Amazon’s Creeping Takeover of Small Business Supply Chains

…and what it means for the future of Earth.

I work for an industrial ceramics manufacturing company in New England. Historically, we're a vertically integrated company, meaning we take raw materials, craft the finished product, and sell on the market ourselves. My job is making sure every shipment that leaves our DC meets our customers’ regulatory and legal requirements, whether that's the integrity of raw materials, worker's rights in the manufacturing plant, or proper labelling of the finished goods.

Customers often say it right in the business contract: if you don’t provide this or that document with the shipment, or have such and such certifications on file or such and such labels on the product, we might not pay you. The idea is that they need to recoup their costs taking care of whatever issue we had agreed we would take care of. Totally standard practice in this industry and many others.

So again, my job is to read all the customer’s regulatory documentation to try and make sure we are doing what they require—otherwise they might not pay!

This entry is about my experience trying to do my job with amazon.com. Amazon dwarfs our other customers in the sheer volume of product they buy, so of course we love them. However dealing with them at my desk, it is apparent they are playing a new (and highly toxic) game. You see, when we email them to discuss the regulations they expect us to comply with, we only hear back from their robots. Obviously the AI takeover happening throughout the world has implications for the future of business and humanity as a whole, but I argue this particular realm of AI automation, supply-chain compliance negotiations, might reveal the shape of bigger picture societal outcomes we should expect from Amazon's strategy.

Still here? Okay, back to the robots; that's who's answering our questions when we email Amazon. They are smart and very polite robots, and sometimes it seems obvious that humans are helping them answer our more complex questions--yet only sometimes in our dealings with Amazon, maybe 3% of the time, do we hear from admitted humans.

That has had consequences for our operations at the ceramics plant. We have a new standard around the office for working with Amazon now: 'this is all in a margin of error, people, don’t expect full resolution of any issues, because Amazon apparently does not'. Seriously, ninety percent complete is about where Amazon leaves most points we work with them on, no matter how much we press them to follow-up.

Remember those cost recoups I mentioned? Amazon does that too and, you guessed it, they do it within a margin of error. So every week we get an email from Amazon telling us how much they are short paying the latest invoice for our violating their standards, whether it’s an item missing a label, or some stamp missing on the packing list. Pretty much every order we ship them is penalized some fraction of the whole cost of the order for a non-compliance issue of some sort.

Now, since the time costs required on our end working with the robots far outweighs the negative $$ amount on the short-payments, and since real resolution is often taken as out of the question, not-gonna-happen, we now just take these losses as a cost of doing business. Why fold like that? You do what your biggest customer requires to maintain good relations—so we hear from up the management chain. Think about how that idea scales.

__

Do you see the potential impact there for the future of the life on Earth in all that? Allow me to unpack it.

Amazon once had this program called “Vine” for food delivery. The image is: pulling delicious food off the vine in the benevolent, Disney-esque jungle. This is The Amazon as a Bountiful Giver of Nourishment. To the customer doing the pulling it is just that, real magic—that is life, generally, as an Amazon customer.

Yet if as a customer I pick from a vine, then my current employers at the ceramics company, and indeed most existing businesses today, are the nutrients in the soil, in which that tree grows. Amazon is the tree and vine—it is what’s alive and thriving. Businesses, all other businesses, are the previous generation of commerce, now the soil—dust to dust—in which that tree lives.

Now, if Amazon.com were as dumb as a tree, that 'soil' would keep being replenished by the income generated for all in a growing market. Our ceramics business would stay healthy and continue growing with all that increasing revenue. But of course, Amazon is not as dumb as a tree.

Those cost-recoups I was talking about, Amazon’s are increasing year by year. They will sometimes announce and then implement new “programs”, purportedly aimed at ensuring full compliance on some standard or regulation in the industry. In the end, these always amount to more cost-recoups on their end, overall, and thus lower margins for us. As far as I can tell, this is an intentional aspect of Amazon's business model—tighten the standards, reap the discounts you take penalizing the offenders.

At my office today the idea is, again, that we must make special accommodations for our biggest customer. Yet eventually that cost of doing business with Amazon will become too great for us. They are our biggest customer by factors, so either they will buy us or let us die. Maybe things will change before then, but I see no indication of this.

It's become almost trite to point out that most global business will be eaten by Amazon in the coming decades. I am only pointing out today that while everyone sees this as a bunch of top-down takeovers--a meandering beast eating all the smaller beasts--in reality the takeover is coming from the other direction: bottom-up, violent and hard to understand--a virus deep in the guts of the world’s supply chains. From my vantage, that virus exists as a combination their (Amazon's) tightly enforced supply chain standards, coupled with strategically poor communications with regard to the manufacturer's handling of these standards, and the associated losses we take due to the 'within a margin of error' ethos they operate under. We might be the only business on earth dealing with all this, but I doubt it.

In the future, Planet Amazon will still need nutrients in the soil, and it will fully control all nutrients. All the supply chains of earth will be a fantastically integrated, omni-channel business. It is hard to fathom what daily life will look like for me and you at that time.

Personally, I grow increasingly interested in property ownership and gardening. Checking online, Amazon has incredible options for me to begin facilitating these ambitions.