I have been asking my daughter what she wants for her birthday. Today we received her wish list: non-profit organizations we could support; an appeal to buy from small companies instead of big businesses; and finally some items that would advance her comfort, learning, and making.
I’ve been reflecting on her list this morning, before and after talking with her about it. I wonder why she stated a preference for smaller companies. After all, the two larger businesses that she named (Amazon and Walmart) were once small, even within my own lifetime. While Walmart’s early origins go back to my birth, I was not aware of this store until they opened a store in my Ohio hometown sometime in the 1980s after I left for college; I placed my first order on Amazon in 1996 when I was developing a course on the chemistry of food and cooking. I remember my parents expressing enthusiasm for the low prices and variety of goods at Walmart, and I myself was dazzled by the pricing and selection of books on Amazon.
Shouldn’t we be happy when small businesses such as these are successful and grow?
For me, the answer is: it depends. Both Amazon and Walmart have grown spectacularly not because they offer low prices and offer a broad selection, but also because it is easy to buy from them (up to 24 hours), delivery is fast, and it is easy to find products. This depends upon a vast distribution and transportation network. On top of that, Amazon has built a community of reviewers who share their opinions with other customers; offers digital services including hosting, entertainment media, and seller platforms; and can easily leverage all of this data to nudge users towards additional purchases. Collectively, all of these traits provide Amazon a strong competitive advantage over other retailers — and the leviathan only becomes more knowledgeable and stronger with every purchase, every view, every click. I purchase much more from Amazon now than I did 24 years ago. As I do, Amazon learns more about my preferences, as well as others’, and serves us better over time, which in turn makes me even more likely to turn there for my purchases.
What’s not to like about this cycle?
First, there is the danger of too much power being divested to one entity, even to one person (Jeff Bezos). With control over vast wealth, Bezos and his descendants can control what people see and do not see, hear and do not hear, eat and do not eat.
Second, the company influences not only its customers, but also its employees — and therefore the working conditions of many citizens. This also has an impact on the culture and the benefits that other workers experience across the country. Depending on the laws of the land, this can in turn lead to vast inequities in wealth distribution, which are unhealthy for a nation, because citizens do not share enough common experiences.
Third, there is the very real question of how much is enough. After all, growth is not always identical to success: cancer is abnormal cell growth. Although it’s been awhile since I’ve read John Bogle’s book, I recall he observes that some appetites (such as for food) have physical limits. Not so, with appetites for money, power, and adulation.
Fourth, it is more difficult to maintain a culture of quality customer service. As a gigantic company takes a life of its own, it can afford to lose a few customers due to bad service.
Fifth, a large company develops many mechanisms to dwarf upstarts who would challenge it. This drowns out alternate voices, depriving the public of opportunities to shop the world (and shape the world) in innovative ways.