Fast & Curious: Short Takes on Random Things

Toll Road

Hypocrisy alert: I literally just read an email from Amazon telling me I can expect delivery of my order on December 17. I try really hard to avoid using Amazon — I just checked my order history and this is the first time I’ve placed one since 2019 — but I needed something I couldn’t get locally (I tried) and so, I caved.

And then I read a series of tweets by Stacy Mitchell (@stacyfmitchell), co-director of the US-based Institute for Local Self-Reliance (ILSR), and I resolved to reinstitute my boycott.

Mitchell’s tweets were taken from her report, “Amazon’s Toll Road,” which focuses on the fees the company charges sellers. It’s a really interesting read. Mitchell says these fees — which she argues take three forms — are the company’s real cash cow, more valuable even than its much vaunted Amazon Web Services (AWS) division.

Amazon's Cut of Sellers' Revenue

Amazon charges a referral fee on every sale through its Markeplace (usually 15% although this can be higher for some items, lower for others) and claims that this is its only mandatory charge. But Mitchell says the fees it charges for advertising and using its fulfillment services, while presented as payment for “optional add-on services,” are actually necessary expenditures for venders:

Amazon has turned over much of the space on its search results pages to sponsored product ads. Sellers used to be able to rely on good customer ratings to land their products on the crucial first page of search results. But today they must pay for ads to get their products in front of customers…

In a similar fashion, Amazon has compelled sellers to buy its warehousing and shipping service, Fulfillment By Amazon (FBA). Amazon’s algorithms heavily favor sellers who do so, making FBA all but required in order to generate sales on the site.

Mitchell estimates that for every $100 a seller earns, Amazon takes $34 — and that in 2021, the company will take in a whopping $121 billion in seller fees.

But there’s another aspect to Mitchell’s argument, which is that Amazon actively hides the fact that it derives so much revenue from seller fees in its financial statements by lumping its Marketplace revenues together with those from two divisions — Prime and retail — that generate “massive” annual losses.

One of the most startling stats in the report comes from a Bank of America report that found that 74% of US households have a member who belongs to Prime, entitling them to free shipping. Mitchell says Amazon loses billions each year on this and on its retail division where it matches Walmart’s low prices. These losses, she says are “strategic and deliberate; they’re a form of predatory pricing that Amazon uses to lock in consumers and control the market.” And they are offset by the money earned from sellers — many of whom are driven out of business. (Mitchell says this isn’t a problem for Amazon, which can always find more — sellers based in China now account for almost half of the top 10,000 sellers on Marketplace.)

Reporting on Mitchell’s findings in TechCrunch, Devin Coldewey asked Amazon to confirm that $121 billion number. Amazon, in a statement, called it “inaccurate,” and accused Mitchell of conflating “Amazon’s selling fees” with its “optional add-on services.”

But I find Mitchell’s argument — that these add-on services are hardly optional — convincing. And Amazon ignored a follow-up question from Coldewey about the accuracy of her numbers.

Mitchell says the only way to reign the company in is to split it up and force each of its divisions to “compete on its own merits,” and the report ends with recommendations as to how lawmakers could accomplish this.


Bet on Annette

Episode 6 of Annette Verschuren’s Bet on Me podcast features Chief Terry Paul of Membertou, “one of the most incredible leaders in our country,” according to the host.

Membertou Chief Terry Paul (Source: Membertou website

Membertou Chief Terry Paul (Source: Membertou website)

After sitting back and letting her guest talk in Episode Five, Verschuren is back to offering constant, running commentary in this episode — “great,” “super,” “wow,” “what a journey, wow, what a journey,” “cool” — and it’s as annoying as ever.

She also says some weird things to Chief Paul, like “You are a leader beyond reproach” and “You’ve always been quick, Terry, yeah, you’ve always been quick.”

There’s no question Paul’s “journey” — from residential school to Chief of Membertou — is compelling, and in the hands of a better interviewer, this conversation might have been both interesting and revealing. Alas, the interviewer is Verschuren and the result is kind of boring.

(A good interviewer, for example, would surely have pressed Paul harder on the issue of succession. Instead, this comes up only briefly at the end when Paul, who has been chief for 37 years, is asked what he sees when he looks ahead five years and allows that there might be someone else in charge.)

No one can deny the improvements that have taken place in Membertou since Paul first took office in 1984 (before amalgamation, when Manning MacDonald was mayor of Sydney) but what hasn’t been sufficiently explored, I think, is that Paul has achieved this by basically turning Membertou into a corporation. There seems to be no line between the corporate division and the government — Paul heads both as “Chief and Acting CEO” of the “Community of Membertou.

It’s a development that was lauded in 2006 by former CBU Chancellor Jacqueline Scott Thayer in a paper called “Doing Business with the Devil“:

During the past decade Membertou has gone from massive operating debt and welfare to labour shortages, budget surpluses, capital reserves and annual dividend payments to band members (with those of minor children banked in a healthy trust fund for future education and other expenditures)…Dramatic changes in the institutions and processes of governance have occurred on the reserve, and they are paying off through a number of new business enterprises and partnerships. In many ways, Membertou’s new organizational structure is more like a corporation than a government.

Lachlan MacKinno cited this paper in his book Closing Sysco, noting that Scott was “a staunch supporter of neoliberal restructuring in the Cape Breton economy” and I also found it quoted in a 2011 article about Indigenous peoples and neoliberal “privatization.” So it’s clearly a concept worth exploring, but for Verschuren — a textbook neoliberal– a government run like a corporation is perfection.


Bridging Finance

Bridging Finance, Membertou and SHIP logosSpeaking of Membertou Corporate, its decision to borrow from Bridging Finance to invest in Albert Barbusci’s Sydney harbor container port scheme is looking less wise every day.

The headline on the Globe & Mail‘s most recently article on Bridging — a debt finance company that was placed in receivership at the behest of the Ontario Securities Commission (OSC) in April — kind of says it all:

How Bridging Finance fooled Bay Street — and hundreds of millions of dollars disappeared

The story starts with an account of a financial consultant who smelled something fishy about Bridging’s returns, began doing some “digging” into publicly available information and ultimately (in February 2021) filed a complaint with the OSC.

Reading this, I found myself wondering why the business reporters at the Globe and Mail, who are presumably as savvy as this financial consultant and had access to the same materials, hadn’t questioned Bridging Finance’s returns before the OSC stepped in (the commission had “already been on Bridging’s tail for a full year” prior to the financial manager’s complaint)?

Why, instead of questioning Bridging’s returns, the Globe was publishing glowing accounts of Bridging’s “Indigenous-focused fund that projects 8-per-cent returns?”

As investigative journalism goes, this is very much of the “horse-has-left-the-barn” variety, I’m afraid.


Keep your receipts

Receipt with pro-labor messages

Source: Reddit (via VICE)

This week, in my piece on Innovacorp’s exits, I wrote about Mobivity, the US-based company that bought Livelenz, an Innovacorp portfolio company, in 2016.

Among Mobivity’s products is a service that prints customized messages on customers’ receipts in restaurants and convenience stores.

By some weird alignment of the stars, messages printed on customers’ receipts were in the news this week, in the form of hackers taking advantage of “insecure receipt printers” (which apparently is not hard to do) to add pro-labor messages to receipts.

Messages like, “ARE YOU BEING UNDERPAID?” and “You have a protected LEGAL RIGHT to discuss your pay with your coworkers” and “POVERTY WAGES only exist because people are ‘willing’ to work for them.”

VICE tied the messages to the r/Antiwork subreddit where people:

…post memes and experiences about work-related depression and anxiety, tyrannical bosses, the interminable grind of living paycheck-to-paycheck, and strategies for reclaiming time from a job, unionizing, or quitting. 

I just went there and got sucked into reading stories about the kind of crap people have to put up with in service industry jobs — a common theme being customers who expect to be served no matter what else happens to be going around them. Examples include tornado warnings, power failures, fires and the death of another customer.

I’ll tell you what, it made me appreciate my “customers” even more than I already did.

Have a good weekend, people!