Amazon Delivers Hardship for Local Business Owners

The following op-ed by Amy Thomas, the president of Pegasus Books, appeared in the March 17 edition of the Daily Californian, the independent, student-run newspaper of the University of California, Berkeley. It is reprinted here with permission of the author.

By Amy Thomas

I really didn’t want to make Amazon the topic of this essay. It is so yesterday for a bookseller to be wringing her hands in public about this highly disruptive competitor. After all, the new narrative — and there is a lot of truth to it — is that indie booksellers are back, we are opening more stores, those of us that have survived got tougher and better, and that customers care about buying local.

There is also good news internally in the publishing world. We are getting books faster from publishers, and many of the largest publishers are offering us more margin and better terms. Some of our smaller publisher partners are offering innovative consignment plans that enable us to keep more of their books on the shelves for longer. Booksellers across the country are extraordinarily collegial about sharing best practices and wonderful marketing ideas.

Inside my own company, I work with smart, creative, and entrepreneurial people who have made Pegasus a home for, among other things, splendid homegrown events: First Person Singular, Jazz Stories, HOOT!, Happy Hour Stories, and Lyrics and Dirges. We have never been more committed to making great literary music in our neighborhoods. Hey, what can I say? It’s a fun job!

But Amazon continues to create an existential crisis that is affecting far more than bookstores. Retailers need other retailers near them, open and thriving, and the retail community at large got smacked by Amazon’s almost preternaturally predatory business practices. A recent economic study by Civic Economics tells the tale. In 2014, Amazon sold $44.1 billion worth of retail goods nationwide, while avoiding $625 million in state and local sales taxes. That is the equivalent of 30,000 storefronts, 107 million square feet of commercial space, which might have paid $420 million in property taxes. Amazon also operated 65 million square feet of distribution space, employing roughly 30,000 full-time workers and 104,000 part time and seasonal workers. Even counting all the jobs in Amazon distribution centers, Amazon sales produced a net loss of 135,873 retail jobs.

Because Amazon was an early tech company, it has also enjoyed the tremendous and unprecedented support of lawmakers, who have routinely written special laws and tax deals just for it. Nearly two decades ago, I listened as members of the State Board of Equalization explained that this fragile new industry needed special protections, and so Amazon would not be required to remit sales tax. I was sitting right there, and my business was not considered suitable for such consideration. That decision in a stroke made bricks-and-mortar uncompetitive on price.

In Berkeley, we have seen the campus open an Amazon “pick-up store” in the new student union building on campus, and Amazon has now opened a distribution center in West Berkeley, so as to support its same-day and two-hour delivery services. Restaurants, so far, have been the only sector not yet touched by this particular competitor, so they seem to be the only kind of new business that regularly opens in our town. At a recent civic meeting, a pretty influential person on the Berkeley scene mused that maybe we should be preparing for the possibility that Berkeley would become “more of an office community.” One of my stores, in the Rockridge area of College Avenue, is currently the only retail business open on the entire side of its block.

So here is the bottom line for me. There is a disconnect when Berkeley residents and students speak up for an increased minimum wage, better working conditions, paid sick days, and all the rest of the things that create an enlightened business community, and yet continue to think Amazon is awesome because it’s so cheap! Amazon’s owner, Jeff Bezos, is reportedly worth $59 billion and is currently building rockets to launch into space. Where did he get this vast wealth in less than 20 years? In part, by paying substandard wages in lousy working conditions, by underpricing smaller competitors out of business, and by avoiding the normal costs of doing business, such as collecting sales taxes. There is a big disconnect when Berkeley residents and students rightly expect their businesses and neighbors to be green and sustainable and yet still enjoy having a whim at night that results in a big truck trundling down their street the next day to deliver a small package.

So here is my modest request, after E.M. Forster: “Only connect.”

Amy Thomas is the president at Pegasus Books and a UC Berkeley alumna. Pegasus Books has two locations in Berkeley and one in Oakland, California.

An array of resources for booksellers looking to create their own opinion pieces or to reach out to lawmakers about changing public policy can find be found in the American Booksellers Association’s New Localism Toolkit and Antitrust Action Kit, respectively.