Amazon’s Campus 1, Seattle – Photo: Amazon
I don’t like Amazon as much as I did last week
Amazon.com announced on Tuesday that it had selected Long Island City (Queens), NY and Sterling City, VA as the sites for its new second headquarters operations. It follows a lengthy and much publicized evaluation process that started with bids from hundreds of cities which Amazon eventually whittled down to 20 finalists. While most people living and working in the chosen HQ2 cities are probably pleased with the news, those in towns that failed to make the cut may be having a different, more negative, reaction. I know I did.
As background, I’ve been a consumer fan of Amazon for years. I placed my first order with the site in 2001 and have been a subscriber to Prime for more than a decade.
As I write this, selections from Haydn’s Complete String Quartets are streaming from Amazon Music Unlimited in the background. My home page for the site is set to AmazonSmile, which contributes small amounts from my purchases to a charity of my choosing, currently the New Jersey Intergenerational Orchestra.
For years, Amazon has been my primary search engine for researching and purchasing products online and in stores. The service I’ve received has almost always been excellent — Amazon makes good on bad products, even when they are not eligible for return.
I am happy being an Amazon customer. But I’m not as happy as I was last week. The reason is simple. Amazon passed on Newark, NJ, the city with the most to gain — economically and socially — from its HQ2 choice.
My history with the city goes back to a Christmastime trip with my parents when I was no more than five. We visited the city’s downtown department stores, including Bamberger’s, where I got to meet Santa, drink a chocolate malt milkshake and delight in the sights and sounds around me.
Sadly, the Newark I remembered from that trip was soon gone. The tumult of the 1960s brought about by racial tensions and social inequality led to riots that destroyed Newark’s image. Residents, primarily the white middle class, and businesses abandoned the city.
In the decades that followed, Newark attempted to remake itself in fits and starts. The city, to its credit, has made great strides in redeveloping its downtown to attract corporate citizens, including Amazon’s Audible division, Mars Wrigley, Panasonic, Public Service Enterprise Group and Prudential Financial. Landing HQ2, or half of it, very well could have put the city over the top and partly moved it out from under the shadows of Manhattan to the east.
In the end, my purchasing behavior with Amazon may not change. That said, I don’t feel as good about it today as I did even last week. Memory is a funny thing. Sometimes it reminds you of a magical past. Other times it reminds you of slights, even the unintended ones.
Discussion Questions
DISCUSSION QUESTIONS: Has Amazon’s handling of its HQ2 search had an effect on the company’s image? Do you think Long Island City and Sterling City will ultimately be happy with Amazon’s decision?
Poll
BrainTrust
Paula Rosenblum
Co-founder, RSR Research
Lee Peterson
EVP Thought Leadership, Marketing, WD Partners
Amazon’s tale of two cities may seem like a buzz kill in the wake of all the winner-takes-all speculation but it is a manageable and beneficial situation overall. Amazon will be able to draw talent from a more diverse skill pool and build upon its existing presence in the DC and New York areas, both of which are well-suited to running brick-and-mortar tests. Negative implications like traffic congestion and rising home costs will be dispersed, making the aftershocks more manageable for both metro areas. No doubt Amazon received incentives from both cities that made the bifurcated location strategy even more attractive. Also, as Amazon receives more scrutiny, its proximity to power brokers both financial and political will come in handy. Either way, this isn’t necessarily a one-time shot. Retail is becoming more decentralized in general, leaving plenty of satellite possibilities open for round two (and three, and four), and not just for Amazon.
I have sympathy, but at the end of the day Amazon has to do what is right for its business and select the locations where it can find the right staff and get the most financial benefits. It is not Amazon’s job to revive failing cities or locations.
That said, I am critical of two things. First, I think the hype surrounding the contest was wrong. This should have been a much quieter and more considered process, without all of the hoopla. Second, I do not agree with the extensive amount of corporate welfare being given; I don’t necessarily blame Amazon for taking it, but I don’t think it provides a level playing field for locations, other firms, and taxpayers.
The issue here is that if Amazon did not pick the city everyone wants them to be in then they don’t like Amazon. But that is something people will get over.
The unfortunate damage to Amazon’s brand is the publicity surrounding the incentives they are receiving for moving to Crystal City VA and LI City , NY. This is quite unfortunate because this is a standard process for big company moves. Look at the tax incentives sports teams receive, or the bonds floated to build new stadiums and stadium taxes incurred by the residents. This is most unfortunate.
I think the muckraking over the incentives will hurt the overall brand. And it is becoming political.
No, that’s not it. The issue is that in the end, it picked the most predictable suspects. And so the whole thing was a sham.
I agree with you, Paula. All a big sham. Personally, I have lived and witnessed the overtaking of Seattle by Amazon. Seattle has lost a portion of its soul to Amazon. Meanwhile, tax incentives enable Amazon to flourish and embed itself into people’s lives through cheaper prices, superhuman fast deliveries, in-home monitoring, etc. AND at the same time integrating itself into every aspect of our lives, ranging from health care to real estate. The old adage is true “nothing is for free.” Possibly, we consumers without realizing it are also losing some of our soul. We all will find out soon enough.
Amazon’s choices and coverage have damaged my view of them. They showed that they care about their own power and won’t make choices to benefit community. Their future employment promises look extraordinarily inflated (to put it kindly). And the demands they placed in the host governments are handcuffs which both locales may come to regret.
In fact, I think it’s possible these two choices were their plan all along and the RFP process was merely a way to negotiate a better deal for Amazon.
What surprises me is that Amazon has always kept their ruthlessness under wraps knowing there would be public backlash. But here it is — laid out for all to see. Perhaps this is why they delayed so long.
But will it dramatically hurt their sales? I doubt it. It appears to have definitely hurt their image.
I don’t like anything about the way Amazon conducted this “search.” It did not remain true to the tenets it started with, and when push came to shove, picked areas where its CEO has homes. In the meanwhile, it gathered a wealth of knowledge about major cities around the country.
And let’s not forget, this is now our conversation as we head into Thanksgiving and the holiday season.
I can think of several other cities that would have had equal talent and be more “livable” that Long Island City (seriously????). Will the host cities be happy? Sure. But like you, I grow more disenchanted with Amazon by the day.
I am starting to look elsewhere for products unless I am in a big hurry, but others are also catching up on shipping times.
There is something about this process that makes me want to take a shower. It just felt dirty.
Props to Scott Galloway (NYU professor) for predicting this. I agreed with his analysis and logic months ago: this was nothing more than a charade to hide the fact that Bezos would pick a city (now cities) where he would want to spend time. He needs to spend time in Washington due to his paper acquisition and the need for his presence to calm congresspeople. New York is… well New York. It was never going to be Manhattan, so Queens or Newark were both equally reasonable possibilities. I guess New Jersey’s massive tax capitulation still didn’t compare to New York’s.
Cleveland, Columbus, Nashville, Indianapolis, etc., you were set up to be played before the madness was ever announced. Bezos was never moving to your cities. He knew he was playing you and that the geek turned powerbroker could push you as far as he liked. It worked. It cost you time and money and being played publicly hurts. You should be angry.
Nevertheless, like almost all corporate faux pas, the public has a short memory and the anger will give way to the convenience of Prime — something Bezos knew all along.
Amazon made some people happy (Long Island City and Sterling City residents) and others not happy in the cities that did not win HQ2. Amazon used the free market to entice incentives from the bidding cities making some people unhappy that the incentives granted could have improved the plight of the losing cities and their citizens. Amazon’s short term image might have taken a hit, but if the company grows, these negative thoughts will disappear over time. The winning cities will ultimately be happy if Amazon continues to hire people and create an economic base which is the bet they are making with their incentives.
It’s impossible to make everyone happy. Amazon selected two places for reasons that make sense. Sterling City is near Washington and let’s not kid ourselves, Amazon is big into lobbying so having a facility close to the Capitol makes sense. As for Long Island City, New York contributed over 2 billion dollars, and I’m sure there will be other perks. Amazon is a business and will do what is best for them. Not everyone living in Long Island City is happy because there are numerous residents concerned about what this will cost them, their city, problems with parking, and more causing some to launch demonstrations. Amazon is a business, far from perfect and it is impossible to please everyone.
I can share the many great experiences I have had as an Amazon shopper. However, I can also share the bad ones. Four months ago, a package sent from a third party vendor only had part of my address, and it took six days to track it down. It was something I needed ASAP. This past August, I purchased a new monochrome laser printer from Amazon and also ordered a cartridge knowing the one that would come with the printer would only be a starter one and not last long. It turned out the cartridge that came with the printer lasted longer than I expected. However, when I went to replace it, I discovered that I received the wrong cartridge model and because it was after 30 days and that’s their policy, there was nothing I could do which meant I lost $120! So Amazon is a business, far from perfect, and will act like a business. Long Island City and Sterling City have won this round an only the future will tell how well it will pan out for Amazon, the residents and most importantly, Amazon’s customers.
Amazon has always been about Amazon, not about anyone else. To look at them as the savior of downtown when considering the incredible tax breaks they’re getting outrages me. The ones who have the most to lose are the poor neighbors who are going to end up having their rents jacked up two and three times as much along with traffic snarls.
This is a data company — they knew exactly where they were going all along. Just another of Bezos’ amazing publicity grabs the media still fawns over every November.
I’m in agreement with Paula and Bob — Amazon is a master at being Amazon. They really excel at high-profile public relations and collecting data to enrich their organization.
It’s hard to offer a truly informed opinion here. I’ve only ever read the headlines. I will say that I had much higher hopes that Bezos and Amazon would find a way to do more good. Something on the order of what a couple of companies are doing in and for Detroit. Shinola and one of the mortgage companies come to mind. Tax revenue is a highly finite resource. I’d love to see how the two cities evaluated the ROI of this whole scenario. And yes, measuring the ROI of rebuilding a bridge is not easy — until maybe it falls down. I’m looking forward to learning more so I can hopefully move from disappointed to “I get it.”
It’s worse than that; throw in the tax breaks they’re going to get that amount to $1.5 billion, that, judging from the last time I was on the subway, New York could really use!!
We have to ask ourselves, as members of our own “contest”-losing towns, what kind of business comes into your neighborhood only on the condition that they pay little if no taxes? To fix roads, to repair public transportation, to increase needed law enforcement in the designated areas, on and on? What happened to “business as community member”? It’s not only about profits or the jobs, Mr. Big CEO.
You can argue that the final choices represent places where the infusion of 25,000 new hires apiece will be less disruptive to the surrounding quality of life, housing prices, transit needs, etc. than in smaller cities where HQ2 would have been more “transformative.” (And not every city can pull 50,000 tech employees out of thin air.) Yes, both cities offered ridiculous tax incentives to land the projects — but is this any different from what the state of Wisconsin offered to Foxconn to build a huge factory here? And is it much different from the incentives that most of the finalists were offering in order to land HQ2? There is definitely some backbiting going on in the reaction to the process and to the final picks.
The reaction to Amazon’s decision is fascinating and consistent with the polarization and mistrust we are seeing regarding large institutions and companies. If I were Jeff Bezos I would have likely made a similar decision, even as a resident of Atlanta, GA, one of the cities that was among the finalists.
It’s easy to see why Amazon wouldn’t relocate here, largely because of Georgia and not Atlanta per se, with the exception of the fact that Atlanta has no mass transit for a city and metro area its size.
Georgia is another thing, as it:
It’s unprecedented for a company to pursue a HQ of the size that Amazon did and while it’s always unfortunate to be on the losing end, this is a for-profit company in the private sector and if states and municipalities didn’t think the process was (going to be) fair, they could have easily declined to make proposals accordingly.
For the right economics, I’d rather live in NYC or DC than many of the other cities on this list of finalists. But like all of us in this forum, it’s really not our decision.
As a customer, the decision is not inconsistent with Bezos’ stated values nor are the economics of the deals anything but beneficial for the company.
Beyond sour grapes and disenchantment with the decision, Amazon remains the best retail customer experience for many, many items. Where its HQ2 or HQ3 are won’t change this fact.
Amazon didn’t cause all the hype around their search. The media did. Amazon was looking for the best place and considered their needs as well as the cities they chose. I’m in St. Louis, and I would have loved for Amazon to move HQ2 here. They passed. Does that mean I’m upset with them? Hardly. I’m not sure St. Louis could have supported them with the number of employees they need. Sure, there may be a few people that this negatively impacts, but it will make no difference long-term or short-term.
Will the cities they chose be happy? Amazon was asking for a lot – and was offered a lot – from the cities that were being considered. I’m hoping the economics work for these cities. I’m sure that was considered when they made their offers. Amazon will bring a lot to the cities. I applaud Amazon’s due diligence and congratulate the winning cities.
Long-term, people will get over any discomfort they feel about Amazon’s process in defining the location(s) for HQ2. Perhaps I’m biased since I live in the D.C. metro area, but I have to agree with the prediction Professor Galloway made so long ago — it was never going to be anywhere but New York or DC in some way. Amazon’s goal here was access to the talent they need to fuel growth. Both of these metro areas have an inherent attraction to the talent pool Amazon wants. They were never going to pick a city on the West Coast — they already have Seattle. Midwest cities might have had a chance, but when weighing the talent pool of NY and DC this is sadly quite predictable. Now, that they chose two locations in those metro areas, Long Island City, and Crystal City, VA is surprising. Living in the DC area it’s hard to see how Crystal City will sustain 25,000 new jobs for Amazon plus the office space, etc. That just feels like a choice driven by proximity to the federal government. And Long Island City? I leave it to the NY natives to explain that one (and as others have said, I have to agree it was never going to be Manhattan).
The Amazon horserace contest came down to a “Tale of Two Cites.” Both of which committed more in support that the now split investment the company is going to make in either.
Given Jeff Bezos newspaper ownership and a home in the area, the DC area should not be a surprise to any of the cities not selected. What was a surprise to all if the split in two that Amazon knew it was going to do for some time, but didn’t announce until it had finalized the winners.
The losers in this horse race should but likely won’t learn that chasing a project such as this will always result in more losers than winners. In some cases, like this one, the winner finds the prize they won was not what they were promised or envisioned. Will that stop them from chasing others in the future? Likely not.
The cities that were “passed up” should celebrate their good fortune: sure some people (realtors, espresso shops, people selling their houses and leaving town) benefit when a behemoth, tech or otherwise, comes to town. But for most, the result is higher prices, crowding and generally destruction of whatever attributes they found attractive.
Companies should locate where it makes the most sense: I have no problem that they didn’t pick Newark — unlike George, I don’t view HQ2 as some kind of WPA program. I DO have a problem with the huge “incentives” aka extortion payments that cites offered up … whether that’s their fault or Amazon’s is up for debate.
Did the HQ2 hulabaloo affect Amazon’s image? Yes. For the short term. Many people see the bid process as a genius yet shady data and incentives grab — benefits the 238 cities willingly provided.
Yet Amazon is all about capitalism, not altruism. Sure, it would have been a heartwarming, Hallmark-inspired holiday gesture for Amazon to rescue a less prosperous location. However, is it realistic to expect the e-commerce giant to resuscitate cities? For corporate social responsibility, the Bezos Fund donated $2 billion for the homeless and child care.
Quick final thoughts:
1. Any harm to Amazon’s image will be very short-term, as many of us will be lured back this month for irresistible Black Friday deals.
2. Let’s acknowledge that Amazon has sprinkled retail love across the continent over the past year, creating thousands of new jobs in fulfillment centers (including Houston, Atlanta, Miami, Vancouver, Calgary and Ottawa).
3. Prescient Professor Scott Galloway should buy a lottery ticket.
Amazon loves to play games with the media, and they create more free publicity than all the rest combined. They are however very shrewd business people, and this headquarter thing reminds me of many other mega corporations that will carve out a host of freebies in exchange for a brand new building. The cities are jumping through hoops trying to sweeten the pot in order to get these high paying jobs so the politicians can look good as well. The winner was and always will be the Amazons of the world, getting major tax breaks and infrastructure demands that suck the city coffers dry, and hey, if you can get it, you are going to take it.
It doesn’t matter how we perceive them, but in the end, Amazon wants to rule the world, and for the most part they are slowly doing it, as they have a unique way of getting goods to people’s homes, better than anyone else, regardless of the cost.
The Norman Rockwell picture of the American landscape sure has changed, and it is only a memory. America is moving fast in the digital world we live in, whether we like it or not.
A company has no responsibility to its “community.” It does, however, have a fiduciary responsibility to its shareholders to operate in a manner that is best for the business. If it ends up giving back something to the community in the process, that’s fine, but that can’t be the overarching reason for making a decision. So I can’t fault Amazon for playing the system for all its worth.
The real problem is the corporate welfare Amazon will be receiving. It should not be the taxpayers that fund the building of Amazon’s new HQ, which also gives it a competitive advantage as its rivals don’t have their hand in the taxpayer’s wallet to finance their own corporate HQ.
NYC has a decrepit and failing subway system, but managed to figure out a way to give Amazon $2 billion.
Ultimately that is the real issue here. Amazon created something of a lottery system to give cities and states an incentive to throw tax dollars at it. Had it been known from the beginning that there were really only 2 locations under consideration, NY and VA would have had little reason to dig deep to give Amazon their taxpayers money.
Corporate welfare for wealthy, profitable businesses is a disease that needs to be exorcised.