By: Lalarukh
Amazon. A business with an offering so versatile, it sells everything from books to tiny homes. It is alleged to have killed off bookstores, and most small sector business retailers. It started with books and expanded into logistics, music, and cloud services. Amazon’s whole business model is based on convenience, and convenience buys them customer loyalty. Low prices, with fast delivery, is what makes this online store so attractive. It prides itself on being completely focused on the customer, and not the market. The introduction of Amazon Prime in 2005, completely sucked in customers. It is said to have paved the way for successful, sustainable e-commerce; popularizing standard practices like customer reviews and email verification. Behind this empire, that owns 47% of all online sales, is Jeff Bezos.
Bezos, a graduate of the University of Washington and Princeton University, was a wall street executive working as a vice president at the hedge fund, D.E Shaw. In 1994, he quit his job after he saw the rapid increase in internet usage and knew this was an opportunity he had to grab. Out of his list of 20 possible products he could sell online, he chose books, as its catalog was the easiest/cheapest to compile online. In 1995, funded by his parent’s $300,000, he set up a makeshift office in his garage and gave his business a 30% chance of survival. However, he had nothing to fear. Just in two months, his revenue was up to $20,000/week.
The company went public in 1997 at $18 per share (the stock adjusted price has since then increased 90,000%). At the same time, they issued a statement which showed that they were in for the long run:
“The company believes it will incur substantial losses for the foreseeable future”.
And they were right. Amazon was consistently losing money for its initial years as a public company. The first profit it reported was a quarterly profit in the last quarter of 2001, which was $5 million, and that barely counted. They reinvested all of Amazon’s capital into the business again, which made investors nervous. Bezos has repeatedly said that investing in future growth is more important than making a profit, which has been a source for Wall Street’s frustration. This was again reflected in 2013 when Amazon had tripled its sales, but made a lot less in profit, reinforcing the lack of interest in profit and singular focus on growth. This led to a commentator calling amazon a, “ Charitable institution being run for the benefit of consumers”. This statement is the prime example of irony, considering the workers' conditions and the over 1 trillion dollar business amazon is today, but we’ll get to that later.
Amazon then blended third party sales with their own, by providing them with a platform, selling their product, and taking a commission. They introduced amazon web services (cloud computing), which owns 40% of the cloud market. In 2014, they introduced Amazon Echo/Alexa, the first well-received voice assistant. They also have a patent on one-click buying and were one of the first to introduce subscriptions.
Recently, a tweet surfaced, highlighting Comparisun’s estimation: “ Bezos on track to become the first trillionaire by 2026.” This was received with outrage, by people criticizing the capitalist system which allowed one person to accumulate that amount of wealth, and by the Amazon warehouse workers, criticizing the inhumane working conditions and outrageous targets set for them. These conditions include but are not limited to: wristbands that track worker movements in cage-like enclosures, no air conditioning in 100-degree weather, intense physical demands and targets, non-compete clauses for workers limiting their opportunities. Other unethical practices include $15/hour minimum wage but eliminating stock awards plus bonuses, swarming with fake reviews, hosting counterfeit goods, selling Holocaust denial books, eavesdropping via echo, not paying enough sales tax, and ending hazard/overtime pay at the end of May.
Workers also shed light on the two 15-minute breaks they get, saying it can take up to 15 minutes just to walk to and from the warehouse break room. They also called for Amazon to provide more reliable public transit services to the warehouse. They called attention to high injury rates at the facility there, which were found to be three times the national average for warehouses. One warehouse worker said, “People get fired regularly, it just takes two or three write-ups, depending on the severity. You can get fired for anything.”
Outrageous physical demands are highlighted in this statement from Raymond Velez. He was required to pack at a rate of 700 items per hour. He said workers are regularly fired for missing rates. Another worker said, “I was a picker and we were expected to always pick 400 units within the hour in seven seconds of each item we picked. I couldn’t handle it. I’m a human being, not a robot.” Ilya Geller, who worked as a stower, told of the pressure workers face from being surveilled by computers to ensure productivity rates are met. Another worker, namely Jackson, has said, “We’ve all complained we need more fans. One day I almost had a heat stroke. I’ve tried telling them they need to do something. They keep saying they don’t have enough money to get more fans throughout the warehouse.”
Despite all the backlash, Bezos is on track to become the first trillionaire by 2026 if his wealth continues growing at 34% a year, according to an analysis from Comparisun. This estimation was made before considering the coronavirus pandemic, which has positively impacted the value of his Amazon shares, and despite the $38 billion, he lost in his recent divorce settlement. Thanks to a $28 billion bump in 2020, Bezos is worth an estimated $143 billion, according to Bloomberg. Bezos' wealth is growing rapidly as Amazon faces increasing criticism from employees and lawmakers over its labor practice. While looking at all these numbers, it makes one question, where does the money go?
Amazon owns over numerous subsidiaries, branching into almost all market sectors, and its acquisitions are only growing. The bigger acquisitions include high-end supermarket Whole Foods, shoe retailer Zappos, IMDB, Washington Post, and many more. Find the complete list here. Apart from around 86 acquisitions, Bezos has made donations to the Day One Fund ($2 billion), University of Washington, Princeton University, Mary’s Place, Seattle’s Fred Hutchinson’s Cancer Research, etc. He has pledged $10 million to fight climate change. He is also one of the biggest landowners in the US, with properties all over the country. He also has other companies such as Blue Origin, a space exploration company; Amazon Web Services, with cloud computing services; and Bezos Expeditions, a venture capital firm. He also donates to The Dream, which helps children brought to the US as undocumented immigrants.
Different words have been used to describe Bezos; everything from quirky and a visionary, to exploiter and greedy. While there is no doubt that what Bezos started was ingenious, it is also quite clear that one does not get that rich without exploiting labor. However, one might also think, why is only Bezos being highlighted? Why is the media not targeting other billionaires? Are they as clean as they want us to think? Or are they hiding behind their philanthropic efforts? Keep an eye out for the next post in this two-part series, shedding light on other billionaires, and more.
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