As Amazon expands its Prime Free Same-Day Service--offering Prime members same-day delivery of more than a million products for free on orders above $35--the company is avoiding some urban neighborhoods with predominantly black and poor populations, according to a Bloomberg study.
Bloomberg wrote: "In Atlanta, Chicago, Dallas, and Washington, cities still struggling to overcome generations of racial segregation and economic inequality, black citizens are about half as likely to live in neighborhoods with access to Amazon same-day delivery as white residents.
"The disparity in two other big cities is significant, too. In New York City, same-day delivery is available throughout Manhattan, Staten Island, and Brooklyn, but not in the Bronx and some majority-black neighborhoods in Queens. In some cities, Amazon same-day delivery extends many miles into the surrounding suburbs but isn't available in some ZIP codes within the city limits."
So far, in less than a year, the service has been introduced in some 27 metropolitan areas.
Craig Berman, Amazon's v-p for global communications, told Bloomberg, "When it comes to same-day delivery, our goal is to serve as many people as we can, which we've proven in places like Los Angeles, Seattle, San Francisco, and Philadelphia." He added that the company has a "radical sensitivity" to the suggestion that it is choosing areas by race. "Demographics play no role in it. Zero." The company also has said that it intends to expand the service and "fill in gaps over time."
Bloomberg observed that unrolling new products in areas with the highest number of customers is "a logical approach from a cost and efficiency perspective… Yet in cities where most of those paying members are concentrated in predominantly white parts of town, a solely data-driven calculation that looks at numbers instead of people can reinforce long-entrenched inequality in access to retail services. For people who live in black neighborhoods not served by Amazon, the fact that it's not deliberate doesn't make much practical difference."
In a look at why Amazon has decided to open at least several bricks-and-mortar bookstores, Business Insider recalls a 2007 shareholder letter, in which Amazon CEO Jeff Bezos answered questions about why, at that point, the company didn't plan to open any bookstores.
In the letter, Bezos said a new business idea had to pass four "tests" before being implemented:
- We must convince ourselves that the new opportunity can generate the returns on capital our investors expected when they invested in Amazon.
- And we must convince ourselves that the new business can grow to a scale where it can be significant in the context of our overall company.
- Furthermore, we must believe that the opportunity is currently underserved.
- And that we have the capabilities needed to bring strong customer-facing differentiation to the marketplace.
Concerning operating bookstores, he said at the time, "We don't know how to do it with low capital and high returns; physical-world retailing is a cagey and ancient business that's already well served; and we don't have any ideas for how to build a physical world store experience that's meaningfully differentiated for customers."
Business Insider commented: "Amazon's first physical bookstore [in Seattle] is already proving to offer a completely differentiated shopping experience," including prices that aren't marked on the books, prices that fluctuate in tandem with online prices, reviews and ratings from Amazon's website and more. "Amazon's bookstore shows the traditional retail experience can be changed. If Amazon has also figured out a way to generate returns from physical stores, it won't be long before we see more stores open under Amazon's name."