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Amazon’s ambitions threaten local business

In the Financial Times (subscription required), Barney Jopson has said Amazon’s US ‘defeat’ in having to pay local taxes in a number of states could lead to a knock-on effect that nonetheless negatively impacts on local retailers of all sizes. Jopson’s report details a future for Amazon with a much larger network of US-based warehouses, potentially increasing its ability to offer same-day delivery to a huge number of customers. “That will erode one of the last advantages of the physical store: instant gratification,” said Jopson, adding that it’s not just indies that would be threatened by this shift, but even major US chains like Walmart and Target, who have in the past helped fund anti-Amazon lobbying regarding taxes.

Bookstore owner Rita Maggio is quoted in the piece as considering Amazon’s plans akin to science fiction – “How far do you push it? I’m afraid we’ll never get back what we lost.” – and it does smack somewhat of sci-fi satire megacorporations, such as Buy 'N Large in WALL•E. However, expansion of this sort could also be a problem for other online retailers too – Amazon has historically cared little for high profit margins, instead preferring volume, and has relatively seamless purchasing.

In the UK, it remains to be seen if Amazon would attempt to start such a scheme, or, given the inconsistency of delivery firms, even be able to achieve same-day deliveries for any reasonable fee. The Slate’s reaction to the FT’s piece was to note US Amazon Prime deliveries have improved in recent months, but sporadic problems continue to plague British fulfilment. Nonetheless, This is Money claimed in July that Amazon is now the UK’s favourite brand, above Google, BBC iPlayer, Marks & Spencer and the BBC. Regardless of fulfilment issues, Amazon’s plans should be a wake-up call for any online or offline business in the USA and possibly elsewhere: if you don’t very soon make your products discoverable and extremely easy to purchase, Amazon is ready to swoop in to take even more of your business away.