How ethical is Amazon? That’s the topic for the poll at the end of this post (see previous posts for similar polls on Starbucks and laptops). I should have written this post before Black Friday but I decided to take a break over Thanksgiving and I also got bogged down with thinking about where to start when researching this massive company. So, I’ve decided to do a few posts on Amazon over the coming month or two, looking at the business from different angles. This post will just look at Amazon during Covid, Jeff Bezos, and then the survey for you to weigh in with your opinion.
Why you should avoid Amazon right now
This week, the Bay Area has gone back down into stricter lockdown conditions – no outdoor dining is allowed and most salons, etc., have to close down again. It’s really hard to watch local businesses that we love struggling so much. Bay Area restaurants employ over 300,000 people and, especially if you’re passionate about cooking and the food industry, you can imagine how tough it must be to be stuck at home. My version of this was to be stuck at home instead of “cooking” things in the laboratory – but I was still getting paid, unlike many in the restaurant business.
If you’re buying presents this year, consider buying gifts that support local businesses instead of relying on Amazon. A gift certificate for a favorite restaurant, café, salon, or day spa, would really help people out a lot more than buying something from Amazon. You could even get a gift certificate for yourself as a reward for getting through this year! Of course, Amazon is thriving: I don’t think a day has gone by in the last week where I haven’t seen at least one Amazon van in my neighborhood.
There was a time, years ago, when I used to wonder if Amazon might be more sustainable than physical stores. After all, constructing and powering buildings make up a significant part of our greenhouse gas emissions. But that hope for a sustainable Amazon went out the window when Bezos’s business model was driven more and more by the speed of delivery.
Faster shipping = a higher carbon footprint
At a work seminar a couple of years ago the speaker asked the audience how many of us are members of Amazon Prime. I was fairly shocked at how many people put their hands up – more than half the room. By December last year there were more than 112 million Amazon Prime members in the US – that’s over one third of the population! Considering that a good percentage of the ~ 330 million residents in the US are children, or adults who live together, it seems that Amazon Prime is getting close to 100% penetration in US households.
Yes – I just checked this and even by spring 2019, over 80% of US households had an Amazon Prime membership! The cost of membership is $13 per month, or $156 per year (so the US population hands around $20 billion to Amazon each year just for Prime membership!). Naturally, when you spend that much for something, you’re going to make use of it – in other words, Amazon will likely be your go-to online retailer.
There were an estimated 103 million U.S. Prime members at the end of the first quarter [of 2019], and they spend an average of $1,400 per year, according to the report. That’s quite a bit more than the $600 per year that non-Prime customers spend. – Motley Fool.
So, putting all of this together, an overwhelming majority of US adults are Amazon Prime members, and it’s a reasonable assumption that most of them will take advantage of Amazon’s fast free shipping, whether that’s 2-day, 1-day, or 2-hours (yes, 2-hour shipping for groceries). There are two main downsides to this business model of fast shipping:
- Faster shipping means a higher carbon footprint. This is well-known and it’s logical that there have to be more journeys when customers want their package delivered overnight. And Amazon has been widely criticized for not making much effort to reduce their carbon footprint. All of the Amazon vans driving around my neighborhood are brand new Ford Transit vans – why don’t they at least have an electric truck fleet that they charge with renewable power at their warehouses? Incidentally, Amazon Web Services also rates poorly for carbon footprint compared to its main competitors, Microsoft and Google.
- Faster shipping means more stress on workers. I won’t labor this point because you’ve probably already read something about the plight of Amazon warehouse or delivery workers – the higher risk of Covid, the draconian timekeeping app that tracks each of them, the regular elimination of slower staff, the anti-unionization efforts, and the gradual conversion of humanity into robots (until it becomes cheaper for robots to take over). Amazon has improved some conditions for workers but that’s always in response to media spotlight. Even now, it seems that the much-touted minimum wage of $15 per hour has loopholes that are abused by sub-contractors.
I’m not judging – most of my friends have Amazon Prime accounts and I used to have a trial account too until I got tired of watching The Man in the High Castle. I also know how it seems so much easier to buy from a retailer that you’re familiar with and think you can trust. In the next post I’m going to take a closer look at why you can’t trust Amazon as a retailer, but for now I’ll stick to my plan for this post – it’s easy to get sucked into a rant when it comes to Amazon 😉 Just consider this: If you do need to buy something online, consider selecting a slower shipping speed if you don’t really need it ASAP.
How ethical is Jeff Bezos?
Jeff Bezos gets a fair amount of criticism that just comes with the role of being the richest person on the planet. So I’ll try to be objective here, as much as possible. As you probably know, Amazon has been thriving during this pandemic, with the result that in August, Bezos became the first human with a “net-worth” (what a horrible expression!) of over $200 billion. What’s he doing with this money? Well, he doesn’t seem too sure, yet. He could use just 10% of his wealth to give each of his one million Amazon employees a $20,000 bonus – a life-changing sum for many warehouse employees or drivers. But let’s compare his philanthropic efforts to what others are doing.
We know that the second richest person on the planet, Bill Gates (with accumulated wealth of around $116 billion, as of August) set up the Giving Pledge along with his billionaire buddy, Warren Buffet.
The Giving Pledge is an effort to help address society’s most pressing problems by inviting the world’s wealthiest individuals and families to commit more than half of their wealth to philanthropy or charitable causes either during their lifetime or in their will.
There are plenty of well-known names on the pledge, from Elon Musk to media tycoon Michael Bloomberg and investing mogul Bill Ackman (what strange language we use when talking about money!). Even when polarizing and widely disliked people like Mark Zuckerberg and Carl Icahn have joined the list, the most notable absence is Jeff Bezos. He’s the only one of the five richest people in America who hasn’t signed the pledge – and the absence seems even more notable now that MacKenzie Bezos signed up after her record-breaking divorce from Jeff.
Although he is the richest man in the world, he still does not rank high when it comes to the percentage of his extreme wealth that he redistributes. On the other end of the spectrum from Bezos’s measly 0.1 percent is Bill Gates. Gates directed 22.2 percent of his wealth during the same period. Warren Buffett directed a whopping 71.1 percent of his wealth to charity between 2000 and 2017. – Market Realist.
Perhaps we shouldn’t judge him yet – maybe there are some great things on the way. Just before Covid lockdown began, Bezos announced a $10 billion climate fund. Although he’s really thin on detail on this fund (making announcements on Instagram), he did announce the first set of donations, amounting to $791 million, last month. I still have to be a little skeptical here – is this primarily just a tax break for Bezos? Last year Bezos bought a Beverly Hills mansion for $165 million – that’s more than Amazon paid in corporate tax for 2019. He also spent $65 million last year on a Gulfstream jet that seats eight people. More importantly, if he really cared about climate change, Bezos would make Amazon shipping and AWS data centers more sustainable.
Is there not a responsibility for the richest person in the world to contribute more to solving global problems? Let’s face it: we face some serious problems, several of which are caused in part by Amazon Corp., and it would be really great if Bezos would step up a bit more. He should start with making Amazon more sustainable and socially responsible.
I haven’t really delved into the social and environmental impact of Amazon Corporation yet, but I’d like to hear your opinion before I write a post on that. Ultimately, we need to assess Amazon the company rather than Bezos the person – if I came to the conclusion that Amazon is changing the world for the better, I’d be more inclined to ignore Bezos’s wealth and think, oh he deserves it, working so hard to make the planet a better place.
How ethical is Amazon?
For reasons that actually overlap with my next post on Amazon, I’ve decided that a rating scale, whether it’s Green Stars or a regular rating, should range from zero to five (not one to five) in half-point increments. I’ll get into that in the next post. Meanwhile, please chime in by voting below on an ethical score for Amazon.
How would you rate Amazon for social and environmental impact on a scale of 0 to 5 green stars? Vote below.
Thanks for voting! I’ll discuss the results in the next Amazon post.