business news in context, analysis with attitude

The Boston Globe has a piece in which it asks the question, does it necessary follow that if you can buy a 55-inch television on Amazon  for $249, that Amazon is necessarily good for consumers?

It is a question that certainly complicates any case that will be made by the Federal Trade Commission (FTC) in its antitrust action against Amazon.

But the Globe asked the question of MNB fave Burt Flickinger, managing director of Strategic Resources Group, and here's what the paper reports:

"His conclusion: Prime Days aside, Amazon has not used the power of its low-cost business model to consistently offer the best prices to consumers, especially when it comes to food and groceries.

"For example, even though Amazon purchased upscale grocer Whole Foods Market in 2017, the chain has not meaningfully lowered its prices as many people have hoped, he said.

"'Amazon is a great place to buy a television,' Flickinger said. 'But when it comes to groceries and household essentials, it’s not the place to save'."

KC's View:

Burt Flickinger has agreed do come on MNB sometime in coming weeks to discuss this issue, and I'm really looking forward to it.

I agree with him that Amazon's approach to Whole Foods has been at odds with its low-price image, but I'm not entirely sure that this is wrong or even deceptive.  We may have expected an Amazon-owned Whole Foods to lower prices, but did Amazon actually promise that?  (It does offer selective deals to Prime members, but they are very limited, generally underwhelming and not very well marketed.)  Plus, is there anything wrong with a retailer operating different kinds of formats with different pricing policies?  In fact, couldn't it be argued that this is a smart way to come to market?

Besides, I've always argued that Amazon should be seen as a convenience play, not a pure price play.  But maybe that's just the way I use it.

I think that a conversation about antitrust policy in the US is long overdue - the nature of competition has changed enormously in the past three decades, but the laws have not kept up.  

Scott Galloway made a comment on "Pivot" the other day that resonated with me.  He basically said that Amazon may have done nothing illegal, nothing wrong - but that it still may be good for America to break the company up so that smaller companies get needed oxygen to survive.  To me, that's a compelling argument worth consideration:  Is Amazon so big that even without doing anything wrong or illegal, it takes up so much space that smaller companies cannot survive or even get started?

By the way, could one make the same argument about what the top of the supermarket food chain will look like if Kroger is allowed to merge with Albertsons - that the combined company, along with Walmart and Costco, are soaking up all the competitive oxygen in the room, inhibiting grown and innovation by other companies that would be good for the economy in the long run?

I'm looking forward to my conversation with Burt Flickinger, who I know will have nuanced and informed responses to these questions.