(^34) Best columns: Business
For a few days this spring, I joined the “silent
swarm” of workers delivering food for apps like
Seamless, Caviar, Uber Eats, and Postmates, said
Andy Newman. It showed me a lot about the op-
portunities in “some of the lowest-tech, lowest-
status, low-wage occupations”—and about new
forms of exploitation. Turns out, making more than
minimum wage in these jobs “requires the physical
daring of a bullfighter and the cognitive reflexes of
a day trader.” If you miss one ping from the app,
you’ll miss an order, and a bonus. And remember,
you are on a bike; if you actually pay attention to
traffic, you’ll miss orders. When the delivery com-
panies started, they were awash in venture capital
“and some riders made $2,000 a week.” No lon-
ger. Now the pay is down to about $4 or $5 each
for two or three orders per hour. Sometimes much
less: One deliveryman “showed me screenshots of
a 23- minute wait at a restaurant for which Caviar
compensated him all of 83 cents.” Worse: DoorDash
cut my pay when customers put in a tip using the
app. The woman who tipped me $3 probably didn’t
know that “she was saving DoorDash $3, not tip-
ping me.” Often, I was treated with little respect.
As one colleague put it, “You’re one step above an
Amazon drone.”
In the past nine years, more money has flowed into
the stock market from so-called stock buybacks
($3.8 trillion) than from individuals, mutual funds,
pension funds, and foreign investors combined, said
Jerry Useem. Corporations justify the practice as “an
efficient way to return money to shareholders,” but
that spike is often short-lived. “Five years out, the
stocks of companies that engaged in heavy buybacks
performed worse” than those of firms that didn’t.
Yet, the managers make out handsomely. Last Febru-
ary, on the same day his team announced plans to
repurchase $4 billion in shares, Home Depot CEO
Craig Menear sold shares worth $18 million. Then
the company gave him even more stock. This is
common: “In the eight days following a buyback an-
nouncement, executives on average sold five times as
much stock as they had on an ordinary day.” Many
companies also rewarded their CEO for higher
earnings per share, or EPS. That goes up when a
company makes money—but also when it buys back
stock and reduces the number of shares. Applied
Materials, a maker of semiconductor equipment, re-
ported a decline in earnings by 3.5 percent last year,
but its EPS actually grew 1.9 percent through the
magic of stock buybacks. That feels like a swindle,
even to the staunchest free-market capitalist. AP
I was a drone
in the delivery
economy
Andy Newman
The New York Times
Here’s why
CEOs love
buybacks
Jerry Useem
The Atlantic
Amazon has been running an “Accel-
erator” program to help smaller sellers
build brands, said Jon Emont in The
Wall Street Journal—with one very big
catch. Amazon, in contracts revealed
this week by the Journal, gets “the right
to purchase a merchant’s brand at any
time for a fixed price, often $10,000.”
Much of what’s sold on Amazon .com
actually comes from “third-party sell-
ers,” independent businesses that mar-
ket everything from phone chargers to
dish soap through Amazon’s site and
warehouses. Those businesses compete
furiously with one another for visibil-
ity. Sellers that sign on to the Accelerator get “marketing support,
product reviews, and prominent display,” but if a merchant’s
brand is successful, Amazon can buy it with just 60 days’ notice.
The original owner remains Amazon’s exclusive supplier for two
years after the acquisition. Merchants complain that Amazon is
making them choose between holding on to their brand or secur-
ing the attention that Amazon offers favored sellers. Says one,
“It’s a pseudo-partnership that’s completely one-sided.”
Buyers may love Amazon, but it “doesn’t have a shining repu-
tation” among sellers, said Rachel England in Engadget.com.
These contract terms are only one of merchants’ many problems
with the retail giant. Companies often report having their goods
counterfeited by other firms and being “kicked off the site for no
obvious reasons.” Prompted by a German antitrust investigation,
Amazon last week agreed to change some of its terms worldwide,
letting merchants appeal charges and giving them an explanation
when their accounts are suspended. That’s not going to be enough
for regulators in Europe, or for
lawmakers in the U.S., said Alison
Durkee in VanityFair.com. Amazon
is now facing a full-blown Euro-
pean Union antitrust investigation
over allegations that it is “using data
from third-party sellers” on its site
“to create its own similar, competing
merchandise.” U.S. lawmakers have
raised similar concerns. At House
hearings last week, Amazon insisted
it doesn’t use data harvested from its
marketplace to compete with individ-
ual sellers, but lawmakers appeared
unconvinced. “You collect all this
data about the most popular products,” said Rep. David Cicilline
(D-R.I.), “and you don’t use that in any way to change an algo-
rithm to support the sale of Amazon-branded products?”
Sure, Amazon watches out for its own interests, said Dan Gal-
lagher in The Wall Street Journal, but lawmakers “don’t seem to
understand where the company’s true self-interest lies.” Critics
think it’s obvious that Amazon would use data from its market-
place to compete with sellers. They seem to believe that Amazon’s
business model is “to take all that action for itself.” It’s not. On
the contrary: Amazon’s profit margins on sales from third-party
sellers, who carry much of the cost and the risk of stocking prod-
ucts, are far greater than the margins from its own retail trans-
actions. Wall Street expects Amazon’s sales to double in the next
five years to nearly $500 billion and its margins to keep getting
better. Amazon can’t get there by taking over small businesses;
the only way it can achieve that goal is by bringing a lot of sellers
into its marketplace—and making sure they sell a lot of stuff.
Retail: Amazon sellers get a devil’s bargain
What’s Amazon CEO Jeff Bezos’ ‘true self-interest’?
steven felgate
(Steven Felgate)
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