President Obama's visit today to an Amazon warehouse in Chattanooga, Tenn., where he will give a speech that the White House said will focus on "manufacturing and high wage jobs for durable economic growth," has evoked a strong, negative reaction from many independent booksellers. Some of them have written to the White House, and the American Booksellers Association and several regional booksellers associations expressed their reasons for concern.
The board of the ABA wrote:
Dear President Obama:
On behalf of the American Booksellers Association, we are writing today to call your attention to how Amazon's business practices are actually harming small businesses and the American economy. While Amazon may make news by touting the creation of some 7,000 new warehouse jobs (many of which are seasonal), what is woefully underreported is the number of jobs its practices have cost the economy.
For you to highlight Amazon as a job creator strikes us as greatly misguided.
As you've noted so often, small businesses are the engines of the economy. When a small business fails and closes its doors, this has a ripple effect at both a local and a national level. Jobs are lost, workers lose healthcare and seek unemployment insurance, and purchasing decreases. And while Amazon may now be boasting about the creation of jobs, any gains are elusive, and not a long-term solution.
The simple fact is that Amazon's practices are detrimental to the nation's economy.
The news this weekend that Amazon is slashing prices far below cost on numerous book titles is further evidence that it will stop at nothing to garner market share at the expense of small businesses that cannot afford to sell inventory below their cost of acquisition. In the end, monopolies are bad for consumers--and there are no examples in American history that prove otherwise.
For more than a decade now, Amazon has flouted sales tax laws in an effort to maintain a competitive advantage over Main Street businesses. To date, 16 states have passed sales tax laws to level the playing field for bricks-and-mortar businesses, and in all but three of those states Amazon (as well as Overstock.com) has fired its online affiliates in order to evade collecting and remitting sales tax to the state (two of the 16 states only just passed their sales tax laws). This has resulted in many online affiliates going out of business. Moreover, by eschewing its obligation to remit sales tax, Amazon has negatively impacted state budgets and services, as well as those of local communities.
In addition, Amazon's continued practice of using books, both in print and e-book formats, as "loss leaders" in an effort to increase their already immense market share of the retail book trade and to up-sell large-ticket items has impacted Main Street retailers and the communities in which these stores are located in ways that can be calculated (job losses, store closures, a decrease in sales tax revenue, etc.) and in ways that simply cannot (urban blight, budget cuts affecting first responders and other community services, etc.).
All told, according to the Institute for Local Self-Reliance, every $10 million in spending that shifts from Main Street retailers to Amazon results in a net loss of 33 retail jobs. That would mean for 2012 alone--using Amazon's own numbers about its increase in sales--Amazon cost the U.S. economy almost 42,000 jobs just last year!
At a time when Main Street retailers, including indie bookstores, show promise of recovering from the recession, we are disheartened to see Amazon touted as a "jobs creator" and its warehouse facility used as a backdrop for an important jobs speech, when, frankly, the exact opposite is true.
Conversely, the value of a local business to its community cannot be overstated--whether through job creation or in the myriad ways it gives back to the community.
We would love to continue this timely and important conversation with you. We'll bring together a group of real job creators to meet at your favorite local, independent bookstore! And we'll buy the coffee!
The board of the New England Independent Booksellers Association wrote:
Dear President Obama,
The news that you are planning to speak tomorrow at the Amazon warehouse in Chattanooga, Tenn., as part of your campaign to highlight the need to bolster middle class families and create jobs has hit members of the New England independent bookselling community like a ton of bricks.
What is the thinking behind this decision? Amazon is the very embodiment of so much that is wrong with our economy. The often-substandard working conditions at their warehouses around the world have been well documented. Their business model is based on fighting those states that have required them to collect and remit sales tax while driving Main Street brick and mortar stores out of business through predatory pricing. As we write, they are slashing prices of bestselling books in yet another price war where independent and brick and mortar businesses will be collateral damage. We cannot believe this is your vision of job creation and the future of American middle class.
This, from a president who has expressed pleasure in shopping at Kramer Books in D.C., and Bunch of Grapes on Martha's Vineyard? We would hope that your administration would be standing with Main Street, and investigating the monopolistic practices of Amazon, rather than either explicitly or tacitly endorsing those practices.
In the words of John Mutter, editor-in-chief of Shelf Awareness, "This is roughly equivalent of going to a Wal-Mart and calling for more of the kinds of jobs it offers."
We urge you to rethink using Amazon as a beacon of hope for the American economy and middle-class. Nothing could be further from the truth.
Hut Landon, executive director of the Northern California Independent Booksellers Association, wrote:
Dear President Obama:
I'm writing you on behalf of the members of the Northern California Independent Booksellers Association to express our dismay at your decision to deliver an address on jobs at an Amazon warehouse.
Amazon is a company that for more than decade fought tooth-and-nail to protect a business model based on sales tax avoidance, in the process fueling other online companies to copy to its actions and costing states cumulatively billions of dollars.
Worse yet, in our state, Amazon's CEO purposely misled the media and public officials by stating that his company shouldn't have to pay sales tax in California because Amazon didn't have a presence here and therefore wasn't using services that sales tax covers. The fact is, of course, sales tax is collected by retailers on behalf of purchasers who are liable for it--Amazon wasn't being asked to pay sales tax, only to do what other retailers are required to do legally in the states.
Amazon now has largely abandoned its sales tax avoidance strategy because it believes it needs to compete on delivery time. So warehouses have been opening across the country, including in Tennessee. Amazon has created jobs, to be sure, but they are often part-time (making those nasty health benefits a non-factor) and barely minimum wage. The company has made news with their warehouses, but it hasn't always been about job creation. In Pennsylvania, employees were forced to work in extreme summer heat with any air conditioning, and you have no doubt been following Amazon's labor troubles in Germany.
On top of all this, your Justice Department handed Amazon a monopoly on e-books with its recent ruling, assuring that independent bookstores will be unable to compete with e-books being sold as a loss leader to attract new Amazon customers. Ironically, while consumers will see lower prices, they will also see many fewer e-books published in the future. When Amazon decides not to lose money on the products, it will force e-book publishers to offer better terms. Given the already low margins, the response will be to simply not publish nearly as many titles. You'll be able to buy the newest book by Dan Brown, just not anything by the next Dan Brown.
Your appearance at the Amazon warehouse in Chattanooga sends a clear signal to small independent businesses that our value as job creators and community linchpins is not as important as an arrogant chain behemoth's contributions to states' monetary shortfalls and creation of thousands more minimum wage, benefit-poor jobs.
We will continue to do what we do best as locally owned businesses--offer knowledge and service to our customers, create and support community growth and activity, make every effort to provide employees with fair wages and conducive working conditions. And some of us will continue to grow and employ new workers, as small business has always done, even with the Amazons of the world being excused for past transgressions and rewarded for predatory business practices.
We are disappointed that you feel Amazon deserves your attention and endorsement (even if implied). We hope you will carefully consider the message you are sending with such an appearance and perhaps re-think that message in the future.
Sharon Hoshida, co-owner of Granada Books, Santa Barbara, Calif., wrote:
Dear President Obama,
As a voter who cast her vote for you twice, and attended your first inauguration in 2009, I am writing to express my concern about your example of Amazon as a job creator. You should know that their undercutting price tactics and ability to conduct business without the tax responsibilities of all other small businesses has done irreparable damage to independent retailers across the land.
For you to stand in front of their warehouse that is responsible for the loss of jobs and income is truly unconscionable. I am a small business owner, and just opened an independent community bookstore in downtown Santa Barbara, Calif. We are job creators, giving nine people employment. Our money stays in the community, we pay local, state and federal taxes, we serve our community. Amazon does NOT.