you could pay C.O.D.; with Amazon, you either use a credit card (at 18% interest) or you’re out of luck. Do business in cash? Tough. Like to avoid finance charges? Too bad, unless you pay off your balances every month. Don’t want to go into debt over that irresistible offer Alexa just chirped to you? Fuhgeddaboutitt.
Meanwhile, the FTC is sniffing around Amazon’s business practices:
As part of its review of Amazon’s agreement to buy Whole Foods, the Federal Trade Commission is looking into allegations that Amazon misleads customers about its pricing discounts, according to a source close to the probe.
The FTC is probing a complaint brought by the advocacy group Consumer Watchdog, which looked at some 1,000 products on Amazon’s website in June and found that Amazon put reference prices, or list prices, on about 46 percent of them.
An analysis found that in 61 percent of products with reference prices, Amazon’s reference prices were higher than it had sold the same product in the previous 90 days, Consumer Watchdog said in a letter to the FTC dated July 6. Following receipt of the letter, the agency made informal inquiries about the allegations, according to a source who spoke on background to preserve business relationships.
This can’t be good. Enough alarms have been set off by Amazon’s tender for the Leftist sacred cow of Whole Foods, its new partnership with Sears, and its entry to the meal-kit market to finally get the attention of federal authorities.
The review of Amazon’s discount pricing is an indication the FTC is taking a serious look at the e-commerce company’s agreement to buy Whole Foods, a deal that critics say could give Amazon an unfair advantage. Consumer Watchdog argued that the deceptive list prices make Amazon prices look like a bargain, and asked the FTC to stop Amazon from buying Whole Foods while the deceptive discounting is occurring.
The FTC plays a dual role of probing charges of deceptive advertising and assessing mergers to ensure they comply with antitrust law. Amazon said in June that it would buy the premium grocer for $13.7 billion. The FTC’s “Guide Against Deceptive Pricing” warns against using a “fictitious” or “inflated” list price for the purpose of making the price charged look like a bargain.
Amazon settled similar allegations with Canada’s Competition Bureau in January. It paid a fine of C$1 million ($756,658.60) as part of the settlement.
In the background, but very much part of the conversation, is Amazon’s engorgement on the The Washington Post company, a once-honored (Watergate!) news organization that Amazon boss Jeff Bezos essentially bought for parts — the main part being the still-influential newspaper in the Imperial City of Washington, D.C. This isn’t so much of a financial investment as a form of protection money — although Bezos had the chutzpah recently to whine about the deleterious effect of Google and Facebook on print’s advertising base, and to make a pitch to the U.S. government for anti-trust protection:
Four years ago, Amazon founder Jeff Bezos was asked if his company’s “ruthless” pursuit of market share was driving book stores out of business. “The Internet is disrupting every media industry,” Bezos said. “People can complain about that, but complaining is not a strategy. And Amazon is not happening to book selling, the future is happening to book selling.”
The future is also happening to newspaper publishers, and their latest effort to stave off change — a bid for an antitrust exemption — is unlikely to succeed, according to legal experts and Silicon Valley insiders who spoke with CNNMoney.
Earlier this week, the News Media Alliance — which says it represents over 2,000 newspapers in the U.S., including The New York Times, The Washington Post and The Wall Street Journal — said it would begin seeking an antitrust exemption from Congress in order to negotiate collectively with Google and Facebook, which together receive an estimated 60% of all U.S. digital advertising revenue.
Good luck with that — because here comes the Big Dog:
The president here puts his finger on Bezos’ long game in buying the Post — with its long-burnished connections to the deepest of the Deep State swamp creatures, the always-wrong CIA — and its past journalistic credibility. Owning the Post gives him leverage over not only Trump, but the federal government as well; it’s worth almost any amount of money that Bezos wants to spend in order for his to be the public voice of the most important city in the world, a city made of money, dedicated to the pursuit of power, and determined to keep the good times rolling without grubby outside interference from the likes of the nouveau-riche Trump family.
The outer-borough Trump, whose never-lost Queens accent set him apart from his tony mid-Atlantic Manhattan counterparts, may have made his new money in the low-rent residential real estate business, but the D.C. elite came by theirs the old fashioned-ways: through the Old-Ivy higher education networks (Hotchkiss and Andover to Yale and Harvard) and generations of familial political connection and, often, corruption.
Bezos, like Trump, is an outsider. But rather than run for president — that piddling office — he busted up American retailing and grabbed the Post to ensure that trouble from 1600 Pennsylvania Avenue and Capitol Hill would be kept to an absolute minimum. With the example of Bill Gates and Microsoft still fresh in everyone’s memory, why wouldn’t he?
… In a much-anticipated decision, Judge Thomas Penfield Jackson declared that, by exploiting its monopoly power to try to crush its competitors, Microsoft had violated federal anti-trust laws. Judge Jackson didn’t just buy some of what Boies, representing the United States government, was selling in the case: that Microsoft had illegally used its stranglehold over computer operating systems to intimidate or eliminate its rivals; he bought it almost verbatim.
Was United States v. Microsoft a tough case? a New York Times reporter asked him before the trial. “Not really,” he replied. And Microsoft—having produced reams of self-incriminating documents and a parade of witnesses who came to court overconfident or inept or deceitful or ill-prepared—made it easier for him than he ever imagined.
And the best part about Amazon’s climb to monopolistic supremacy? You’re subsidizing it:
Like many close observers of the shipping business, I know a secret about the federal government’s relationship with Amazon: The U.S. Postal Service delivers the company’s boxes well below its own costs. Like an accelerant added to a fire, this subsidy is speeding up the collapse of traditional retailers in the U.S. and providing an unfair advantage for Amazon.In 2007 the Postal Service and its regulator determined that, at a minimum, 5.5% of the agency’s fixed costs must be allocated to packages and similar products. A decade later, around 25% of its revenue comes from packages, but their share of fixed costs has not kept pace. First-class mail effectively subsidizes the national network, and the packages get a free ride. An April analysis from Citigroup estimates that if costs were fairly allocated, on average parcels would cost $1.46 more to deliver. It is as if every Amazon box comes with a dollar or two stapled to the packing slip—a gift card from Uncle Sam.Amazon is big enough to take full advantage of “postal injection,” and that has tipped the scales in the internet giant’s favor. Select high-volume shippers are able to drop off presorted packages at the local Postal Service depot for “last mile” delivery at cut-rate prices. With high volumes and warehouses near the local depots, Amazon enjoys low rates unavailable to its competitors. My analysis of available data suggests that around two-thirds of Amazon’s domestic deliveries are made by the Postal Service. It’s as if Amazon gets a subsidized space on every mail truck.