What Is Amazon?

The ever-growing retail supremacy of Amazon has contributed to the closing of 9300 stores in the U.S. in 2019. Has it or is it just a coincidence of a larger problem? Is this behemoth a monopoly as many have argued and it thus must be broken into smaller entities?

"I think we're just in the middle of a major transition in the retail space. Traditional brick and mortar stores for the most part haven't learned how to compete," stated Nathan. Amazon is a major time saver, delivering stuff to customers door instead of using limited time to go shopping.  

People still use some local businesses for certain things and some avoid the national big box stores in favor of Amazon. They like Amazon's lower prices on many things and free delivery to the front door. Return policies are generous and return shipping is almost always free with convenient pre-printed postage paid label. But other online retailers do the same thing.

"Amazon's customer service is amazing and they've given some customers things for free rather than make them return it. So I reward them with my business and I think that's just fine. I'd be foolish not to do it. I understand the concerns that smaller companies are unable to compete but it's a problem that I don't want to be responsible for solving. I usually prefer to buy clothing at brick and mortar stores however because I like to try things on. And I don't have to fight traffic and weather," added Shannah.

Some have argued that Amazon is not a monopoly at all. 

There are two types of monopolies, pure and natural.

A pure monopoly is an industry in which there is only one supplier of a product for which there are no close substitutes and in which it is very difficult or impossible for another firm to coexist. Sources of maintenance of such a monopoly include legal restrictions (U.S. postal service has a monopoly because Congress has given it one; that is not to say that there are not other mail delivery companies but they are much more expensive), patents (most pharmaceutical companies have patents on their drugs so, until the patent expires, they control a specific drug they develop thus they are a monopolist in that sense), control of scarce resource or input (De Beers control the diamond market), deliberately erected entry barriers into the business (start expensive lawsuits on trumped-up charges or spending outrageous amounts on advertising that rivals cannot match), and large sunk costs (airplane producing companies like Boeing in the U.S. and Airbus in Europe).

A natural monopoly is an industry in which advantages of large-scale production make it possible for a single firm to produce the entire output of the market at lower average cost than a number of smaller firms, each producing a smaller quantity.

Which one of these does Amazon fit into? It supplies and ships goods, connecting suppliers with customers in a novel way that does not require huge personal inventories. But it is still a behemoth company that controls a large swath of the market. So, is it a monopoly? Is it becoming one? Will it eventually put out of business ALL the little guys?

Another interesting issue is that a monopolist engages in price discrimination - charging higher prices for the same goods to customers who are less resistant to price increases, or failing to charge higher prices to customers whom it costs more to serve. (one example is national health care)  
Price discrimination can sometimes be damaging to the public interest, but at other times it can be beneficial. Some firms cannot survive without it, and price discrimination may even reduce prices to ALL customers if there are substantial economies of scale. (Amazon is definitely an economy of scale).

More questions to ponder of other products and service providers:

- Is the software industry a natural monopoly?

- Are Facebook, Google, Twitter, YouTube monopolies?

Some have argued that they are and should be broken up, particularly the social platform ones that drive the information highway.

Last but not least, why do we have Anti-trust laws at the Justice Department and are they doing their job?

What will happen to customer choice for goods and delivery charges once Amazon is the only one left delivering goods and the shipping costs skyrocket? As it is now, Amazon hires the postal service for weekend deliveries.

Not withstanding the wide variety of goods provided, stellar service, free returns and rapid deliveries, does Amazon fall under monopoly, monopolistic competition, oligopoly, or perfect competition?

Smart Meters and Shopping

Samples of Smart Meters

I went shopping today for a pair of pants. I was hoping it would only take a few minutes. How difficult could that be in the land of plenty? As I entered the large department store, I was greeted by stifling heat and humidity. This particular department store chain uses smart meters, cycled and controlled by the power company from a remote location in order to “save” them money. Customers and employees suffer because a small group of elites have managed to convince and bribe bureaucrats and politicians into pushing the agenda of non-existent global warming.

Driving to the mall, I rolled my eyes as the radio announced that today is an all-day power cycling for those with smart meters who have signed up to reduce their electricity cost. This means no air conditioning when it’s 100 plus degrees Fahrenheit with the heat index.

Those who think they are saving electricity and suffer in the hot days of summer and cold days of winter to “save the planet” from some apocalyptic disaster are actually charged higher rates compared to those who use more electricity. Credulous individuals who have bought the global warming nonsense and Gaia worship are actually helping power companies. Utilities don’t have to buy or build facilities to store excess power during times of peak usage. It is all about making money, not about saving the planet.

The associates, a fancy euphemism for a salesperson, were milling about hot and sweaty, seemingly in a state of melting, totally uninterested in helping me. I made eye contact with several people, and nobody offered to help. Why would they? They are paid a basic salary whether they try very hard or not at all. It reminded me of the communist workers’ motto, “We pretend to work and they pretend to pay us.”

Salespeople in this area of northern Virginia are mostly foreigners who have immigrated to the United States, legally or illegally, for the opportunity of a better life. Sadly though, they’ve brought with them the customs and work ethic of their former third world dictatorships they’ve escaped. They are content with mall wages (previously the place for summer jobs of college students) because, by any comparison with their countries, working conditions and the hourly pay are far superior. Many of them qualify for and receive welfare and Obamacare subsidies and are none too shy to apply and accept them. If the crazy Gringos are passing out leaflets in Spanish teaching them how to do it, why not take advantage of free money?

I finally found someone who relented to help me but she was struggling with the cash register and the simple mathematical calculation. By now sweating profusely and feeling sorry for the frustrated salesclerk, I gave up and left without purchasing anything. I was in terrible need of a cold glass of water.

In a different department store where employees speak English well, are polite and eager to help because they are paid on commission, I am greeted friendly as soon as I set foot in the door and a sales associate guides me in the right direction immediately. The store is comfortably cool.

It is the difference between night and day, between a business run on the capitalist model and a business run and staffed on the socialist model where nobody cares if customers are helped, merchandise is snagged from your hands if you do not make up your mind quickly, and clothes cannot be tried on or returned for hygienic and sanitary reasons.

I understand the sanitary part. It may not be such a bad idea since we live in an area with a high population of illegal immigrants who were not checked for communicable diseases like scabies and parasites like lice and bed bugs when they invaded our border.

First trip to the Mall

What a novel concept to shopping - the Mall! I liken it to the Sunday Promenade in Europe minus the shops. Every Sunday afternoon, we dressed up in our only good dresses and shoes, and took a bus to downtown's Republic Boulevard, flanked by beautiful old chestnut trees. At one end was the main train station terminal, at the other end, the Art Museum, the Marriage House, and a Parisian like bakery with tasty confections of chocolate that we could only afford once in a very long while. Families dressed in their Sunday best paraded their children up and down or stopped if a bench was available. We admired or envied each other in a sad display of people watching in place of going to church. Church was "verboten" by the communists and priests barely made enough money from donations and a meager state stipend to keep the church open for baptisms, weddings, and burials. I am not sure how many people would have gone to church instead of the weekly promenade up and down the gorgeous boulevard had God worship been allowed by the communist state. Come to think of it, since we had state sponsored marriage houses, I think the only reason the communists kept some churches open was to bury its dead. We did not have funeral homes so the logical location to place the deceased in state was the church. I say this because the regime had no qualms about demolishing beautiful old churches, 300-400 years old some of them, to make room for gaudy concrete buildings, headquarters of the local chapters of the communist party or the unions (syndicates as they were called).
You can imagine my glee to be introduced to the Mall. I did not have any money to shop, but it was fun to look. I was surprised that shoppers could actually try things on in a very cozy dressing room, helped by polite ladies and, most shocking of all, could actually return things if you changed your mind. I was used to the communist central planning when they would produce half a million white boots when the market demanded 10 million pairs of black and brown boots. People would fight in long lines for the white boots anyway, sometimes grabbing the first pair on the rack, not knowing whether that was the right size or not. Not that it mattered, you were not allowed to try them on, you might get them dirty. Neither were you allowed to return them if they did not fit. Once you bought them, they were yours to keep. No returns, no exchanges, no credit. I can only imagine that there were many customers with sore feet and bunions. Romanian shoes were not exactly made for comfort or durability.

Cultural differences crept along the way in my daily existence and a trip to the mall was no different. I had to apologize to a poor girl who was politely trying to sell spoon rings, silver rings wrapped around the finger made from the end of a spoon. Coming from such a poor country, it seemed excessive to me to destroy a perfectly good spoon in order to create such a gaudy ring. I wasted no time telling the girl the truth, after all, Europeans are very blunt, not necessarily schooled in the fine art of tactfulness. Needless to say, I brought the girl to tears and was forced to apologize. My husband insisted and I complied, although I did not understand why I had to apologize for expressing my opinion and telling the truth.

Speaking of being truthful and blunt, you never ask an European how they feel, unless you are prepared to listen exactly to what ails them, why, and what they are going to do about it.

I was shocked when few people were paying with cash, mostly with checks and credit cards. I could not understand the concept of paper checks or plastic credit cards very well. At that time, department stores did not have an instant connection with a bank clearinghouse for checks or credit cards. They were mostly accepted on faith and in some instances, by making phone calls. My Egyptian friend, Lula, used to laugh that the country was run on paper and plastic, not fiat money. She had no idea how true her jocular statement was.
I loved the colorful department store bags and was amazed that they were given free of charge with each purchase. I saved them for a while, hoping to find other uses for them. I did the same with Styrofoam containers, plastic forks and spoons, I could not throw them away - I washed them over and over until they broke. My husband chided me that I was McDonald's bag lady.
I found the mall to be very peaceful, a place to meet friends, a place to relax, not necessarily to shop. Back in the late seventies, there were no restaurants inside the mall or a food court and no coffee shops. If you wanted coffee, you had to percolate it yourself. The biggest department stores inside the mall in Tupelo, MS were Sears and Roebuck and J. C. Penney. There was a McRae's but rather small. I was sad when the mall was destroyed by a tornado a year later and abandoned.