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We need Amazon during the Coronavirus. That's a problem

Though the cracks began forming years ago, the widening pandemic could hasten physical retail's decline and strengthen the monopoly hold of Amazon and other online giants. This threatens to leave consumers with higher prices and less choice

By Greg Bensinger
Published: Apr 1, 2020

We need Amazon during the Coronavirus. That's a problemImage: Shutterstock 

Powell’s, a beloved bookstore chain in Portland, Oregon, laid off more than 300 people in mid-March, temporarily closed its five storefronts and issued a dire warning for the years to come. “When we do open our stores again, we expect the landscape of Oregon, and all of our abilities to spend money on books and gifts, will have changed dramatically,” wrote Powell’s chief executive, Emily Powell. “We see the path ahead more clearly: it is dark and scary.”

While millions of Americans shelter at home, stores have been forced to close and lay off or furlough employees. The most vulnerable companies are those that failed to prepare for a future dominated by e-commerce.

Unfortunately, the federal $2 trillion coronavirus stimulus package does little to mitigate retailers’ woes, despite their executives’ pleas for relief, though the Federal Reserve is working to ensure that larger companies have continued access to credit markets. The aid plan gives tax relief for prior property improvements, and it establishes a $350 billion fund for small-business loans that could help those firms maintain payroll and rent, but little else.

Though the cracks in bricks-and-mortar retail began forming years ago, the widening coronavirus outbreak stands to hasten physical retail’s decline and strengthen the monopoly hold of Amazon and other online giants. Such a consolidation of power among just a few retailers threatens to leave consumers with higher prices and less choice.

During the pandemic, reliable delivery of essentials like milk, eggs, toilet paper and cleaning supplies has been a lifeline for those who are reluctant or unable to venture outside their homes — Amazon-branded trucks have remained a familiar sight in residential neighborhoods. The competitive advantages of Amazon’s meticulously constructed worldwide logistics network, built to shuttle nearly every imaginable item to customers in as little as an hour, are especially evident in this crisis.

While many other traditional retailers are struggling with falling demand, Amazon has pledged to hire 100,000 temporary workers to keep up with it. Several other retail giants, including Walmart and Target, have kept pace with coronavirus quarantine demands by keeping physical stores open and leaning on their own delivery networks for grocery shipments and other necessary items. Walmart plans to hire 150,000 new workers.

After a surge in online orders after its physical stores closed, Powell’s is rehiring some of its workers, though the nationwide loss of some 3.3 million jobs in March spells darker times ahead for retailers.

While Amazon and Walmart deserve credit for preparing for a calamity such as the coronavirus pandemic, some of their ability to deliver during the crisis may come at the cost of employee protections.

Both companies are offering two weeks of paid leave to workers diagnosed with COVID-19, though some employees told The Atlantic that the policies are confusing. Walmart has been reluctant to give employees sufficient leave if they get sick or are fearful about coming to work.

At Amazon, white-collar employees were sent home while the company’s army of pickers and packers have had to brave outbreaks in at least 21 facilities. Some 1,500 Amazon employees signed a petition this month seeking workplace improvements in the face of COVID-19. And attorneys general in 14 states and the District of Columbia sent a letter to Amazon’s chief executive, Jeff Bezos, urging him to loosen its sick leave policy.

A few workers at a Staten Island Amazon warehouse walked off the job Monday in protest, after one employee tested positive for coronavirus, prompting Amazon to fire one of the organizers. New York state’s attorney general said Monday she was investigating the dismissal.

Others were planning to skip work at the company’s Whole Foods grocery stores Tuesday over its sick leave policies.

Contract drivers for those ubiquitous Amazon delivery vans say the frantic pace of the job requires them to forgo preventive measures like the use of gloves, sanitizers and masks, potentially imperiling customers and other drivers.

Consumers may be at a disadvantage, too. Because Amazon relies on smaller sellers for the majority of sales, price gouging remains a problem. And while prioritizing storage and delivery of products it deems “essential” during the pandemic — such as “household staples, medical supplies, and other high-demand products” — Amazon has also appeared to include its own branded devices in the “essential” category.

Though it may seem a lifetime ago, before the coronavirus struck, Amazon was in the throes of a congressional antitrust investigation and was a frequent target of elected officials who criticized it for its workplace conditions and for evading corporate taxes. To quell a steady drumbeat of criticism, Jay Carney, Amazon’s head of communications and policy, wrote a New York Times op-ed article in February extolling the company’s $15-an-hour minimum wage and arguing that “what we do can generate positive ripple effects across the country.”

That may be true, but it can also compel competitors to adopt Amazon’s strong-arm business practices. Last month, a group of labor unions petitioned the Federal Trade Commission to open an inquiry into Amazon’s market power.

Even in less frantic times, Amazon has been criticized for its workplace culture and its heavy-handed tactics with sellers. Last year, The Wall Street Journal contended that Amazon may be losing control of its own marketplace, allowing dangerous counterfeits to appear on its virtual shelves that would never pass muster at traditional retailers. Both Walmart and Amazon have quashed unionization efforts.

Amazon and Walmart have offered critical delivery services during this crisis, but regulators and elected officials should not lose sight of the dangers of monopoly power falling into the hands of the fortunate few that survive the coronavirus fallout.

©2019 New York Times News Service

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