Henry Hazlitt (Economics in One Lesson) convinced me that protectionist policies are, in the long run, worse for everyone. Whether it be high tariffs or the (fictitious?) actions of Ned Ludd, protectionism is short-sighted because it fails to recognize that “maximizing the use of God’s world”—more efficiently using the resources in creation—raises the overall standard of living for everyone. To take the Ned Ludd example: machines did, in the short run, cause numbers of British textile workers to lose their jobs. But in the long run everybody, including those workers, got less expensive clothing. Textile workers were freed to contribute to their economy in other ways.
But… the Internet world—and Amazon.com in particular—has raised some challenging questions I’ve been puzzling over for a good while.
For example, do you perceive an ethical problem with walking into Best Buy, trying out a tablet there, and then using your smartphone to order it more cheaply from Amazon?
Best Buy paid to build an attractive building in a convenient (and therefore expensive) location. It paid to hire and train knowledgeable workers, some of whom are your neighbors—people who, in turn, patronize your own business if you’re local. Best Buy paid to stock your item in all its stores just in case you wanted one.
I don’t feel comfortable, ethically, with abusing my neighbor’s profit that way. But I have to admit that I’ve done something it at least once, when buying a used microphone on Amazon saved me $50. I bought it at BestBuy for use that day, used it once, took it back, and ordered the used item from Amazon. I’m not sure I like what I did.
Best Buy doesn’t like it at all, of course. It has, I read, taken to using a proprietary bar code so people can’t readily compare prices with online vendors.
Do we really want brick-and-mortar stores to go away? Do you want to be unable to touch a Kindle before you buy one? Do you want to have to rely on online reviewers—especially when numerous news stories have questioned their reliability (some companies have been caught paying for favorable reviews)?
It feels doctrinaire and callous to me to say “business is business” when it means my neighbor may lose his job for it. Call me a Luddite if you want.
But despite the cash I rake in from blogging, my money supplies are still finite. It’s hard to argue against saving cash when I can. I feel stuck philosophically.
I’ve had this post sitting in my draft folder for months; that’s how stuck I feel. I didn’t know how to finish it.
Until I got a wisely worded e-mail from Chun Lai of Westminster Books, a Reformed Don Quixote fighting (sort of) the Triple-Behemoth-Goliath-Windmill-Giant called Amazon. Give this key portion a read:
Our great challenge is that we continue to exist in an environment where Amazon — the industry leader — is allowed by Wall Street to function without regard for their short-term profitability. Some of you may be aware that Amazon recently reported a $7 million loss on $15.7 billion of revenue. Next quarter, they are forecasting a loss of between $65 and $440 million. Despite this, their stock is up about 20% this year, indicating investor willingness to sustain Amazon’s loss-leading business model. As I ponder economic history, I can’t name another 21-year old company with which Wall Street has been this patient.
Amazon’s results show that, despite their buying power, technology, management skill, and income from non-book products and services, they are unable to post a profit given their current pricing model. This reality is made all the more striking given that competitive forces like Borders and independent bookstores have gone out of business while Barnes & Noble and other retailers struggle to carve out an existence. It is important to emphasize that we do not believe that Amazon’s business practices are necessarily inappropriate or immoral, but that they are — by virtue of their size and scope — creating an economically challenging environment that has significant consequences for the promotion of Christian books.
Our prayer at the bookstore is for the Lord to sustain our ministry as long as we are useful to His Church. Our conviction is that without alternatives to Amazon, important gospel-centered and biblically faithful resources would not receive the attention they deserve, or even worse, would not be published at all. Our ambition is to increase the reach and demand for theologically sound books so that publishers and authors are encouraged to produce and invest in like-minded projects.
Wow. Maybe my book-buying habits need to change.
Please talk to me on this one.
Here are a couple quick thoughts to muddy the waters. I’m not saying this practice is right, I’m just saying it’s complex. Which is basically what you were saying. 🙂
1) Aren’t Best Buy, Walmart, Target, and other big box stores merely getting beat at their own game? Haven’t they already pushed small independent retailers out of business? I’m not saying that makes the show-window-shopping practice right, but the big box stores are by no means guiltless.
2) When I go to a brick-and-mortar, I fully intend to give them an opportunity to provide me with a reasonable price. I even include a certain margin for the convenience of having the item right now. However, I often find that they don’t have the inventory (e.g. Walmart) or the price is just unreasonable. In one instance, the store’s price was about 10% than the MSRP (which was even higher than Amazon’s price). In that case I felt like they were trying to cheat me and decided to get the product online.
3) The draw of an independent retailer is often the extra service or advice. I’m glad to pay a little extra for that. If a big box store staff ignores me when I obviously need help, I don’t feel as much of an obligation to buy the product there. That’s probably why I buy so much at Home Depot and Lowe’s. Their employees have very often helped me find the right product or given me repair advice. Sure, Amazon might be a little cheaper for that drill. But those people helped me and pushed me into buying the right product.
4) How often do you look at a product at a couple different locations before you actually buy it somewhere else? To which of these locations do you owe the purchase?
5) How much have you bought at our local church bookstore? The reason they offer such low prices is because they don’t have much of a profit margin. How much impact has the MCBC bookstore had on other local Christian bookstores? Not sure what the answer is here, either.
6) I don’t really have a problem with Amazon not being forced to concentrate on short-term profits. How many business decisions are bad in the long-term for pretty much everybody, but they’re made because it will boost this quarter’s earnings? Besides, my job requires me to be a fan of Amazon (at least AWS). 🙂
It seems that during a major transformation like the one we’re seeing things aren’t quite clear. Hopefully the ethical choices will be a little clearer once we figure out how to handle retail in this brave new world.
All I was going to say (before I read David’s comment), was that I’m stuck too.
I’m less concerned for the big boxes in the brick and mortars like Best Buy, etc. I’m more concerned for the little guys in the brick and mortars, like WTS Books. That concern is driven by a sympathy I have for the people working at the little box stores.
But when it comes down to purchasing stuff, I always decide based on bottom line, and that tendency is exaggerated by the fact that life outside the USA means that shipping costs (and speeds) are a huge factor. Anecdotally, this means that WTS Books has almost completely lost me, because their Canadian ship costs are terrible. But incidentally, so has Amazon.ca! They offer low shipping costs, but frequently the shipments take more than 2 weeks to arrive. I never thought I’d do this, but I order more from CBD now than Amazon. Somehow they always ship stuff as fast as they promise.
Dave, this is the best comment in your history of comments. Good thinking. Helpful. And 3) numbered.
Duncan, that’s an interesting perspective. I didn’t know people outside the U.S. had Internet.
This is definitely a tough decision. One that many people (young people specifically) are working through. I generally make purchasing decisions based on the type of company I am purchasing from. For example, I prefer (when humanly possible) to shop at places like Publix (http://www.publix.com/careers/whypublix/OurBenefits.do) because of the way they treat their employees. I wonder if the marketplace in general is moving towards a more conscious decision making process instead of just finding the cheapest price.
I agree with Dave on point #1.