07 / 07 / 2020

Amazon Part Deux (Or They’re Not Your Customers, They’re Amazon’s Customers)

Jeff Bezos’ empire is like a terrifying sea monster in disguise. Too bad so many entrepreneurs refuse to see what lurks behind the mask of happy-faced boxes.

Carey Smith | Founding Contrarian

Any entrepreneur who’s ever been a teenager should have learned that the argument “everybody’s doing it” is not one that carries much weight, either with mothers, fathers, law enforcement or anybody else. Yet it’s an argument I keep hearing from founders who are convinced they need to be on Amazon. For them, it’s Amazon or bust.

For some reason, they’re unable to recognize how they’ve been brainwashed into believing that the retail juggernaut is a gentle giant. They’ve fallen hook, line and sinker for those slick ads showing happy, singing boxes tumbling down conveyors, and small business owners testifying to the strength of their “relationship.” Whaddya bet Amazon tells them they’re on the “journey” together? Excuse me while I lose my lunch.

It reminds me of the old story of Leviathan, a sea monster that would float near the ocean’s surface with its back exposed, so that mariners would mistake it for an island. As soon as they dropped anchor and disembarked, Leviathan would dive to the bottom of the sea, dragging the poor sailors down with it.

Whenever an entrepreneur starts waxing lyrical about Amazon, I want to sit them down and say, “It’s time you learned the truth.” And the truth is that just like that sea monster, Amazon will drag your business down.

In an earlier post, I talked about Amazon’s exorbitant fees and strongarm tactics; about how it beats down price and quality, turning branded products into commodities; about how it will undercut you with a cheaper product; and about how the small business owner is completely at its mercy when a bad review is posted.

But the bigger problem that can’t be stressed enough is that when you sell on Amazon’s site, you’re losing your connection to the very people who will help your business grow. When you sell on Amazon, your customers are not your customers — they’re Amazon’s. Let me say that again: They’re Amazon’s customers. And not only does Amazon know more about them than you do, it knows more about them than the customers know about themselves: every keystroke they make, every pause they take, every time they choose red over green, extra-large instead of large, a more expensive model over a cheaper one, and every other thing they browse and buy on Amazon’s site. And all that information they gather? It’s theirs, and they’re not in the business of sharing.

At Big Ass Fans, we experienced this first-hand once when we briefly sold one product on Amazon as an experiment. We sold only a minuscule number of fans, because our customers preferred to deal directly with us. The whole time, however, Amazon was after us to lower our prices. Why? They wanted to see how low we would go in order to learn our costs to potentially sell a knock-off of our work.

No, Amazon is in the business of data collection, and every day they’re coming up with new ways to accumulate more, and new ways to use it to their advantage. Someday, though, all that data collection — and the power that comes along with it — will be Amazon’s undoing, and the company will be broken up. It’s inevitable. Someday the sea monster will go down with the ship, and stay down.

Until then, too many entrepreneurs will continue to think “everybody’s doing it,” so it must be okay. I wonder what their mothers would have to say about that.

Just the other day, meanwhile, a colleague familiar with my feelings sent me a headline from Twitter that read: “Jeff Bezos Depressed After Realizing Net Worth Still Just Number Known To Man.” The fact that the source was the satirical news site The Onion doesn’t mean it’s not true.