Just how big is Amazon’s ethics challenge?

Discussion
Photo: @isunwater via Twenty20
May 20, 2019
Tom Ryan

Axios Harris’ 2019 poll of the 100 Most Visible Companies shows that just 41 percent of U.S. respondents agree Amazon.com shares their values, 39 percent feel Amazon rewards its employees fairly and only 19 percent feel the corporation speaks out on social issues important to them.

Amazon dropped out of the top 10 rankings for Ethics and Culture in the study “amid a year of tabloid attacks on its CEO, backlash from Whole Foods employees and rising reports of fake products being sold online.” Fallout from the last-minute cancellation of its New York City headquarters was also cited.

The overall study found Amazon dropped from the top spot in Corporate Reputation rankings — albeit only to number two, behind Wegman’s. Amazon still ranked as the leading company in trajectory, growth and vision.

In the past, backlashes against Amazon usually stemmed from the e-commerce giant’s avoidance of collecting sales tax and the related disadvantage to brick and mortar store operators. Amazon now collects and pays taxes in all states that require them.

Beyond labor, counterfeiting and headquarters issues, controversies in recent years have included privacy concerns over its Echo devices, Ring doorbells and facial-recognition technologies; its alleged discriminatory cashless stores; and accusations of monopolistic behavior from Democratic presidential candidates.

Source: The Axios Harris Poll 100

In a recent Wall Street Journal article, “Amazon’s Size Is Becoming a Problem — for Amazon,” Christopher Mims, technology columnist, argues that the company’s sheer size, which includes not only dominating online selling, but cloud computing and logistics as well as its extensive access to consumer data, will continue to draw the scrutiny of regulators.

“When Amazon not only provides your on-demand videos, toiletries and home furnishings but also the cloud service your doctor uses to analyze your medical records, you might think twice about buying that pint of gelato at Whole Foods,” wrote Mr. Mims.

Axios said its study “reveals Americans are torn between the ethical side-effects and the elevated Prime lifestyle they’ve grown accustomed to from Amazon’s innovation. People are often noted in research for saying one thing and doing another. And here, Amazon’s growth shows no signs of abating. But how long will Americans look away?”

DISCUSSION QUESTIONS: Which, if any, of the ethical questions surrounding Amazon will become an impediment to growth over the next five years? Does the company need to take any major actions to change its practices?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"People say one thing and do another. They want to be all ethical and support others, but look at the net-net. "
"I’m not disagreeing with all the comments and concerns about this giant company. But I think it is pretty easy to jump on the bandwagon."
"As Amazon grows and people become more dependent on their services, there will be higher scrutiny."

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18 Comments on "Just how big is Amazon’s ethics challenge?"


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Chris Petersen, PhD.
BrainTrust

Trust is a very fragile thing. Once it’s gone, it’s gone. The litmus test of Amazon’s ethics will be Echo. Big Brother is watching and her name is Alexa. Amazon has been less than forthright about what Echo is recording and how that data is being used. If consumers feel violated because their data is misused, they will no longer look the other way.

Ken Lonyai
BrainTrust

“Axios said its study ‘reveals Americans are torn between the ethical side-effects and the elevated Prime lifestyle they’ve grown accustomed to…'” That’s it in a nutshell.

People say one thing and do another. They want to be all ethical and support others, but look at the net-net. Convenience and/or savings is still more important or Amazon would not have around 50 percent of e-commerce sales.

David Dorf
BrainTrust

As Amazon grows and people become more dependent on their services, there will be higher scrutiny. Any company under a magnifying glass will reveal issues, and the measure of the company is how they react. Thus far, Jeff Bezos has steered the company in the right direction, sticking with high ethics. I assume as long as he’s actively at the helm this will not change.

Cathy Hotka
BrainTrust

Amazon has come a long way since its early days as “Earth’s largest book store.” I’ll guess that the questions raised in this story are shared by industry observers, not average Americans, who tend to give huge corporations the benefit of the doubt. Some of us, though, keep Alexa unplugged and prefer real free shipping, not “free” shipping that costs $12.99 per month.

Shep Hyken
BrainTrust

It is interesting that the bigger you get, the closer you are watched. No doubt all companies, regardless of size and success, should operate with integrity. Yet as a company gets big and noticed, what is considered “business as usual” gets scrutinized. And once there is a mistake, the company gets scrutinized even further. Success comes with a price tag which puts an organization in a spotlight fueled with criticism. Right or wrong, that’s just how it works. These questions will continue to plague Amazon and any other large organization with massive success.

Rich Kizer
BrainTrust

When a company grows and grows, with the obvious support of customers, there comes a time when size offers opportunities for concerned people to criticize. Great companies can’t be so careful that they are afraid of making a mistake – mistakes are lessons to build better companies. Everyone got excited for a quick, high tech, no cash needed store … until others felt that it was unfair for cash carrying customers. I’m not disagreeing with all the comments and concerns about this giant company. But I think it is pretty easy to jump on the bandwagon.

Scott Norris
Guest

On the supplier-side, the fallout from the Vendor Central/Seller Central actions at the top of this year are still compounding, and the ground rules for the new paradigm still haven’t been documented. Interaction with Amazon for small-to-midsize companies like mine is all automated – when we have questions or when a process doesn’t work, we don’t have anyone to turn to: we’re not sure a human ever looks at our communications. As the Washington State Attorney General’s spokesperson said in the tainted children’s products settlement, “it’s all a black box.”

When there’s no transparency, who knows what is going on. As a supplier, I just can’t get enthusiastic about giving so much control to something like that.

Jeff Allen
Guest

Same here Scott. Things have been terrible this year for small to medium-sized businesses on Amazon. Before 2019 we were seeing steady 30 percent to 40 percent increases YoY. Now I’m happy to just see flat. We use all of the tools Amazon offers including both internal and external Amazon Advertising, but that doesn’t seem to matter. I know Amazon is customer-focused as they should be, but they certainly aren’t vendor-focused anymore.

Jasmine Glasheen
BrainTrust

Customers set certain values aside for convenience, which is why the Amazonification of retail is a market rife for disruption.

Target is already offering same-day delivery through Shipt and it won’t be long before other retailers with better reputations get on board.

Once a retailer with a reputation customers can feel good about starts to offer Amazon prices, the days of the behemoth will be numbered.

LAURA RAMIREZ
Guest

Sadly, that still leaves us primarily with legacy/big box retailers like Walmart, Jet.com and Target. The race to the bottom has been going on for a long time and though there have been some bright spots with consumers opting to support local and small businesses, it’s still about price and convenience. This is primarily tied to non-livable wages and lack of healthcare. For example, it is egregiously unacceptable that people are buying their medical supplies on Amazon because that is all they can afford. But I digress.

Cate Trotter
BrainTrust

Amazon’s deal has always been convenience. But it’s clear that this comes at a price. Customers are becoming more conflicted about the ethical trade-off that comes into play when shopping with the big A. While these issues are clearly becoming more and more important, there is a question of whether people want (or can afford) to put their money where their mouth is and choose alternatives.

The thing is that Amazon itself knows this and you could argue that it knows that as long as it keeps offering more and more convenience/perceived value, then it can get away with having lower ethical standards. As the company grows and moves into more and more areas though, there’s definitely going to be some changes required.

LAURA RAMIREZ
Guest

As someone who grew up poor, ethics had nothing to do with my mother’s purchasing decisions. As long as this country struggles with paying people livable wages, Amazon (and Walmart/Jet) will benefit. What I actually hope happens is that these two behemoths will battle it out in the ethics arena — lesser of two evils and all that.

Brent Biddulph
BrainTrust

And let’s not forget how Amazon.com lured traditional retailers like Target, Toys “R” Us and others years ago to run their e-commerce businesses, only to leverage that data to improve their own customer insights and engagement capabilities, then to ultimately weaponize against those traditional retailers in the end, setting them back years in the e-commerce, digital space.

This is a ruthless adversary, propped up by AWS profits and a blind Wall Street investment community, and recently witnessed headline news and PR about “Amazon lowering prices at Whole Foods” that was pure nonsense.

For those traditional retailers willing to invest in advances in data management, data science, and emerging technologies — progress is well underway and gaps are being closed.

LAURA RAMIREZ
Guest

And let’s not forget the vendors whose short-sighted need for revenue ended up losing business to Amazon’s private label products. Hindsight is 20/20 I know, and I’m no genius, but I had fights with the owner of my previous company about selling on Amazon circa 2008 and worked really hard to find alternative revenue streams that were not handing over product and data to a massive third party. Did we overall make less money, probably … undoubtedly … but we had more ownership and dare I say our customer retention was aces because of relationship building.

Liz Adamson
BrainTrust

Amazon has reached its fingers into a huge number of American households. Some reports cite Prime membership as much as ~50% of U.S. households. With that kind of reach comes a lot of scrutiny and responsibility.

With a company the size of Amazon it can be a challenge to ensure that there is the right amount of transparency, that teams are not acting on their own without oversight from leadership, and that their good intentions don’t come off as having ulterior motives due to a disregard for detail.

That said, Amazon has got to put checks and balances in place to ensure that they maintain the trust of their customers and a keep a high ethical standard in place. Once they lose that trust they may not gain it back, and for a company whose mission statement is “to be earth’s most customer-centric company,” that would be a serious blow.

Bill Hanifin
BrainTrust

With increasing market share comes scrutiny. Whether rational or not, consumers may build resentment against Amazon as it continues to make entry into new segments, and the demise of neighborhood retail becomes more apparent.

Walmart has been through this cycle and, I believe, has come out the other side. Now the attention shifts to Amazon.

The key to the outcome of this discussion question may be how much Mr. Bezos cares about all of this and whether he directs a proactive approach to preserve the company’s reputation in the eyes of consumers.

David Slavick
Guest

I find this discussion very multi-layered. Perhaps Amazon takes a hit regarding ethics because of who is its leader and that Mr. Bezos is also owner of a prominent newspaper leading the charge for fact-based reporting. Regardless, I am a free market supporter. This leads me to put all the burden on the consumer, let the buyer beware or said differently, let the user be aware.

Privacy concerns? Don’t put a listening device or a security system in your home. Feel essential to support your local shops, then buy from them vs. relying on the convenience of free shipping. It is all about customer choice. Amazon is not at fault. They are in the business of winning. It’s a tough battle out there, but they are not at fault. Competition is good. Complacency is bad.

Bethany Allee
BrainTrust

There’s a host of ethical issues building and waiting in the wings for Amazon. It will be interesting to see if consumers stand by the ethical concerns they clamor for now (fair wage, environment, go local…pick one), or if convenience will win.

wpDiscuz
Braintrust
"People say one thing and do another. They want to be all ethical and support others, but look at the net-net. "
"I’m not disagreeing with all the comments and concerns about this giant company. But I think it is pretty easy to jump on the bandwagon."
"As Amazon grows and people become more dependent on their services, there will be higher scrutiny."

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