Does Amazon Dominate the U.S. Supply Chain?

“The Cost of Free Shipping: Amazon in the Global Economy”

Jake Wilson, a co-editor (with Ellen Reese) of The Cost of Free Shipping: Amazon in the Global Economy, commented to the AJOT that Amazon is increasingly dominating the U.S. supply chain by using its vast database and mass cloud computational capability to consolidate data. And in addition, Amazon expands its control of the supply chain by surveillance and control of truckers, air freight pilots, warehouse workers, suppliers and subcontractors.

Wilson is a sociology professor at California State University at Long Beach and the book’s co-editor along with Ellen Reese, a professor of sociology at University of California, Riverside and author of “They Say Cutback, We Say Fight back!” have in the book taken a different approach to investigating the Amazon phenomenon.

As the title implies, this is not a book about Amazon’s amazing success but rather a compendium of essays analyzing various aspects of the Amazon operation from a strong pro-worker and anti-monopoly point of view - a point of view that could become mainstream, not just in Amazon’s case but for all Big Tech.

Amazon and Covid-19

The Los Angeles Times reported that Amazon’s growing power over the economy is an area of concern for both Republicans and Democrats as a July 29th House of Representatives hearing demonstrated. House Representatives “in rare bipartisan accord” ordered Big Tech CEOs to testify about perceived abuses of their power … The chief executives of four of the most prominent technology companies in the world — Google’s Sundar Pichai, Amazon’s Jeff Bezos, Facebook’s Mark Zuckerberg and Apple’s Tim Cook fielded questions about their business practices and market dominance.

Wilson said that the Covid-19 pandemic has been a huge boom for Amazon’s business. “This year we saw a dramatic increase in the role that Amazon took in the retail business as brick and mortar stores had to shut down or restrict operations while Amazon expanded its business. During the pandemic Amazon hired 200,000 workers and rapidly increased its sales while other retailers curtailed their businesses or went out of business. Jeff Bezos’ net worth at the beginning of 2020 was 110 billion dollars whereas in August his net worth has risen to 168 billion dollars [Forbes and Bloomberg are reporting that Bezos is now worth $200 billion]. It is possible that within the foreseeable future, Jeff Bezos will be the first human being to be worth 1 trillion dollars.”

The introduction describes how Amazon uses its Prime membership as its economic base of power: “As of 2020, there were over 150 million Amazon Prime members, making it the world’s second largest paid subscription program. Indeed, about 60 percent of American households are Amazon Prime members.”

And the expansion overseas is really in its infancy but there is pushback. Wilson says Amazon is engaged in expansions in Europe and in India. In Europe, he says “The company is making a major push into the German market. German workers are unionized and enjoy strong labor protections, so Amazon has built up its warehouse capacity in Poland in order to ship products into Germany and by extension into other EU countries.”

The book points out that unlike in the United States, many countries have successfully kept Amazon out or restricted its market penetration to protect local retailers.

Supply Chain Consolidation

Wilson says Amazon is moving to dominate the logistics business and the U.S. supply chain in the following areas: Trucking, Warehousing, Air Cargo, Ocean Shipping, and Amazon Web Services (AWS). He says Bezos’ and Amazon’s success are based on effectively integrating traditional mail order sales with software and the Internet. According to the book, Amazon Web Services (AWS) plays a major role in this integration. The AWS division sells cloud computing services—i.e., storage space, bandwidth for website hosting, and processing power—to individuals and companies such as Netflix and Instagram, and Amazon itself. Over the years, Amazon accumulated a lot of data about its customers that it fed back into developing algorithms that are used to advertise and track customer purchases, buying histories and other demographic information which support its marketing efforts – essentially commercializing Big Data.

Surveillance Capitalism

The AWS data processing capabilities complement the discussion of how Amazon has advanced “surveillance capitalism.” The introduction argues that: “Along with other high-tech companies, such as Google, Amazon has also been on the forefront of a phenomenon that Shoshana Zuboff calls ‘surveillance capitalism.’ Surveillance capitalism refers to ‘a new economic order that claims human experience as free raw material for hidden commercial practices of extraction, prediction, and sales.’ … Likewise, Amazon uses electronic technology to surveil its fleet of workers, including warehouse workers, delivery drivers, ghost writers, and other high-tech workers, in order to extract valuable information about their work flow that is used to further exploit, discipline, and control workers, increase labor efficiency, and inform the development of workplace automation and other business investments.”

In 2020, Wilson says workers are starting to push back. A recent story in Reuters illustrates the point, “Amazon … employees across the country are seizing on the coronavirus to demand the world’s largest online retailer offer more paid sick time and temporarily shut warehouses with infections for deep cleaning. Employees in at least 11 states this year have voiced their concerns and staged actions to highlight a variety of purported workplace deficiencies, allegations the company has denied.”

The book is a worthy read of the Amazoning of the global supply chain and the impacts of click order consumerism on the global economy.

Ironically, “The Cost of Free Shipping: Amazon in the Global Economy” is available at Amazon for a Hardcover price of $99 and Paperback of $26.95