Updated: May 22, 2020
Amazon has joined the growing list of companies focused on their ecological impact. They recently issued a press release that they will become carbon-neutral by 2040.
To meet that goal, Amazon chose to order 100,000 electric delivery trucks. They will buy them from a Michigan-based company Amazon invested $440 million in earlier this year.
The first of these trucks will be in service in 2021 and 10,000 more will hit the road in 2022. But, is this step enough to offset the tarnished image of the company?
The announcement of carbon neutrality was conveniently scheduled. It fell the day before more than 1,500 Amazon employees were going to strike.
The strike comes as part of the larger Global Climate Walkout planned for September 20. Many of their employees are fed up with Amazon's practices and they have a right to be.
Amazon cleared over $250 billion in sales in 2018 accounting for nearly 50% of all online retail sales. Once a simple online bookstore, today Amazon is a force reshaping the marketplace for consumer goods. Not everyone believes this is a good thing.
News release after news release have admonished them. They've been accused of everything from unfair labor practices, to breaking antitrust laws.
Investors are taking notice. Amazon's stock fell to a low of $1,692.20 in early June. The drop came after an announcement of an investigation by the U.S. Department of Justice’s Antitrust Division. Today that investigation continues. The Federal Trade Commission is interviewing small business owners with products sold on Amazon.
The interviews typically last 90 minutes. The FTC asks owners to reveal information about the percentage of their revenue coming from Amazon purchases.
The probe into Amazon’s business practices shows the FTC is making a serious inquiry. They are devoting a lot of manpower to understanding how the company works.
One area of interest for investigators is discovering whether Amazon's practices are illegal. Third-party merchants that sell goods on their own websites have raised concerns.
Today, third-party sales account for more than 50% of the products sold on Amazon. Many small businesses are now gaining 90% or more of their sales through Amazon.com. This can put them at risk of going under if they don’t give in to Amazon’s demands and policy changes.
One Amazon merchant, Karnani, is not afraid to speak out. He reported that Amazon suspended his account when Apple and Amazon made a new agreement. Apple wanted to dictate who could sell their products on Amazon. During that suspension, Amazon held onto both Karnani’s inventory and money for as long as 90 days.
Third-party sellers also take issue with controversial pricing agreements with the site. In a March 2019 article, The Verge reported that Amazon would no longer force merchants to sign price parity agreements. In these agreements, merchants promised not to price their goods lower on Amazon than elsewhere.
These price parity agreements were used to force merchants to drop their prices on Amazon. This practice led to an increase in the percentage of sales through the site.
The official price parity agreements have been terminated. But, Molson Hart, who runs a plush and construction toys business that sells through Amazon, claims the company is still engaging in harmful practices.
One of the ways they do this is by pushing products sold on other websites for cheaper down in their listings. They also will take away their prime status decreasing their sales on the site dramatically.
Hart reports that there are other ways that Amazon is controlling merchants. Without price parity agreements, they reduce the amount of support they will give to a merchant’s customers. They can also increase storage fees and display more sponsored advertising results in searches instead of allowing organic results to filter up.
Other merchants are sharing similar stories about their items becoming less visible to shoppers if they offer a lower price on another website.
But even more frightening, one merchant claims that he helped a health and beauty brand triple their earnings through sales on Amazon.com. Soon after, Amazon itself placed a large wholesale offer for the products and sold them directly. This left the merchant with unsold inventory and a huge loss in revenue.
Amazon Consumer Business chief Jeff Wilke responded in June when news of the FTC investigation first broke. He stated, “Our job is to build the kind of company that passes that scrutiny with flying colors.”
Third-party sellers aren’t the only people taking an issue with Amazon’s policies. Their own employees made media headlines last year. Rumors about the working conditions at their warehouses and practices on their delivery routes came to light. People claimed they had to urinate in bottles to avoid missing deadlines. They also reported that they had to work while injured.
Workers also complained of low wages. They insisted they had to use government assistance programs like food stamps and Medicaid to make ends meet.
In response, Senator Bernie Sanders introduced legislation in September 2018 called “Stop Bad Employers by Zeroing Out Subsidies Act”. Conveniently, the letters of the act spell out the acronym BEZOS, the last name of Amazon’s CEO.
The act suggests that companies like Amazon whose workers require government benefits should be taxed for that cost.
Amazon was quick to respond to media pressure and in October 2018 raised its minimum wage to $15 per hour. This increase affected all of its employees in the United States.
Sanders was also one of the first to praise Amazon for raising its minimum wage saying, “Today I want to give credit where credit is due, what Mr. Bezos has done today is not only enormously important for Amazon’s hundreds of thousands of employees, it could well be, and I think it will be, a shot heard around the world.”
Sander’s prediction may not be far off. After all, Amazon is the second-largest employer in the United States. Their new minimum wage will benefit the more than 250,000 employees they currently have. It will also affect the new hires they bring on board in the future.
This is a huge step in the progress of the “Fight for Fifteen” movement that started in 2012 when two hundred fast-food workers in New York City walked off the job demanding union rights and higher pay.
CEO, Jeff Bezos, issued a statement about the wage increase, “We listened to our critics, thought hard about what we wanted to do, and decided we want to lead. We’re excited about this change and encourage our competitors and other large employers to join us.”
In response, Target announced it was increasing its minimum wage. In June 2019, it will rise to $13 an hour, and the company pledged to increase the wage to $15 per hour by the end of 2020.
Today, Amazon has more than 30,000 full-time job openings in the United States. To fill these positions, Amazon is hosting Career Day events in 6 major U.S. cities. More than half of these jobs are tech-oriented.
To fill some of these positions, Amazon is spending $700 million to retrain many in its workforce to perform higher-level tasks as lower-level jobs are increasingly reduced due to automation and technology innovations.
This retraining effort will be the first to explore many of the greatest challenges in the 21st-century economy - rising inequality and fear of replacement by automation.
The company’s retraining program is one of the largest ever attempted and will affect more than 100,000 employees by 2025. Combined with its new fleet of electric trucks, and its increase in its minimum wage, Amazon is positioning itself to be one of the most progressive companies of the 21st century.
Perhaps Amazon’s recent commitment to carbon neutrality is one step towards that progressive goal. But will these efforts be enough to appease the public outcries against the behemoth? Only time will tell.