How Amazon and Large Online Retailers Are Hurting Communities
Two words – Property Tax
Sorry we had use such a sensational title. Other large online retailers are adding to the problem, even some big box retailers are adding to their own demise. When physical retail stores close, local municipalities suffer.
I just picked my local RadioShack clean a month ago. I bought all the sports cameras they had for 80% off retail. I then sold them on Amazon for 20% off retail. Amazon got their cut, and I made a little money. That Radio Shack is closed now, the rest are on their way, just not discounting as fast. That first RadioShack had less than a week before they had to renew their lease, so they got out.
These days, I work from home mostly. In about an hour, a UPS truck is going to come ripping through my neighborhood road, over the speed bumps just a little faster than they should, honk some horns, make the dogs bark, and then rip through again.
I actually have packages coming today. They’re from Game Stop – two books that I bought for $10 each, and are selling for $40 on Amazon. I’m excited, because they were $20 in the store, and I bought all those up. Even with those margins, I’ll only profit $14 each. The other $10 goes to Amazon, and $6 goes into our air, water and earth as wasteful pollution, including Amazon’s costs.
First, I receive the two books in additional packaging to my home, which I throw away because it’s not reusable for me, and my condo association doesn’t recycle. Then I pack it into a larger box with other products, which I reuse from my collection of saved boxes, and ship it to a Pittsburgh Amazon warehouse. They then ship it single serve to whoever buys it, wrapped in lots of specialized packaging to protect the merchandise. Hopefully that gets recycled.
So back to the property tax issue.
Local governments (cities and towns), especially in sales tax free New Hampshire where I live, subside on property taxes. It pays for our schools, roads, sewerage, garbage disposal, police, fire protection, and so on. As manufacturing stateside has declined a long time ago, retail is one of the largest provider of jobs in the US, but they are disappearing fast.
Those local jobs pay rents, mortgages, and property taxes. They provide for working class families like you and I, or as entry level positions for young workers.
So here we have an online retail giant that pays absolutely no property tax in almost all the communities it serves, yet it beats on our roads and other infrastructure, filling our dumps with trash (less than 20% of recyclables get recycled), polluting our air and water, causing health issues and so on.
It’s no wonder why big box stores like Sears to small shops on Main Street are getting crushed like a beer can at a frat party. The hangover will be the empty parking lots and malls, shopping centers and brand new housing developments where trees used to stand. Duude.
Don’t be ridiculous – All those shipping and warehouse jobs created.
Yes, there are jobs created by online shopping, but those jobs are centralized, often outside of our communities. Amazon is rapidly automating. They are trying to cut out shipping costs as well, not with people, but drones. They’ll own all the drones, generate their own energy with solar panels they purchase with their enormous cash reserves, and the batteries for their warehouse bots will be owned by them as they buy up manufacturers for their technology.
Unless, of course, you are in a community that does not have an Amazon warehouse. Even worse, when the economy takes a downturn like it always does. Stock markets and businesses disintegrate, job hiring halts, stores close, buildings become vacant, property values drop across the board, and so, tax receipts plummet.
Amazon and online retailers aren’t all bad – they’ve done a lot for our economy through innovation and lowering prices. Many small businesses and individuals like myself make money through affiliate programs and advertising their services and products. It just isn’t enough, and it won’t go on forever.
Netflix used to pay $15-30 per referral of a free trial of their service. Now you must be Comcast to strike a deal with them. Amazon charges FBA (Fulfillment by Amazon) sellers over $5 per book, no matter the size to sell. They make their own small products as well, and you can’t compete with the pricing. Outside opportunity always goes to zero with large corporations.
How Can We Stop This?
Around 2010, big box retailers were complaining that they couldn’t compete fairly with online retailers that were not charging sales tax. That makes sense, so laws were passed that ordered online retailers to collect sales tax in states they did more than $500,000 a year in business.
Online retailers need to pay their fair share of the infrastructure and local services in the communities they operate in. To do this, the retail and real estate industries need to lobby to enact an emissions tax. Price pollution and let all retailers compete to provide the most efficient and high quality shopping experience at a price they can understand.
If you are busy and want to pay for the convenience of double packaged, single serve goods to arrive to your house while you work, you can. If you want to go see what is available, right now at your local shop or department store, you can do that too. You may save some money and interact with your community as well. Hopefully you’ll consider riding a bike or walking there.
Sure is a lot to think about. Let me know your thoughts.
I have to go – my packages just arrived.
Shortly after I wrote this article, I discovered a Massive Shipping Fraud Scam by Amazon that affects all sellers (especially FBA sellers), retailers (both online and brick and mortar) and customers as well. You should definitely read it and get involved if this has affected you. Now, I really like some of Amazon’s services, but we need to have fair competition before they become a monopoly, reduce service and jack up prices after the competition is gone.