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Walmart used to be the menace of main street. But now, small mom-and-pop retailers (along with their big box brethren) have a new punching bag: Amazon.com.

The Seattle online retailer has been taking it on the chin this holiday season after releasing a new mobile application that encouraged shoppers to check out goods at brick-and-mortar stores, and then make their final purchase on Amazon. The company added a bit more salt to the wound by offering a one-day discount for those who completed a “price check,” presumably while shopping in physical retail stores.

Large retail associations and brick-and-mortar stores shot back, saying that Amazon was taking advantage of tax loopholes and turning physical retail stores into showrooms for the online powerhouse. U.S. Senator Olympia Snowe even got into the fight, calling it “anti-competitive behavior that could shutter the doors of America’s small businesses.” An “Occupy Amazon” Facebook page emerged, and an Oregon bookseller offered a one-day discount and $5 gift certificate to any shopper who canceled his or her Amazon.com account.

One would think that Amazon had a public relations nightmare on its hands, one that came amid the key holiday shopping season. And so how did the online retailer react?

Well, it did … nothing. (At least not publicly).

We’ve watched Amazon for a long time now, and this public-relations strategy is pretty customary. Amazon’s reaction to the massive AWS outage back in April is a perfect example, with many developers feeling as if they were left out in the cold by a company that wasn’t clearly communicating what was going on.

What makes the PR approach so fascinating is that Amazon prides itself on satisfying customers, and one would think that translates directly to a proactive PR effort.

But that’s never been the approach at Amazon — in deep contrast to companies such as Starbucks or Costco or Microsoft. It even flies in the face of one of its very own units: Zappos.

I’ve been wondering about this approach for a long time now, and it didn’t entirely click until I read a piece in Forbes last week by columnist Venkatesh Rao.

It is a fascinating analysis on the “Amazon Way,” one of the best I’ve ever read. Rao gets behind the PR strategy, writing that the company does not “immediately respond with knee-jerk PR damage control.” He continues:

“Where other companies might respond with overwrought displays of contrition and dramatic conciliatory gestures, Amazon will likely do the minimum necessary, wait out the storm, and move on.  Amazon dealing with its market is the corporate equivalent of a patient, low-reactor parent dealing with a child throwing a tantrum.”

Amazon’s rise over the past few years has been absolutely fascinating to watch. The company is now being discussed along the lines of Apple and Google and Microsoft in terms of its new-found power in the tech industry. Its market value keeps growing and growing.

For a company that started as an online bookseller, this is an amazing transformation. And Rao, the columnist for Forbes, concludes that the Achilles Heel for Amazon might just be PR, something he dubs “relationship capital.”

“Nobody completely trusts Amazon. There is a degree of social isolation it suffers in the corporate landscape. Customers, suppliers, affiliates, partners — everybody has learned to be on their guard when dealing with Amazon. Nobody ever enters a relationship with Amazon with wholehearted enthusiasm. Only with a certain reluctance. You deal with Amazon mostly because you have to, not because you want to. This lack of relationship capital may start to matter one day. But today is not that day. Today we succumb. Today we welcome our Amazonian Overlords.”

Pretty interesting stuff. Language like that, coupled with Amazon’s recent battles with states over sales tax collection, could put a big target on the company’s back much as Walmart was derided over the past two decades. As I was writing this post, a news alert popped up in my email with a story from The Motley Fool. It was titled: “Is Amazon the new Walmart (in the ‘Evil Empire’ sense)?”

It will be interesting to see how Amazon responds — if at all — as the company’s power increases.

Comments

  • Guest

    MS has a proactive PR department? You’re kidding, right?

    • http://geekwire.com Todd Bishop

      It depends on the situation and the product, but certainly Microsoft does plenty of proactive public-relations. Were you thinking of any situation or product in particular?

  • Guest

    MS has a proactive PR department? You’re kidding, right?

  • Jhadle

    Have to agree with you and Mr. Rao, John. I semi-boycott Amazon. I try to buy books at Powells and/or Elliott Bay Books but if the price differential or convenience factor is too overwhelming, I reluctantly go to Amazon. I try to buy music elsewhere, except if the price differential is too huge. 

    There are things i admire about Amazon — they are very consumer friendly and so easy to do business with — but their public morals really leave a lot to be desired. The self-serving no-philanthropy “principle,” the tax-evasion “principle,” and now the “price check” maneuver that evidences a completely conscienceless approach to business. 

    Jeff Bezos, who is obviously an unusually gifted entrepreneur, simply does not believe in morals for companies. The company is there to do one thing: maximize profits. The troubling thing is that he thinks this is a defensible and principled stance.

    • Guest

      What morals and “principles” should a corporation evince?

      • Jhadle

        It should pay state sales taxes just like the retail businesses against which it is competing, recognizing that states are losing huge gobs of revenue that support education, environmental protection, social services, etc. It should make charitable donations to worthy causes. it should not take a scorched earth policy against struggling local brick-an-mortar businesses. It should not go onto a device you bought and without your permission or knowledge  zap a book you bought. Just for starters.

        • Virginiasquire

          Retailers do not “pay” sales tax, they “collect it” from their customers. Per a Supreme crt case (Quill) a retailer is not required to collect sales tax if it has no physical presence in the state. That is just the law. Deal with it.

          • Jhadle

            Amazon sought to mount an initiative to repeal an Internet sales tax law passed by the California Legislature. This is what I object to. States obviously cannot have a satisfactory revenue picture if Internet sales are not taxed in some way. And it is also only fair to the brick-and-mortar businesses against which Amazon and other Internet businesses are competing to have a level tax playing field.

          • Guest

            Internet sales are taxed, James. California citizens owe use tax on interstate purchases. States can satisfactorialise their finances by ensuring that their taxpayers remit the proper amount of tax. Don’t you pay your taxes?

          • Jhadle

            My name is not James. Internet sales are not effectively taxed.

          • Guest

            Internet sales are subject to use tax in most states. Whether you effectively pay your use taxes is between you and the taxing authorities.

          • Jhadle

            I am a Washington resident and hence am charged sales tax by Amazon.

          • Guest

            Good. I am glad to hear that your purchases from Amazon are effectively taxed. I also expect that you properly file use tax reports with the Washington State Department of Revenue concerning purchases from out-of-state merchants. If you’re unfamiliar with this procedure, a simple Bing search will bring you up to speed.

          • Jhadle

            Having citizens file use tax reports is obviously is not a convenient or effective way for a state to tax Internet sales. Amazon has opposed states’ legitimateefforts to tax Internet sales. This is what I object to.

  • Jhadle

    I should also add two things: 1) The company is there to maximize profits in the long run. Growth seems to be the immediate goal. 2) In line with my semi-boycott of Amazon, I have actually started to do kind of a reverse “price check” thing with Amazon. I use Amazon to research products and prices and then I shop elsewhere — either at the brick-and-mortar or at some place like newegg or B&H Photo.

    • Guest

      Please describe Newegg’s, B&H Photo’s, and your local brick-and-mortar shop’s stances on philanthropy, taxation, and comparison shopping. Do they align with yours?

      • Jhadle

        I don’t have the time nor means to research every business I do business with, but if it comes to my attention that a company is behaving badly (in my eyes), then I don’t feel like doing business with it. I don’t claim to be pure about it. But I also don’t want to be blind or indifferent to bad corporate behavior. A company as large and successful as Amazon has to expect to come under some scrutiny.

        • Guest

          Rather than opting out of “bad corporate behavior,” why not opt in to good corporate behavior? Do you know of any on-line retailers that collect sales tax voluntarily and give to charities of which you approve?

          • Jhadle

            I don’t see why I shouldn’t opt out of bad corporate behavior. I do opt in to good corporate behavior when I am aware of it. As I mentioned above, what I objected to with Amazon was its effort to mount an initiative to repeal the California Legislature’s attempt to tax Internet sales.

  • http://twitter.com/hrhmedia Hanson Hosein

    I think this is an insightful look into how Amazon manages its public relations.  I’ll admit to buying deep into the Amazon ecosystem (from Kindle to Prime).  Still, I also recognize that they don’t seem to spend much effort on building social capital or community. 

    Folks who admire unabashed capitalists such as Bezos will argue that it doesn’t matter as long as the company produces results, jobs and a value proposition for consumers.  However, they do need to proceed with caution.  As you point out, Wal-Mart had a similar attitude, and they were roundly criticized for their lack of sensitivity to public opinion (from labor practices to predatory business ones), which led to some profound organizational changes over the last couple of years.

    As a Puget Sound citizen, I would like to point to Amazon with pride as a shining local example of the best of us — not just because of their business acumen or innovation, but because they also do the right thing.  So I’m taking the rising negative buzz against the company a little personally!

  • Guest

    I live in the Seattle area. So, I would pay sales tax to Amazon regardless of their stance vis a vis other states. However, I too semi boycott Amazon. It is a good source of information, but every dollar spent at Amazon by people in other states robs those states of funding for education, roads and police. It just doesn’t feel good to shop there most of the time.

    However, I do feel good about a used book I bought from an Amazon seller that is a Goodwill store located in Florida. Better to buy the book than have it go into a landfill. I am not even sure if I was charged the sales tax or not. If not, it is ridiculous that all the value is added in our state but the since the product happens to physically be in Florida, I don’t have to pay.

    The creepiest thing about Amazon though is what happened with 1984. I will remember that for a very long time.

  • Guest

    No.

  • Guest

    Amazon gives me the willies. Seriously. These guys have the moral compass of something that doesn’t have a moral compass. At all. If they can get away with it, they will. You’ve got to be really careful in dealing with them.

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