Amazon: Disaster averted?

In the weeks before Steve Jobs’ death, if you clicked on Amazon.com you saw Jeff Bezos’ open letter to customers, which began as follows:

Dear Customers,

There are two types of companies: those that work hard to charge customers more, and those that work hard to charge customers less. Both approaches can work. We are firmly in the second camp.

Thankfully, Amazon had the sense to take this down when Steve Jobs died.  It was unworthy of a leading company, and Jeff Bezos is lucky it wasn’t posted longer.

Because, of course, these words were an unsubtle broadside against Apple.  Amazon’s new tablet computer, Kindle Fire, priced at $199, is clearly cheaper than the iPad ($499 and up).  But Bezos wrapped this pricing differential into a larger Us vs. Them story, taking on Apple the company.

Bezos’ mistake and the right-brain reasons why:

Emotional idiocy

People love Apple.  Even before the outpouring of grief and affection at Jobs’ death, millions of people were (and still are) passionate about Apple.  And they’re Amazon’s customers, too!  What’s the point of dissing them?  Self-righteousness is not only unattractive—it’s emotional idiocy to make customers feel bad.

Connecting the dots: Ugly patterns

Yes, Amazon is about low prices, Apple isn’t.  But Amazon is implying superiority.  Sure you want to go there, Amazon?  Consider the many ways this may backfire:

Goliath comes to town—and state

Suppressing state revenues

85% of Amazon customers don’t pay sales tax.  This price advantage over brick-and-mortar retailers deprives state coffers of millions of much-needed dollars that could be paying teachers, firemen and more.

Reduced job creation

Amazon’s efficiency relies on a small labor force.  According to a reputable study, for every million dollars in sales, Walmart hires five workers and Amazon hires one.  A huge percentage of Mac- or iPad-owners have met real people at Apple stores.  How many of you have ever met someone who worked for Amazon?

Ugly muscle

Amazon’s expensive state-by-state campaigns to avoid collecting sales taxes makes them look like all those other corporate loophole-seekers.  Again, more Goliath than David.

Big Brother and the Bullies

Predatory pricing

Amazon’s prices actually go up when their algorithms detect out-of-stocks elsewhere.  This clashes big-time with their Low Price Warrior image and makes them look creepy and insidious.  Do they really want more people to take a closer look at this?

Undue influence

Nancy Koehn of Harvard Business School, in a recent Bloomberg article, indicated that “Amazon may be getting big enough for people to finally start considering the ramifications — for towns, shopping centers, and jobs — of a world dominated by online buying.  ‘Americans get very nervous about centralized power that – affects their communities,’ she says. ‘We get a little bit nervous about bigness, yet we want the convenience and the – pricing and the material plenty that bigness allows.'”

Saved from itself?

Clearly, Amazon is a smart and savvy company with lots of enthusiastic customers.  But there is a kind of Walmart-like arrogance and blindness in Bezos’ letter.  History, literature, and business alike are filled with examples of greatness brought down by pettiness and ego.  Steve Jobs’ death is a loss to the world, but it may be a bright spot for Amazon–not in removing a rival, but allowing Amazon to step away from a foolish and ignoble bit of corporate hubris.