Unfortunately, my old wexBlog is gone; so, I have no proof, but I swear that I predicted that we would see Amazon’s profits drop and probably go red when sales tax laws were finally applied to online retailers. Anyone with two eyes and a beak who did not see this headline coming is blind like the New Orleans division of the Army Corps of Engineers
Certainly, many physical stores were put out of business by the unnatural advantage that online retail firms were granted during the first ten to fifteen years of the internet’s availability to the public. That finally came to an end. I’m glad that Barnes and Noble hung in there. With a little bit of luck and a fair amount of skill, we’ve seen that retailer go through some of its most difficult years resulting from having to charge sales tax for online and in-store purchases while its purely online competitors weren’t. Borders, on the other hand, did not make it.
I do have hard feelings about Amazon. It was clear to me that its business model would not work with all things equal, and I was regularly ridiculed by many who disagreed with my view. I was bothered by Amazon’s severely unfair artificial advantage over firms that were willing to let me through the store door so as to hold the actual products that I was interested in purchasing. Amazon is a look-but-don’t-touch operation. It’s a china shop where even adults aren’t allowed past the storefront window.
Resentments aside, Amazon deserves credit for a very important piece of electronic equipment: the tablet computer. Yes. Amazon’s “Kindle” inspired the likes of Apple Computer Corporation to go a half-step beyond eBooks. If there had been no Kindle, there would be no iPad. Bezos invented the iPad, not Steve Jobs.
Amazon never was a storefront. Its competition was never the retail bookstore, or any other store with physical branches, with which it appeared to compete. It only looked like competition, but once the cost of sales tax was incorporated into the purchase price of products that Amazon sold, the truth emerged. Amazon is a catalog company, and that would be its competition. However, catalog companies are all gone, pretty much, having given way to Amazon. Now, as Amazon gives back the commerce that it borrowed from physical stores at shopping malls, its costs are becoming more and more apparent in the form of unattractive quarterly reports.
Can Amazon survive? Yes, but as a much smaller company that caters to those who prefer to order online, rather than head to the local retail outlet. Also, Amazon has been the driving force behind online video delivery technology, vending on demand, and that part of Amazon’s business should be profitable for a while longer, though many companies have sprung up to compete in that area.
Amazon should now concern itself most with margin and penny pinching of the worst and most obnoxious kind. Even there, however, Amazon can expect push-back from wholesalers. Nonetheless, Jeff Bezos should toy with vision and mission statements that embrace penny- pinching paradigmata.