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    Do we need an Ethical Amazon?

    1 CommentTuesday, 15 September 2020  |  Joanna

    Jeff Bezos, the billionaire founder and owner of Amazon, is the wealthiest person alive. He earned $13bn in one week earlier this summer. Those of us trying to sell fair trade, ethical products online are ever aware that we have to compete with the behemoth that is Amazon. Some of us sell on Amazon Marketplace, and I confess we used to do this. We saw it as a good way to market ourselves, although the way Amazon works meant that we made less than £1 on most of the sales we made there. For the same sale Amazon would typically earn around £3. So lets break down that sale: 

    I uploaded the product details and photos, continuously monitoring whether we were still the cheapest available (because if you're not the cheapest who's going to buy from you?) You aren't supposed to sell your products for less on your own website but since you can afford to do this if you don't have to pay Amazon fees, most people do.

    Amazon hosted the listing, took payment and sent me an automated email with the customer's details.

    The order I was sent by Amazon did not contain the customer's direct email address, so I could only contact them through Amazon. They didn't want me to contact the customers direct, in case they realised they could have bought the item cheaper by going direct.

    I packaged the items, took them to the Post Office and paid the postage.

    Amazon kept the money for two weeks, and when I received the payment it had Amazon's fees taken out. 

    A typical order breaks down like this:

    Customer buys item for £11 (£7 + £4 postage & packing).

    The item costing me £3.50 wholesale is put into packaging which costs me 50p and taken to the post office where postage costs me £3.70. My total costs come to £7.70.

    Two weeks later Amazon pays me, taking its fees of £2.50 leaving a payment of £8.50. My profit on the transaction: 80p. Amazon's share: £2.50

    Most people would agree that the majority of the work done in this transaction was done by me, but Amazon earns three times as much as I do. This is how Jeff Bezos earns $13bn in a week. 

    So can this be done ethically? If all you do is host a website, send out automated emails, take money and pay it out does that justify such a high fee? I pay my card processing company 1.75% of every transaction they process for me. That feels about right. 

    There are many reasons I believe an ethical alternative to Amazon - listing and selling products via the drop shipping method, taking a large commission and stopping suppliers from dealing direct with their customers - would be impossible.

    Since I started this business in 2005 I have seen lots of companies promote themselves as the ethical alternative to Amazon. The only one with any staying power has been Ethical Superstore. But Ethical Superstore works in a similar way to All's Fair in that it invests in products to keep in stock and ships the orders itself. This means - in theory if not always in practice - that the suppliers have already been paid for the goods at the time the customer places her order. This is a fundamental principle of fair trade. Taking money from a customer, insisting that the supplier ships the goods and only paying them two weeks later is very much outside the principles of fair trade. So Amazon's business model is impossible within the framework of fair trade.

    Additionally, the accumulation of huge wealth at the top of an organisation is expressly prohibited by the ten principles. And that's before we get to the working conditions of those who work in Amazon's warehouses shipping those goods Amazon sells from its own stock. Reports abound of workers being forced to urinate in bottles, dismissed for minor infractions, being denied sick leave or sick pay, and ambulances parked permanently outside warehouses to deal with the regularity of workers collapsing while at work. All for the minimum wage. This is not a bug, it's a feature of the business practice where profits matter more than people. Where pursuit of vast wealth by a small number of men (and it's nearly always men) can only happen by squeezing out the little people - be that suppliers on the Amazon Marketplace or Amazon's own workers.  

    Finally, let's talk about tax. All's Fair is a sole trader which means we don't pay corporation tax. And our turnover is so low that we are not VAT registered. This means we are paying 20% to the Treasury every time we place an order with a supplier, book a market stall or buy carrier bags, for example. It equates to roughly 15% of our total turnover. Amazon had estimated revenues of $17.5bn last year but paid just $14m corporation tax. That's 0.01% of their turnover. In some places Amazon is actually taking more money from the Treasury than it pays in tax, for example if it receives a tax rebate to set up a warehouse in an area of high unemployment and its poorly paid workers are claiming working tax credit or other income top-ups. The Fair Tax mark is one of the less understood fair trade labels but it's enormously useful to see which companies are paying their fair share and are happy to tell you about it.  

    Fair trade puts people before profits. Which makes it the antithesis of Amazon. The people who value what we do love our personal service, the direct connection to the artisans and farmers, the stories we tell. You can scale that up a bit, but not into a multi-billion pound business. A WFTO member once said that once his business reached £100,000 a year turnover, someone asked what he needed to do to get to £1million. He replied that he didn't want to. He had decided it would it be better if that £1million was spread between ten businesses. He was interested in mentoring and training ten others to match his own achievements, to share the knowledge and experience, rather than jealously hoarding all the wealth for himself. This is the fair trade mindset, which I believe is incompatible with Amazon's scale.

    So what can we learn from Amazon? What makes it so useful to people? Like that other retail behemoth Tesco in the 1990s, Amazon markets itself as a one-stop-shop. You can order your Fairtrade chocolate alongside a pair of  Nike trainers and a Barbie doll. Whereas, All's Fair can help you with the chocolate, and a fair trade doll instead of Barbie, but you'll have to look elsewhere for the trainers. But perhaps the fair trade movement could help you could learn about Ethletic fair trade trainers instead.  If they had as big a marketing budget as Nike you'd already know about them. And perhaps buying from a number of small businesses is more sustainable in the long run. Statistically the businesses which employ most people are the smallest ones. 

    Last year Fairtrade Yorkshire launched the Fair Trade Detectives website. It was an idea "stolen" (with permission!) from campaigners in Hull, and is set to be launched in Scotland as well. The website - built and monitored by fair trade volunteer and enthusiast John Saunderson - lists places where fair trade and Fairtrade products can be found in the region, and it's a truly collaborative effort with everyone encouraged to add in their own listings and build up a picture of how many small businesses are embracing fair trade. It lists supermarkets as well, because that's where most Fairtrade products are sold in the UK, but it lists them on a par with dedicated fair trade shops and cafes.   

    I think this is a more wholesome story than Jeff Bezos earning his next billion. And I'm hopeful that in the post covid world more people will start to think about the impact of wealth inequality and global trade, and choose to shop local, fair trade and make it personal.

    If you would like to hear from experts in global trade from key sectors like tea, bananas, garments and crafts discussing how we can build a fair trade future, you can book a ticket to the Fairtrade Yorkshire virtual conference on Monday 19 October.

    Book your free ticket now


    Lucy Morley
    Thursday, 17 September 2020  |  14:16

    Excellent blog post! Thank you