I read the New York Times and want to ask: Are we sharpening our executioner's sword? That is what FedEx wondered as it helped Amazon grow by delivering its packages. Finally, FedEx woke up and decided it's better to make less money tomorrow than help usher in its death in the near future. As the Times reports, FedEx is terminating its ground delivery agreement with Amazon at the end of August, thereby passing on the delivery of millions of packages.
Amazon has historically partnered with businesses, only to then eat them from the inside out. Amazon, you may recall, was the original warehouse provider for Toys "R" Us, which declared bankruptcy last year. Amazon has since happily eaten up those toy sales.
Amazon by many accounts is building a shipping company and was just using FedEx to help itself get there. It was going to do FedEx what it did to Toys "R" Us.
While Amazon's nefarious practices may seem common practice, few have the wherewithal to say not to its money. FedEx deserves praise. CVS stopped selling cigarettes--but a key difference was that Philip Morris wasn't opening pharmacies.
In the home goods industry, we have many entities that are enabling Amazon and just sharpening their executioner's sword. The marts are inviting Amazon to their shows. Sales reps are inviting Amazon to their showrooms. Amazon will go to the shows and the rep showrooms until the day it can simply buy the goods directly from China. In the meantime, it will not abide by most distribution and pricing agreements, and it will discount items--thereby hurting indie stores.
When a mart, rep group, or brand enables a bad actor like Amazon, they hurt their indie stores. This results in short term gain, but a long term loss as it likely puts the indie store closer to Toys "R" Us's fate. As our industry continues to enable Amazon, and the number of indie stores shrink, we may see the executioner's sword come for other members in the distribution chain like the reps, brands, and marts themselves. We've already seen Faire and other tech companies sharpening their knives.
Who in our industry has the guts to say no to money today to ensure prosperity tomorrow? As a reference to creative problem solving, please see California's approach to presidential candidates. They are requiring candidates who want to be on the ballot to release their tax returns. What if our industry isolated what makes Amazon sleazy, and then put in place rules to stop it?
PS - Happy to see Scott Galloway quoted in the Times article. I’ve helped 50+ retailers acquire his book The Four.
Read the article about how FedEx gave Amazon ‘the Heisman’ here in the NY Times:https://www.nytimes.com/2019/08/07/business/fedex-amazon-shipping.html