Antitrust 10/28/2020

A retail disconnect between politicians and Americans

Carl Szabo
Carl Szabo Vice President and General Counsel

Where do most Americans shop? Despite what cable news says, it’s not Amazon. Nor is it Target, or BestBuy. By a runaway margin, 95% of everyday Americans shop at America’s largest retailer—Walmart. In fact, in 2018, Walmart was nearly 3 times larger than its counterparts Amazon, Kroger, and Costco.

Despite Walmart being the true giant of retail on and offline, Washington still recently released a flawed antitrust report vilifying Amazon for being a retail monopoly. The product of tons of documents reviews, hundreds of hours of interviews, and millions of taxpayer dollars spent, the partisan House Judiciary Committee Report antitrust report displays a clear misunderstanding of the retail industry— concluding that Amazon is a monopoly simply because it is the “only” marketplace Americans shop. 

If all you read was the House Judiciary report you’d think that Americans begin and end every single shopping experience with Amazon. It says that “64% of American households that have Prime memberships are effectively locked into Amazon for their online shopping.” If you are like me and have Amazon Prime, you still bargain hunt at Costco, Walmart, Target, and local supermarkets for the best deal.

The Report is correct that many of us use Amazon. Everyday Americans read the reviews and see what similar items exist. But what the Report forgets is that we often then go and buy the product elsewhere. By web-rooming— using sites like Amazon for research and then making a purchase elsewhere— everyday Americans can get the best bang for their buck.

And there is nothing wrong with web-rooming for the best deals available. Online websites and businesses provide these reviews and community comments boards in the hopes we will buy on their sites. But most of us, nonetheless, then shop elsewhere. 

We sometimes need or want the item right now. Or we want an easy way to return the item or prefer in-person shopping. Whatever the reason, Amazon is both a jumping-off point in a search for the best retailer and a final destination for purchases. 

Of course, we all know this. We make these decisions as consumers every day. But unfortunately, some of our elected representatives are too disconnected from how their constituents shop. By some fault of miscommunication, Washington has become convinced that there is no choice in shopping, only Amazon. And somehow, politicians like Representative Cicilline who in 2018 identified the robust choice in the marketplace, are unfortunately attacking one competitor of many for ruining the market.

What’s worse, the argument has grown a few new limbs. The partisan House Judiciary antitrust report also complains that Amazon has a monopoly on data because it collects data from customers to better tailor the user experience. But, this practice is not unique to Amazon. In fact, Walmart, the largest global retailer, prides itself on collecting “[b]illions of data signals from hundreds of millions of Walmart customers” to do the exact same thing. And Walmart is not alone. Every store, big and small, collects information about its customers to help understand how to make the customer experience that much better. 

Similarly, the Report hinges part of its argument on how two-day delivery and even food delivery by Amazon are further anticompetitive practices. Yet both are actually strategies used by many of Amazon’s own competitors. Amazon’s food delivery has served as a saving grace during the COVID crisis but let’s not forget Walmart is the largest online-grocer in the country. Not to mention, Walmart also has quick and same-day delivery options too, as do competitors like Target and BestBuy. These businesses provide two-day, same-day, and food delivery because we, the customers, expect it. In fact, quick delivery speeds are most definitely one of the most consumer-friendly developments that Amazon has brought to us, not a sign of consumer harm.  

Despite what Washington might believe, customers are not losing because Amazon exists. We love Amazon. We love online shopping. And we love the incredible choices we have. The last thing we as customers want is the government deciding to destroy a convenience we love based on bad facts.

 

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