"Yes, Virginia, there is a Santa Claus" (and his last name isn't Bezos):
Amazon, Consumer Democracy, and a Holiday World Without Unions


Drew T. Levy
December 7, 2000 (the e-retailing x-mas season)


One small step for the consumer, one giant leap for consumerkind.

Amazon today announced an agreement with Consumers Union, publisher of Consumer Reports magazine, to make available "objective" product reviews and purchasing advice to their valued Amazon.com customers. 1

The deal theoretically unites two of the greatest sources of consumer survey information available in the world today: the long-heralded "objective" product reporting of Consumer Reports and the less publicly heralded consumer survey and information gathering of Amazon.com. Of Amazon's information gathering capacity, the Financial Times (London) recently noted: Amazon's "crown jewel is an unparalleled customer database providing the most comprehensive insight into consumer behavior enjoyed by any retailer physical or online, and opening up multifarious cross-selling opportunities." 2 This is consumer democracy: if last week you bought an *NSYNC disc, this week Amazon will recommend the new Backstreet Boys album. They know your tastes and the tastes of consumers like you. In addition to the album, Amazon will recommend a new book on boy bands and a stereo to play your compact discs on. The horizon of recommendations is bounded only by how far Amazon can diversify. And as such, the horizon stretches on and on, further each day, toward toys, patio furniture, even automobiles. And now, today, consumer democracy is expanding. Not only will Amazon recommend a stereo, in the very near future they'll let you know which stereo Consumer Reports thinks you should buy. The power is in your hands.

The consumer is the market, the market is the consumer. Or so we are meant to believe. But as the Financial Times further observes in its description of Amazon's information-gathering capacity: "Harnessing this asset, Amazon is relentlessly colonizing new markets, using pacts with established vendors such as Toys R Us to gain instant branding and supply chain access." Colonization, markets, information-gathering ? this all sounds so familiar, so much like empire building (in this age when nation-building seems such a troubling concern). Perhaps one Silicon Valley-based venture capitalist put it best when he enthusiastically described Amazon's current diversification campaign (clothed in the garb of consumer-empowerment) as its "monopolist's gamble."3


Did anyone ever unionize the reindeer?

This is the third consecutive holiday season in which unionization drives have begun among Amazon's Seattle-based workforce. The last two holidays such drives ground to a quick halt. This time around, however, failure is nowhere near as certain. The economic landscape of the New Economy, a landscape so dependent upon the bright light of the Amazon sun, has dramatically changed over the last year: becoming bleaker, more ominous, threatening even. The sun gods still make their proclamations from the hill, but the investors are less certain and thus so too are their idols. As Amey Stone recently noted in Business Week Online: "It's an easy bet that an Internet entrepreneur won't be Time's Person of the Year for 2000. In 1999, it was Amazon.com CEO Jeff Bezos, whose growing customer base, billions in stock market value, and hearty guffaw exemplified the awesome potential of the New Economy. This year's Web is characterized by plummeting stock prices, thousands of layoffs, fleeing senior execs, and shuttered sites." http://www.businessweek.com/bwdaily/dnflash/nov2000/nf20001123_206.htm

Although mass media attention to the plight of workers and union organizers at Amazon is new, Amazon's strategic avoidance of unions is nothing new at all. A pioneer of the New Economy, Amazon plays the Old Economy game of avoiding unions with the skill of an old pro. Amazon would have us believe that it doesn't have unions or even real union problems because it is a new kind of company, one that transcends traditional organizational hierarchies, and in which workers and management converse in a reciprocal dialogue of give and take. Most everyone at Amazon, after all, is an owner.

Well, not only did Amazon set out to outsource costumer relations positions to India as early as January 1999, it has also long been involved in actively pursuing areas of the country with little to no labor support in which to build its massive distribution centers. As diversification has assumed a more and more crucial role in the Amazon strategy, regional distribution centers have developed as one of the key cogs in the Amazon machine. 4

In April 1999, Amazon opened a 750,000-square-foot distribution center in Coffeyville, Kansas.5 Where is Coffeyville, Kansas you might ask? Well, as one union representative in the area was recently quoted as saying: it "isn't strong union country." Amazon workers at the Coffeyville distribution center start at $9 hour, about $4 an hour less than the company's new hires in their Seattle headquarters.

So what does any of this mean? Amazon would have one believe that in building a plant in Coffeyville it's helping itself by addressing key (costly) distribution issues, thus passing on the increased efficiency and savings to consumers, as well as the increased profits to its employee share holders and other investors (in the form of stock prices that still aren't rising). It would also claim that is has aided a depressed local economy, moving into an abandoned warehouse, and bringing with it some 500 jobs.6 The latter fact cannot be denied. But the claim that Coffeyville wages are simply set by the market is suspect at best. "This is not exactly the Third World," the Associated Press observed yesterday, "but union organizers say Amazon.com's decision to open a distribution center in Coffeyville has the same effect." If wages are set by the market, then Amazon's playing that same market fpr all that it's worth. The robber-barons of the last Gilded Age headed South and West to lands without unions: Bezos has learned these historical lessons well. Wipe away the polish of the New Economy, and its Old Economy tarnish comes shining through.

Holiday Cheer

The strategy is to cut costs, increase efficiency, and to stave off unionization both at home (Seattle) and abroad (in whatever union-free space in which the company might next set up shop). All of these are marks in the plus column for Bezos and his precious investors. As Nick Guyatt has shown elsewhere on this site in an article, Amazon continues to live off its investors' money, piling up greater deficits, and eating away at its own (venture) capital nest egg. As Financial Times puts it: "Juggling an expensive diversification strategy, the company is in a rat race to generate cash flow from operations before it runs out of money." Workers in Seattle (or anywhere else Amazon is located) are encouraged to reject unions because they're said to be out-of-step with the non-hierarchical structures of the New Economy corporation (i.e. Amazon). The flip side of this coin, of course, made strikingly clear by places like Coffeyville, is reject the union or we might just move your job to somewhere where someone else will. "Amazon hasn't chosen to put its distribution plants in places like Coffeyville for nothing, one internet analyst recently told the AP, "Labor costs are a factor in deciding where to put jobs."

Enter the holiday season of 2000. The New Economy might think it can escape the organizational structures, unions, and collective bargaining of the old way of doing things, but one thing it can't escape, one thing that's neither old nor new, is the fact that most consumer spending in the U.S. takes places in the month between Thanksgiving and Christmas. Sell how you want, where you want, but you better sell during December.

Union organizers, well aware of the importance of the holiday season, and of Amazon's dire need to make a strong showing (in all facets of operation), have once again focused their efforts during this time of year. Organizing is taking place both in Seattle and in towns like Coffeyville, Kansas (though I suspect not in India). The story is in progress ? keep in touch, keep up to date, and contact Amazon.com: let your voices be heard. There may have been an announcement today that included the words Amazon, union, and agreement. But it was the wrong union, the wrong agreement ? and one wonders how long we'll have to wait to hear Amazon, or anyone, announce those three word together again.


1 New York Times, December 7, 2000.

2 Financial Times (London), December 6, 2000.

3 Ibid.

4 In the previously cited Financial Times piece, Steve Phillips describes Amazon's diversification and market share strategy as a radical and uncertain departure from its earliest successes: "Its success has partly been based on superior order fulfillment, allied to a user-friendly interface built around its patented 1-Click technology?.But now, rather than sticking to a tried-and-tested formula that achieves short-term profitability, Amazon is diversifying into toys, tools, electronics and kitchenware. The aim is to realize the ultimate dotcom dream --- building the web's one-stop store."

5 AP, "Union organizers take aim at Amazon.com warehouse," December 6, 2000.

6 The abandoned warehouse used to be occupied by Golden Books. One can't help but wonder if one of the reasons Golden Books closed shop and left town was because it could no longer compete in an Amazon world. Of course, Golden Books was not in the business of direct book sales, but the question still begs asking. Whether or not the answer is yes, another interesting fact remains: not only did Amazon move into an existing warehouse in an area renowned for a lack of union strength or activity, it was also able to draw upon a worker pool whose wage demands were (relatively speaking) depressed by the local economy and who just happened to have experience in Amazon's hallmark market: books. How convenient.

Last modified: Wednesday, 07-Feb-2001 00:04:49 EST