Why Warren is wrong on Amazon

Jack Hough of Barron’s questions Democratic presidential candidate Elizabeth Warren’s recent attacks on the huge online retailer.

Amazon’s private-label sales make up a much smaller portion of its revenue than those of other retailers. Over the years, I’ve made out well with the company’s slippers, kitchen scale, tripod, light bulbs, and more recently, dog bed. But there are some product categories it hasn’t yet gotten into, in which margins still seem too plump. …

… Sen. Elizabeth Warren, polling second among Democrats in the race for president, has other ideas. Amazon must be broken up because it is “knocking out the rest of the competition,” she tweeted in April. It’s “using the data it collects to copy successful goods sold by small businesses on the Amazon Marketplace and sell its own branded version.” …

… Warren says that Amazon is victimizing small businesses, which is a good rallying cry for her, but a questionable business plan for Amazon. Private labels work best for products with decent turnover and excessive margins. Their presence in a category is a good sign that customers, not small businesses, were the victims. Remember when HDMI cables sold for $30 a decade ago? Now, you can find them for $7. …

… I appreciate Warren’s concern, but I say let Amazon run wild with private labels and see what happens. The fallout, I’m pretty sure, will involve lower consumer prices, not societal damage of time-to-move-to-Canada proportions.

Mitch Kokai / Senior Political Analyst

Mitch Kokai is senior political analyst for the John Locke Foundation. He joined JLF in December 2005 as director of communications. That followed more than four years as chie...

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