Business

Kramer: Amazon must improve questionable business practices to move forward

Amazon has done just about everything right. Chief Executive Officer and founder Jeff Bezos had a dream of revolutionizing the way we buy, and kicked off that dream by selling books online and hand-delivering them himself. Now, his company is the biggest online retailer and expanding its deliveries all over the world, but it must wipe away the questionable business practices and maintain itself as a shining leader in the digital wave.

Amazon’s recent lawsuit with book publisher Hachette, which has unfolded over the past month, has been an illustration of the conflict between the between the disruptor and the disrupted. Amazon wants to sell the Hachette’s books at lower prices, under the conviction that they can sell higher volumes, according to an Aug. 9 article by The Seattle Times. Hachette reassures that sinking selling prices even further is hurting the livelihoods of the authors producing the content. All the while, consumers sit on the side and think, “I hate when mom and dad fight.”

The retailer is powerful enough to win the fight, but headlines have slanted heavily against the cutthroat business practices that Amazon has shelled out toward Hachette. Books from the publisher were subjected to inexplicable shipping delays, and new books couldn’t be pre-ordered, according to the article. It is nothing less than an abuse of power, and an embarrassing assault on literature.

Hachette’s lawsuit is the first major challenge to Amazon’s image, as they have won over the public in recent years, as have other online companies.

“Anything you want on earth, you’re going to get it from us,” once said Dave Clark, Amazon’s senior vice president of Worldwide Operation and Customer Service, in a 60 Minutes interview. Jeff Bezos dreams of same-day delivery. Television content is moving from cable hookups to the Amazon homepage. Soon, groceries will be coming in packages.



To say Amazon has enjoyed the past decade would be an understatement. Sales were at $34 billion in 2010, and then more than doubled to $74.5 billion in 2013, according to a Google Finance report. Consumers are moving online, and Amazon is greeting them at the gates.

The company’s disruptive nature has run booksellers out of business in the same way that Wal-Mart and Netflix ushered out their competitors: by making it easier and cheaper.

Bezos is in an incredible place to take his company wherever he wants to. His million-square-foot fulfillment centers are popping up all over the globe. Amazon struggles not only with book publishers, but with government oversight. As an online retailer, Amazon evades many state sales taxes, which in the state of California reached a rate of $200 million per year. Mom and pop shops can’t keep up with the resulting drop in prices, and consumers respond accordingly.

The problems extend past legal struggles. Conditions in these fulfillment centers are not what you would expect from state-of-the-art warehouses. Under strict expectations, workers must meet extremely high boxing quotas to maintain the highly efficient supply chain. That isn’t absurd for a company of Amazon’s enormity. But reports of warehouse employees collapsing from 100+ degree heat in fulfillment centers have been seeping through the headlines since 2011. That kind of mistreatment is unacceptable.

Amazon has mostly gotten the temperature problems under control, but it needs to do the same with the other legal battles it is facing. Jeff Bezos is a brilliant CEO, and his vision for the future of the company trumping short-term profitability expectations is inspiring, but he has to get his company’s image under control before it starts to find itself dealing with the public relations conundrums that have faced the likes of Nike and Wal-Mart.

If Amazon wants to be one of the great companies of the next century, it needs to maintain its outward, global reach, while also providing fair support for employees and the clients it works with.

Phil Kramer is a sophomore advertising and marketing management major. His column appears weekly. You can reach him at [email protected].

 





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