Written by: Stephanie Varin
Is Amazon a Monopoly?
The growth of the Amazon, the e-commerce company, is staggering. Year over year, they have consistently grown by $15 billion dollars, according to to CNBC. It’s growth has been enormous within the past few years as it has absorbed many companies from several different industries. This worries economists and politicians across the board, including POTUS, Donald Trump. In fact, if Trump is reelected, it is very possible he will appeal to the Senate in order to create new antitrust laws that might force Amazon to break up. Why all the fuss? Many believe that Amazon is quickly becoming too big and too powerful. In short, Amazon may be becoming a monopoly.
So, is Amazon becoming a monopoly? Well, no. Though some believe the company is becoming the textbook definition of a controlling power in the market, as least for our standards, it isn’t. According the Merriam-Webster, “a monopoly occurs when complete control of the entire supply of goods or of a service in a certain area or market rests with a single entity,”, and the FTC defines a monopoly as a company with +50% total market share, whereas Amazon only controls 5% of all retail sale in the US (Forbes). However, it does exhibit some monopolistic tendencies (see this video for a summary). For example, about 1 in every 2 dollars spent online is spent at Amazon. Also, in 2016, Amazon’s sales were six times greater than the online sales of Walmart, Target, Best Buy, Nordstrom, Home Depot, Macy’s, and Costco, combined (HowStuffWorks). Not only this, but Amazon seems to be dipping its toe into every pond out there, and has significant market value in many industries, including, but not limited to, electronics retail, fashion, consumable manufacturing, food delivery, grocery, bookstores, healthcare, pharmacy, and web services (CNBC). With all of its market holdings, Amazon is making many companies within these industries very nervous, and could very well threaten their performance, especially that of brick and mortar stores. So why isn’t the FTC taking action against this retail giant? Well, it’s all based in the consumer welfare. Because Amazon’s prices are so low, one of the many reasons that consumers love the site, it can’t be seen as threatening the consumers, and thus some economists don’t see it as a problem (Forbes). Also, it isn’t restricting trade which is the largest reason why monopolies are restricted and banned -- government wants to promote competitive and free trade.
So, is Amazon a monopoly by traditionally defined standards? No, but that does not mean that Congress could not create new antitrust laws that redefine what a monopoly is, and if that happens, Amazon could be in deep trouble.
Works Cited
Hanbury, Kate Taylor Mary. “Amazon's Growth Could Threaten These 10 Industries.” Business Insider, Business Insider, 28 June 2018, www.businessinsider.com/amazon-is-killing-these-7-companies-2017-7#healthcare-companies-8.
Ladd, Brittain. “Is Amazon A Monopoly? Donald Trump Thinks So.” Forbes, Forbes Magazine, 30 July 2018, www.forbes.com/sites/brittainladd/2018/07/29/amazon-is-not-a-monopoly-president-trump-yet/#46aa580c4735.
Markets, Economy &. “Here's Why Amazon Isn't a Monopoly.” Business Insider, Business Insider, 15 Aug. 2017, www.businessinsider.com/amazon-stock-price-not-a-monopoly-2017-8.
Salinas, Sara. “Amazon Sales Grew by $15 Billion Year over Year - Its Peers Don't Come Close to That Level of Growth.” CNBC, CNBC, 27 July 2018, www.cnbc.com/2018/07/27/amazon-sales-grew-by-15-billion-year-over-year-blowing-away-peers.html.
“Why Is Amazon Not Considered a Monopoly?” HowStuffWorks, HowStuffWorks, 11 Dec. 2017, money.howstuffworks.com/why-is-amazon-not-considered-monopoly.htm.
I agree with Stephanie's claim that Amazon is not a monopoly but does possess some of the tendencies of one. When I think of a monopoly, I think of there being little to no alternative source of supply for consumers to turn to in order to buy a product. All the companies that are afraid of Amazon because of its low prices are indeed alternative sources of supply. However, because their prices are higher, the demand for their products decreases, and Amazon, as a substitute producer, has an increased demand. A price floor could be set by the government, so that Amazon can't offer such low prices and drive other companies out of business. However, doing so might actually drive away consumers and that could hurt many product industries as a whole. In that case, it might be up to the other companies to lower their prices in order to compete with Amazon by looking for more cost efficient means of producing their products. The only downside to that could be cheaper, not as high quality products, which could also drive away consumers and bring down demand. A efficient balance would need to be found between price and quality.
ReplyDeleteI don't believe that a price floor would be effective; it would result in inefficiencies and customers that don't have access to products. I agree, though, that it is very hard to find a balance between government restrictions and the availability of supply to consumers and minimizing inefficiency within the industry.
DeleteI would agree that Amazon is not a monopoly. Although the prominence of Amazon in online sales does make it harder for corporate retailers to sell their products online, the low prices of Amazon often indicate lower quality. For example, a tee shirt bought off of Amazon for $2.00 is likely a worse quality than a $15.00 tee shirt from another online retailer like Nordstrom’s. Therefore, an increase in income could rapidly reduce demand for products from Amazon. For other goods, like electronics, where specific brands or models are sold for a similar price, Amazon has little advantage over a physical store where buyers could just as easily purchase the item for the same cost in less time (including shipping). For the time being, Amazon appears to be a strong competitor in online sales, but less intimidating when considering the entire retail market.
ReplyDelete
ReplyDeleteI agree with Stephanie’s claim that Amazon is not a monopoly. It is a consumer choice for the cost savings to utilize purchasing through Amazon. Due to Amazon having lower prices, the demand for products increases. This is a representation of the Law of the Demand. Although companies are put at risk to be ran out of business, consumers love deals. For companies to compete with Amazon, prices will need to be lowered and companies will need to seek options to save money on producing products. This does not ensure that the product will although be of high quality. In general consumers are more prone to buy off of Amazon due to the cost savings. Although there are still other stories to buy from, if a consumer chooses.
Luke Lochner
ReplyDeleteIn my opinion, Amazon is fantastic. It has cheaper prices and the stuff I want can be delivered right to my door. It saves me time from going out to the store to get it and it is easier to browse my options online. I also believe many people in America feel this way. It isn't Amazon's fault that they are so good at and thought of this idea before any other store did. Amazon should not be punished for thinking of something that no one else has. They are giving the people what they want and what they want is an easier way to shop.
The question, however, does not necessarily ask whether or not Amazon is resulting is customer satisfaction, but rather if the domination of Amazon in the industry is restricting trade as a whole. It may not be at the moment, but in the future the company could take advantage of all of its holdings and inflict price hikes that negatively impact Americans and the world market.
DeleteI very well agree with the statement, that amazon is not a monopoly. They have not taken over every market their is in the US, meaning other businesses are still gaining a profit. While these companies are still making money, Amazon is making more from the cheaper products in every genre. It really does show how easy it is to buy on Amazon, you don't even have to drive. You just simply use a computer to buy your items. This also shows how lazy, but yet efficient our economy is becoming by using online buying, rather than driving to a local Walmart or Target.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI agree with the fact that Amazon is not a monopoly. My definition for a monopoly is when one person/company owns all of the product in one market. Amazon has so much product that they’re not even close to being the only ones who have that supply of anything. Whenever you google something online to buy, it always comes up with a bunch of different stores on the list... But Amazon always seems to be at the top. No matter what the product is, Amazon has it. Just because Amazon has all the products in every market, doesn’t mean that’s the only place you can buy them. Amazon knows they have so many customers and so much inventory that their cost benefit analysis will be tough to see how much they can price things at but still make money. I believe that Amazon prime also makes them a ton of money that most people often forget about.
ReplyDeleteStephanie is correct in saying that Amazon is not a monopoly, as it does not fit the text book definition. Nowadays; however, the text book definition almost seems outdated. Companies can now own much of the market without owning the stocks or the competition as social branding, advertising and societal norms take over the market. It is commonly looked at to buy something from Amazon and be seen as smart or savvy whereas buying something from Walmart for the same price is looked at as cheap. This distinction isn't made necessarily based on actual quality but rather social expectations. With this coming into play, the monopoly definition should change, or there should be a new term introduced to reflect the changing thoughts on larger companies. Amazon isn't a textbook monopoly but it does hold a large power no other companies hold. With smaller businesses always starting as people have more of a freedom to build a start-up, it is harder and harder to actually have a monopoly. Instead of the "monopoly" definition that causes the government to have to wait until there are the rules (that are nearly impossible to reach at this time) that are broken, there should be more caution with larger companies that control the societal norms and influences as that is what now controls the market.
ReplyDeleteI believe Amazon is not a monopoly as well. Although, the company is so huge and is increasing its sales by so much, it isn’t necessarily controlling any other companies like a monopoly would. Like you mentioned before with Trump being upset that Amazon has grown so much, I could see him creating new laws or even creating a new business of sorts to be more competitive against Amazon. I don’t really understand what the fuss is about with Trump because won’t the growth of Amazon still grow the economy? Even though other businesses are losing sales, Amazon could still help the economy more in the long run. Technology will only keep growing so the fact that a lot more people are shopping online is a good thing for the future since more people will end up purchasing more online anyways.
ReplyDeleteI would also agree with the claim that Amazon is not a monopoly. They may have bigger numbers than many different retailers, but that is because all of the different retail companies such as Walmart or Target, don't have everything that Amazon does have. But there are also sites like Ebay, which are direct competitor to Amazon. Also just like Amazon, on Ebay you can sell your own products and has pretty much anything you want for sale. For somethings as well you really can't buy on Amazon such as perishable foods, and sometimes clothes. So if you want food you will have to go to one of the grocery stores in your area and while your there, you should pick up that thing you wanted. People can buy stuff off of Amazon but also you have to wait two days or even more for it to be delivered, where as with a store you can just go out and get it that day. Amazon is good for some shopping, but when it comes down to it, if you can find it at Walmart or Costco, most people will probably go out and buy it from the brick and mortar stores.
ReplyDelete
ReplyDeleteI agree that Amazon is not a monopoly. Although it is not a monopoly, it does control a large portion of retail. People are always looking for the best deal, and Amazon can deliver with this most of the time. They also eliminate having to go to the store which many dislike. So, although Amazon is not technically a monopoly, they do make things a lot harder for smaller retailers and small businesses. They are even making it more difficult for larger corporations. With their prominence on the online market, eliminating other online retailers as well as actual stores. With more people buying online, stores are getting less business and have the possibility of going out of business. Although Amazon may not be a monopoly, they do control a lot of what goes on in the retail market.
- Colin Pham
Bennett Grzeszczak
ReplyDeleteI agree with the claim that Stephanie makes due to the fact that the competitors of Amazon also accrue online sales that somewhat compare to the amount that Amazon. Even thought Amazon is the clear favorite in this category, other companies have also increased sales dramatically. Additionally, if prices on Amazon are lower than other retail stores, consumers are much more likely to purchase a good from Amazon rather than pay a higher amount for a good at a retail store. Amazon also allows consumers to buy products online and receive the product in a shorter amount of time than other companies.
I agree with all of her points and ideas. Some of my family owns a huge company which ships the larger packages to costumers from amazon. I am very familiar with the amazon business and how it is ran. Amazons success has been very influential to other businesses and how they sell items online along with delivery. Amazon is a very successful business and is continuing to get larger by the day. This article was very interesting especially since I am familiar with the business.
ReplyDeleteI do not think that amazon is a monopoly. Amazon is just a successful company that makes their money in many different ways. Their found a way to get products into the hands of their customers that is easy, fast, and efficient. By sitting on your phone you can order almost anything imaginable and within two days it will be at your door. I think Amazon is doing things right leader the charge for the 21st century shopper, and other retailers are still stuck in the past.
ReplyDeleteAmazon is an interesting business to examine in this way due to the fact that everyone loves Amazon, but also you mentioned how 1 in every 2 dollars spent online is spent on Amazon which makes me wonder how much longer until Amazon is the only successful online business left. Additionally, I think that while it may not be a full monopoly, putting preventative laws in place could benefit all retailers in the long run.
ReplyDeleteI agree that Amazon is taking over the sales economy. I agree that laws have to be made to limit Amazon because of all the other stores it is putting out of business. It has become a more convenient replacement for all the stores that you have to drive to instead of something on your phone or computer.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI do not believe amazon could be considered a monopoly now or in the new future. Although they lead the United States' online sales by a huge lead from their competitors, other companies may even out this revenue gap by in-store sales, which amazon does have. If you look at amazon as a retail store as a whole (in-store and online sales), they still do not fit monopoly standards of over 50% of its market.
ReplyDeleteI totally agree with this argument, that Amazon isn't by definition becoming a monopoly, however with the way that economists, congress and just the government as a whole I can definitely see how it may seem like they're becoming a monopoly. Everyone loves Amazon which leads to their growth of around 15 billion dollars per year. This is an insane amount of growth year after year and will most likely continue to grow. Everyone loves Amazon though and to be honest from the government's perspective I don't understand why'd you would even think of making Amazon disband. That'd just make the general public angry and honestly damage a good amount of the retail industry since people will now not have that one stop shop of Amazon. Overall, I personally don't believe that Amazon is becoming a monopoly because other retail companies are still thriving with Amazon being such a huge company.
ReplyDeleteI believe that Amazon is a monopoly, but I agree that it is not a monopoly in the traditional sense. Admittedly, the company does not have control over the entire retail market and does not supply a majority of the goods when looking at a singular industry. However, Amazon does have control over the internet sales market (as 1 of every 2 dollars goes to Amazon); this is clearly having a negative effect on other major internet retailers and brick and mortar stores. Therefore, I believe it may be necessary to regulate Amazon as other monopolies are currently regulated, with antitrust laws, even if it means redefining what a monopoly is.
ReplyDelete
ReplyDeleteI believe that Amazon is practically a monopoly and should be broken up. Amazon severely restricts their competition through their really low prices on purpose. Amazon is using such low prices now to starve out the competition like Walmart or other brick and mortar stores. The problem like you mentioned isn't the low prices for consumer but after these competitors are gone then everyone will be buying almost everything off Amazon because they will be a monopoly. And be able to control the supply of goods which is not good for one company to be in control of. The government should step in and stop letting Amazon merge with other companies, like they just did with Whole Foods, so they can't get stronger and gobble up all of the market. Even if they are not legally considered a monopoly, they basically are. So they should be stopped before it actually hurts consumers when they are a real monopoly.
This is a very interesting topic. I agree with you that Amazon may be becoming too powerful in the market. Although they may not be a traditional monopoly, there are undeniably monopolistic traits that the company displays. I truly hope that the government doesn't force Amazon to end. Although it is a little concerning that Amazon is overtaking so many companies, there is also good reason for that. They offer seemingly unlimited products and they are shipped straight to your house. I agree that Amazon may be becoming a monopoly, but this may be for good reason.
ReplyDeleteI agree with the idea that Amazon is not a monopoly. Though they have a large portion of the market controlled, they do not have control of all of it. At a point in the future, if they did have majority control, I think the government should step in to make them separate. I do not think though that there would be a point in the future where they would have a monopoly because consumers would never only buy from them, not all people have computers or would prefer Amazon; unless they made a major change to their business model where all people could buy from them.
ReplyDeleteBy definition, it is obvious that Amazon is not a monopoly. However, I think that Amazon has characteristics that are very similar to monopolies that existed almost a 100 years ago. Some of the most common examples of monopolies of the past are Andrew Carnegie's Steel Company and John D. Rockefeller's Standard Oil Company. Both companies bought out their competition, much like what Amazon is trying to do right now. Amazon hasn't managed to buy their biggest competitors yet, but they have definitely taken steps to achieve this goal by buying Whole Foods, IMDB, Goodreads, Audible and many other name brands. So yes, I agree that Amazon isn't a monopoly yet, but I think that in the near future it has a high chance of becoming one.
ReplyDeleteI think amazon.com is a monopoly in itself. They once started out as a book selling company, and look what they have turned into, and how much they are worth at the moment. Now they sell virtually anything on the market, and recently they just bought Whole Foods to increase their market even more. If you need anything at all, you can order it and it will be to your door within 2 days or so, it’s insane. I think a better question is, will Amazon ever slow down and be surpassed by another company? I don’t see this happening just because of all the things that they are doing already, which in my opinion, makes it a monopoly.
ReplyDeletePersonally, I believe this topic is so interesting because of how controversial it is; split between whether or not people think Amazon is currently or becoming a monopoly. Amazon doesn't fit the definition of a monopoly and I think that's for a reason. Sure, every one in two dollars spent online is at Amazon, but they don't control the entire market. Also, Amazon sells different types of products from a multitude of categories, but there are competitors in each industry. Although some of these competitors may not have a powerful online presence, we need to consider that consumers weigh the costs and benefits of shopping online and shopping in person, and going to the store is not an extinct action, at least not yet...
ReplyDeleteAmazon is a monopoly because they used to just sell books and now they sell anything you can think of. They are now growing even more, they are buying other stores and company to make them bigger. When you Oder something from them it will come to your door in about 2 days or so. With amazon getting bigger and bigger they are never going to want to slow down they are going to want to be the best in the business. They are company that will never stop growing.
ReplyDeleteAmazon may not be a monopoly on the standards that we normally define them as, but Amazon may become a cornerstone company; a central organization on which everything else is dependent upon. Amazon ships goods that other companies use, provides services that outweigh other companies goods, and dominate a young and coming internet market. I personally think Amazon’s branches (anything that doesn’t deal with handling or shipping of goods ordered online) should be made into separate companies.
ReplyDeleteI think that Amazon is not being a monopoly even though that FTC has a different definition for the term Monopoly. Yes, Amazon does have a lot of power in the economy with online sales affecting many other businesses. That is completely normal for some businesses to lose money because another bigger and better company is coming through and more people are flooding to that company because of better pricing. What I think that the government should do is just monitor Amazon and make sure that with all this power that Amazon holds that they aren’t doing anything too radical that would jeopardize our economy because they hold the right to keep on growing and maintaining a business that is obviously working out really well.
ReplyDeleteAlthough Amazon does not fit the dictionary definition of a monopoly, I certainly believe that, with time, the company could quickly go overboard and begin to exert monopolistic presences on other companies. With 1 out of every 2 dollars spent online going to Amazon, there is certainly no competition for other online retailers. After all, anything you can buy at an online retailer, you can probably find on Amazon as well. Additionally, with a quick 2-day delivery, people are going to choose Amazon over the competitor anyway. I believe that Amazon, for the benefit of other online retailers, should at least be further looked into by the government, just to see if a disbandment would be the appropriate approach.
ReplyDeleteI agree with your statement, that Amazon is not a monopoly, but has certain traits like a monopoly. They’re not really controlling any other companies, which is what a monopoly does. They have huge sales because people like to get things fast and with low prices. You can also find pretty much anything on Amazon, making it an ideal place for people to purchase things. It’s very efficient, you can buy something online and get it the next day. Amazon isn’t a monopoly but will continue growing while technology and the world advances.
ReplyDeleteAgastya Asthana,
ReplyDeleteI agree that Amazon is not a monopoly, it is just a hub for goods and services which causes consumer easy both with prices and delivery. Amazon doesn't fit the definition of monopoly but that doesn't mean it is a monopoly. Many of us prefer the services amazon provides because Amazon partners with a lot more companies than Walmart, Target, Home Depot, and etc. I specifically mentioned the word "partners" instead of buys because although Amazon is powerful, its power is divided into so many parts that belittles Amazon's power. Amazon can rarely ever establish trust because the negative consequences followed by trusts would mean that consumers would treat as a substitute site rather than their go-to site. Amazon in fact helps grow other companies because if you want you ingenious idea to hit the market then Amazon can promote the product and give your company a boost to a point where more people will buy your product. Overall, Amazon is giant enough to establish a monopoly but it hasn't done so because Amazon is a whole made up of different businesses and corporations; Amazon establishing trusts essentially means every sector of Amazon, including businesses, accept the decision of trusts.
The reason why Amazon is making so much money is because they have LITERALLY EVERYTHING. Walmart, Target, and other places like that have a lot of essentials, but they don't have random stuff that people want to buy. If someone doesn't know where to go in order to buy something, they'll choose Amazon.
ReplyDelete
ReplyDeleteI think the topic regarding whether or not Amazon is a Monopoly is very interesting. I agree that it is not yet a monopoly but has the potential to become one in the near future. As more and more consumers rely on availability and efficiency, more heads turn towards Amazon, an outlet where you can get almost anything you want at a very quick speed. Compared to its competitors, Amazon distinguishes itself by offering a broader range of products at much lower prices, providing exactly what the customer wants. It is interesting to me to think of the possibilities in the future for Amazon. If it continues to grow at the pace it is currently, it could very soon become a monopoly, threatening the small industries still managing to survive even more than right now.
I agree that Amazon is not a monopoly. With Amazon selling products with very low prices,this increases buyers demand for Amazon and all their great deals. Although Amazon is not a monopoly right now, it could very well be one in the near future when it starts to control power in the market. There is no surprise that Amazon is overly popular and has millions of costumers. The business is genius, given the fact they just resell others products for a cheaper price, how could anyone not want to use Amazon? You save so much money. I personally don't see anything wrong with Amazon and how they are making money. I do see the worry in what the future holds if Amazon keeps becoming so popular to the point where it shuts down other companies, which hopefully will not happen.
ReplyDeleteEllie Reyes