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Democrats on the Hill Say Amazon is a Threat to Main Street America. Its Retail Sales Say Otherwise.

Democrats leading antitrust legislation on the Hill say tech companies like Amazon are too big for the country’s good – and are especially threatening to small businesses. Senator Amy Klobuchar has argued that “our country faces a monopoly problem, and American consumers, workers, and businesses are paying the price.” But is there really a “monopoly problem” in retail? Amazon’s recent sales say otherwise.  

Last week, Amazon reported its slowest sales growth in roughly two decades, and “product sales have flatlined,” according to The Wall Street Journal. Meanwhile, spending at brick-and-mortar stores has increased by 11.2%.

This isn’t surprising, because Amazon never had a monopoly in the first place. In 2021, data showed, derailed in a NetChoice report, that for every dollar consumers spend, 75 cents go to retailers outside of the five largest retailers (Walmart, Amazon, Kroger, Home Depot and Costco). 

History has shown that free markets promote competition without the need of onerous government interference. Sears was once the most powerful retailer in the world; at its peak, half of Americans owned a Sears credit card, and its sales accounted for 1% of U.S. gross national product. Kmart went from 2,400 U.S. stores to four. The moment retailers stop innovating and putting the customer first, they will go elsewhere. Customers today face no shortage of options on where and how to shop, and small businesses are adopting a mix of online and offline sales channels to reach consumers.

In 2019, CATO economist Ryan Bourne shrewdly noted that “none of the economic features that can ‘tip’ markets to one‐​firm dominance for a time have created permanent monopolies before.” In 2007, he noted, Forbes magazine claimed it would be nearly impossible for rivals to overtake Nokia; the first iPhone launched later that year. Similarly, A&P was once accused of “predatory price cutting, harming small local retailers, undermining wholesalers through its huge buying power.” Its growth among big-box grocery stores did not stand the test of time.

It’s not always a failure to innovate or C-suite mistakes that balance the competition. Sometimes, a confluence of events is at play – from world events to stalled supply chains. Sometimes, it’s just plain economics. When retailers reach a certain level of saturation in a market sector, they simply can’t continue their same pace of growth. 

Meanwhile, Amazon faces stronger competition from large and small retailers alike. Walmart and Target have been investing heavily in their online offerings for the past few years. Sales on Etsy reached a record $4.2 billion last year. Shopify which helps small businesses build and sell through their own website saw staggering growth since 2020. Yet, 80% of retail shopping still occurs offline. This is consistent with NetChoice findings, “consumers still prefer physical retail, with 77% saying it is important or somewhat important that a retailer offer a physical location.” They like the immediacy and the sensory element of purchasing in-store.

As NetChoice’s “Retail is Everywhere” report notes, the narrative around retail over the past several years has been that “retail is a largely stagnant industry that is being swallowed whole by large online retailers that are smashing small businesses.” This narrative has been propagated among some Washington lawmakers. But Amazon has never been the gatekeeper; its model has always been inclusive of other businesses, not exclusive. 

Monopolies occur when one firm becomes the only seller of a certain product, without any close substitutes. Amazon simply doesn’t foot the bill, even though the media loves to (wrongly) throw around the word. 

The most popular shopping categories of Amazon Prime members are electronics, apparel and home and kitchen items. But plenty of Americans purchase these items at other retailers – and not just large ones. Small businesses generate half of the country’s GDP and employ half of its workers. 

Amazon’s recent decline in sales isn’t a sign that the company did anything wrong, and it isn’t a sign that lawmakers’ antitrust rhetoric has worked. Instead, it’s further proof that retail is a highly competitive market where consumers are benefitting from more options and low prices. Government intervention in retail is unnecessary, unreasonable and unfounded.