Introduction
Amazon is one of the largest and well-known companies in the US and the. In terms of market capitalization, it trails Apple, and terms of the number of workers, Amazon trails Walmart (DePillis, 2018). Amazon is unrivalled terms of its significance to contemporary life and its power to change the American economy. This paper claims that Amazon has a two-fold effect on the US economy. On the one hand, Amazon creates numerous employment opportunities, which is beneficial for the economy (Day & Gu, 2019). Moreover, it is one of the largest tax payers in the country, which contributes cash into the US budget. On the other hand, Amazon induces smaller businesses to lose control over pricing and pay for shipping and returns, which may drive less efficient firms out of business. Therefore, it is crucial to investigate the impact of Amazon on the US economy in detail.
Company Overview
Amazon Inc. is one of the most diversified companies in the world, as it competes in numerous industries. The corporation is well-recognized as the biggest online retailer on the planet. But Amazon is a lot more than that. It distributes advertisements on the internet, rendering it a minor but expanding competitor to both Facebook and Google (Amazon, 2020). Amazon is a manufacturer of products with a growing selection of home devices and video-sharing devices. Amazon Studios is beginning to grab prizes from Netflix and HBO for its exclusive television programming and films (Day & Gu, 2019). Amazon’s purchase of Whole Foods Products and expanding its network of electronic service retail stores has instilled established retailers with terror. And in possibly the most startling event of all, Amazon is now the world’s largest cloud-computing services company (DePillis, 2018). In response to demands for antitrust inquiry, Amazon has emphasized a few things that, legally speaking, resonate. The industry’s extensive outreach is not indicative of its market dominance. Amazon has established rivals in almost every industry it has penetrated, such as those businesses that have made progress by blurring the barrier between online and physical trade (Amazon, 2020). The company is so big that many retailers and smaller businesses find it hardly possible to work without being present on Amazon, which makes them lose control over pricing and always be in the constant urge of improving efficiency (DePillis, 2018). Thus, the company’s size is becoming dangerous for the health of the US economy.
Positive Sides of Amazon
Large Tax Payer
Amazon is one of the largest tax payers in the US, which makes it a valuable contributor to the US budget. During the first quarter of 2020, Amazon’s revenues surged 44% to $108.5 billion, and as the company’s global expansion proceeded in 2021. During the first year of the pandemic, the company’s revenues grew from $280.5 billion in 2019 to $386 billion in 2020 due to increased demand for delivery services and growing online sales associated with mobility restriction during the pandemic (Amazon, 2022). The revelation followed the trade department’s announcement that the U.S. economy soared 6.4% annually in the first quarter as improving vaccination rates, a major wave of fiscal spending, and a gradual rebound in the labor market aided offset some of the effects of the coronavirus outbreak (Amazon, 2020). Amazon’s annual revenue for 2021 totaled $502 billion, which signified substantial growth of sales (Amazon, 2022). As a result, in 2021, the company payed almost $4.8 billion in income tax in comparison with $2.9 billion payed in 2020. Thus, the company has a significant contribution to the US federal budget, which is a benefit to the US economy.
Largest Employer
Amazon has generated more employment in the United States than any other corporation during the last few years. These positions offer an opening wage of $15 hourly, more than double the national minimum wage and provide comprehensive, industry-leading amenities (Day & Gu, 2019). The company’s initiatives created over 2.7 million employees in the United States, and it recruits over 800,000 Americans throughout 40 states plus 250 counties (Amazon, 2022). Amazon’s workers have access to various schemes to acquire new abilities for in-demand employment as part of a skill enhancement project by 2025 (Amazon, 2020). Amazon’s provide $700 million assist all staff members in acquiring the skills necessary to move into better qualified, better-paying, structural or non-technical responsibilities (Reese, 2020). The company is happy that LinkedIn has acknowledged them as a great business to collaborate with, partly because of these initiatives and perks (Amazon, 2020). In summary, Amazon has a positive impact on the US economy by providing Americans with jobs that have competitive salaries and benefit packages.
Negative Effects of Amazon
Amazon also has a negative effect on the US economy. While Amazon provides global exposure to sellers, it makes them lose control over pricing, spending money on advertising, increasing cost of delivery, and reducing wages to meet the high standards for efficiency (DePillis, 2018). Each year, more retail establishments shut their doors, as brick-and-mortar stores can no longer compete with Amazon’s diversity and two-day delivery (DePillis, 2018). Those who wish to remain must adopt at least one chapter from Amazon’s playbook by providing consumers with a technology-driven service that satisfies their high expectations (DePillis, 2018). To preserve their customer base, the Amazon Effect has compelled conventional brick-and-mortar shops to implement several new techniques.
Many merchants were slow to adopt online shopping till they began losing customers to ecommerce competitors. They increased their attempts to adopt this new medium and create their websites at this time (DePillis, 2018). Amazon has urged shops to expand their product selection to keep up with its extensive inventory. Due to its community approach, Amazon can provide a limitless number of products without bearing the expense or liability of inventories or being constrained by purchasing expenditures (DePillis, 2018). This move has prompted other retailers, like Walmart, to incorporate the same marketplace concept into their merchandising strategy and compete with Amazon by providing sellers with higher prices and more exposure (Day & Gu, 2019).
While the tendency to increased efficiency may be beneficial for larger businesses, it is devastating for smaller small-scale business that cannot keep up with the growing competition (DePillis, 2018). As a result, the health of the US economy may be affected negatively in the long run due to decreased competition and larger entry barriers for retailers. Moreover, Amazon may have too much power over the US economy.
Conclusion
Amazon is more than just another large company, as it has a deep effect on the US economy. On the one hand, Amazon has a positive impact on the US economy, as it creates thousands of jobs every year and makes large contributions to the US federal budget. However, Amazon also limits the opportunities of smaller businesses and dictates high standards of making business in retail. As a result, the competition in retail is decreasing, which may be a threat to the US economy in the long run. Thus, deeper investigation of the topic is needed to understand whether the negative influence of Amazon outweighs its positive effect on the US economy.
References
Amazon. (2020). Amazon’s economic impact in the U.S. Web.
Amazon. (2022). Annual report 2021. Web.
Day, M., & Gu, J. (2019). Timeline: How amazon got to be so big. Bloomberg.com. Web.
DePillis, L. (2018). It’s Amazon’s world. We just live in it. CNN business. Web.
Reese, E. (2020). Gender, race, and Amazon Warehouse Labor in the United States. The Cost of Free Shipping, 102–115. Web.