Published on: April 8, 2021
Yesterday, we took note of a Los Angeles Times story about how a new coalition of small business organizations called Small Business Rising "is urging policymakers to break up Amazon," calling for antitrust regulators to separate Amazon's own retail business from its third-party marketplace.
I commented, in part:
While I completely understand the motivation behind this effort, and agree that there are ways in which Amazon makes it very tough on small businesses for which it provides a platform, I wrestle with the idea that this all makes it necessary to break up Amazon's two retail entities.
I would guess that many of the businesses signing on to this effort - especially in the grocery sector - carry private label/own brand items that are similar to national brands that they sell. They have the choice to price the private label products above or below the national brands, to give them better or lesser promotion, and higher visibility or lower visibility on store shelves. They make the determination of which private label items to carry based often on sales data for national brands.
In fact, if I go into the local grocery store, I have to do all the analysis myself - looking up and down the shelves to compare and contrast such items. Amazon does it for me - telling me if other sellers offer an item at a lower price, though noting that they may not provide free shipping under Prime.
I'd also guess that for every third party merchant that has found it difficult to do business on Amazon's marketplace - and, by the way, they don't have to do business via Amazon - there are several that actually have discovered new markets, customers and opportunities because they're now able to scale. They've understood that Amazon puts them in the middle of a competitive mosh pit, but it also serves as a magnet for shoppers that didn't even know they existed.
In so many ways, Amazon has disrupted traditional retailing by doing what legacy companies always have done, except doing it faster, more effectively, and with greater customer-centricity. In the process, it has become bigger and even better at what it does - and hardly a monopoly.
I get that this is hard. I get that small retailers are at an enormous disadvantage … but in many ways, by depending on legacies rather than innovations for their raison d'être, they've put themselves in this position.
MNB reader Jerome Schindler wrote:
Many of those private label/own brand items have labeling and often even a packaging shape that mimics the leading national brand to trick consumers into thinking it is the national brand or at least is made by the national brand. In this situation imitation is not the sincerest form of flattery - it is unethical behavior to say the least. I would characterize it as theft, theft of the reputation of the brand name counterpart. Litigation is very expensive and in my experience winning is a crapshoot- different day, different judge, different result. In addition many national brands hesitate/are afraid to sue their retail customers.
Another MNB reader wrote:
I agree with your comments. Would also suggest this is the same whining we got from the grocery industry back in 1995 when Wal-Mart was the 800 lb gorilla kicking their a$$es! Someone famous once said, "compete is a verb"! Just do it!
Another MNB reader wrote:
Understand the concerns of the small retailers and also the value of the Amazon model as you referenced. Wondering what the unintended consequences of a “break-up” of Amazon would be? Do you know any retail legal experts that could shed some light on this as I suspect the drumbeat to break-up big tech is only going to grow louder – for business and political reasons.
MNB reader Rich Heiland wrote:
I know it's not an exact comparison, but….
Back in 1991 when I was publisher of the Hanover (PA) Evening Sun, Walmart came to town. Everyone was up in arms. Walmart did an interesting thing. It got with our chamber of commerce and set up a bus to take local merchants to the nearest Walmart. Walmart folks took them through the store and in very direct fashion told them where they could compete with Walmart and where they could not.
We had two traditional men's stores. One owner came back, got rid of blue jeans, anything he saw in Walmart. He went more upscale, added a formal wear rental business using local kids as models, increased services like tailoring. The other guy went back and continued to rail against Walmart. Two years later he was gone. The guy who adapted was not. I know adapting to, and competing with Amazon, may be more difficult and it could be small retail as a class is doomed. But, I think there will be survivors and they will be the ones with an open ear to the market and where it is at, and going.
By the way, Hanover Clothing is still in business all these years later...
Tom Furphy made the point in yesterday's Innovation Conversation: "You can't out-Amazon Amazon."
Yesterday we provided a link to a Fast Company piece about how "you won’t find breadfruit in the produce aisle at your local grocery store. But Patagonia Provisions, the food-focused offshoot of the outdoor apparel company, wants to help make the tropical fruit a mainstream ingredient."
Prompting MNB reader Howard Schneider to write:
A whole article about breadfruit that doesn’t mention HMS Bounty? Someone should be hanging from the highest yard arm.
Fair point. For Fast Company to do that is like cruelty or brutality with no purpose.
Yesterday there was a reader who suggested that a headline about business that do not do what they need to survive ' "Suicide Ain't Painless" - was highly insensitive because of the number of "mentally fragile" people in the world.
"I thought that it was a clever - and appropriate, considering the column - headline that also was a movie reference - the theme song from M*A*S*H is entitled "Suicide Is Painless." And you know how we love movie references around here.
One MNB reader replied:
This was a good headline.
But institutions and GOVT and the media promote this type of sensitivity. everybody is offended - everyone is being attacked - everybody is a victim. There are very few adults anymore. The morality of mankind has not changed in 6,000 years. Even though GOD walked the earth in the form of man 2,000 years ago.. and told us how to behave - it hasn't changed - we are just getting weaker in our ability to accept.
BTW - the interview with the union guy - not sure he had more than 10 minutes of value - he added nothing profound - his job is to complain about the lack of.. ( you pick the subject). Unions are about money - not progress or innovation or efficiency. And wasn't it so appropriate that he was in a wood walled office that came straight out of good fellas? You cant make this stuff up.
I do want to respond to this.
First … I have no problem if anyone wants to point out to me when I say or do things that seem insensitive. I try to do my best to think about people's feelings, but sometimes I blow it. And sometimes, I just disagree with the conclusion … but I'm happy to air the complaint.
As for your complaint about my interview with the UFCW's John Grant … I'm sorry you saw no value in it, but I'm glad I did it. I thought John did far more than complain - I thought he gave a fair accounting of his positions both on the impact of the pandemic and management-labor relations in general. And I know that I'm better off for having had a conversation with someone with whom I do not not necessarily agree on all issues.
And to pick on a wood-paneled office seems a little petty to me. (I've been in those offices. It is not as if the UFCW has invested in a palace for leadership. Trust me. I'm actually pretty sensitive about this stuff.)