- Amazon is going to be a brutal opponent for President Donald Trump if he decides to escalate his battle with the company.
- Amazon is largely popular with the American public – even with Trump supporters.
- Trump’s past corporate opponents, like the NFL, were weak where Amazon is strong.
In November 2016, Donald Trump got 63 million votes for president. So let’s do a little comparative measuring.
Amazon doesn’t release statistics on Prime membership, but the investment-research firm Consumer Intelligence Research Partners uses a consumer survey to estimate that 90 million American adults have access to an Amazon Prime membership.
The investment bank Cowen uses another survey to estimate that there are 60 million Amazon Prime member households in the US. That’s up from 50 million households a year earlier. And of course, 60 million households entails a lot more than 60 million adults.
So, the “Amazon Prime user” demographic is already substantially larger than the “Trump voter” demographic – and while Trump’s support base appears stagnant at best, Cowen believes Amazon continues to add new Prime members at a double-digit annual percentage rate.
So, Trump will likely be seeking reelection in 2020 at a time when nearly half the 240 million adults in the US are users of Amazon Prime.
Does he really want to have a fight over whether Amazon should have to pay higher prices for shipping – which, in turn, would likely mean a higher Prime membership fee, or maybe even an end to free two-day shipping?
The NFL is weak; Amazon is strong
I understand why Trump feels emboldened to take on Amazon. He has sometimes found ways to pick fights with private businesses and win. His fights with the National Football League over cultural issues have arguably been politically beneficial to him, and they have been clearly detrimental to the NFL.
But Amazon is not the NFL.
The NFL was weak prey, highly vulnerable to Trump’s attack.
NFL stakeholders are divided: Team owners have to appeal simultaneously to a fan base, much of which supports Trump, and a majority-black player community, which stands against him on a major cultural issue. The league faces an enormous brain-damage scandal that is scaring families away from youth football and eroding the current and future fan base. And a lot of people think the games have gotten boring.
And the NFL faces strong competitors: If people get turned off from professional football, there are a lot of other things they can watch. One of the competitor products, college football, is extremely similar and arguably more fun.
For all those reasons, Trump has been able to put the NFL in a no-win situation, at a time when the league’s image was already suffering and fans’ attachments to the league had already been weakening.
Amazon is not like this at all.
Amazon offers products and services that people like a great deal, and, according to the Harris Poll, it has the most positive public image of any of the 100 major companies whose reputation they track.
You will have to take free shipping from the electorate’s cold, dead hands
Amazon’s stakeholders are aligned regarding the key issue Trump on which has attacked them: Neither sellers nor buyers on the platform have any desire for higher postal rates. The US Postal Service, for its part, also insists its Amazon-related operations are financially beneficial.
If Trump were to take action that caused Amazon’s shipping costs to go up, the relevant stakeholders – including nearly 100 million American customers – would be broadly united on Amazon’s side of their business dispute with Trump.
It would be a political nightmare for the president.
Whatever Democrat runs against him in 2020 would be able to run as the candidate who would bring back free shipping. No issue unites Red America and Blue America like free shipping.
Amazon does have some political exposure on the state and local tax issue that Trump has highlighted. Many state and local officials in both parties would like to close some of the loopholes and collect more sales taxes. So on that issue, Trump has key allies.
But Amazon has already begun collecting sales tax on its own sales in every state that levies a sales tax.
If Amazon is required to start collecting sales tax on sales by marketplace sellers (something that is likely to happen in due time, Trump feud or no) the company will adjust, just as it has adjusted to collecting the tax on its own sales.
Trump is unlikely to motivate his supporters to stop shopping Amazon
Of course, there are matters other than direct public-policy risk. Amazon might worry that a president with tens of millions of supporters is publicly criticising them. What if his supporters are motivated to take their business elsewhere?
But there are also reasons Amazon is well positioned not to worry too much about this.
First, unlike the NFL, Amazon does not have competitors that can easily swoop in and take its place. For most customers, abandoning Amazon wouldn’t be an easy form of virtue signalling. They’d be forced to do something more expensive and less convenient; it would be way harder than changing the channel.
Sure, there are other retailers, but Amazon reached its dominant position by offering the broadest selection and, crucially, free two-day Prime shipping, which is made possible in part by its unmatched logistics operation.
And maybe most important, Trump supporters don’t automatically follow his instructions about what businesses to hate. They do it when Trump’s grievances align with their own.
It is useful here to look, again, at the NFL example. Do you remember, vaguely, that during Trump’s efforts to gin up anti-NFL sentiment, he took a detour to attack Golden State Warriors point guard Stephen Curry?
Going to the White House is considered a great honor for a championship team.Stephen Curry is hesitating,therefore invitation is withdrawn!
— Donald J. Trump (@realDonaldTrump) September 23, 2017
Do you remember why this never really became A Thing in the way the NFL-national anthem controversy did?
Partly, it’s that the NBA fan base is more African-American and more left-leaning than the NFL fan base. But it’s also because “was Steph Curry nice to the president” is not a hot-button cultural issue. Lots of Americans have strong feelings about race relations and policing and the national anthem and all sorts of issues that were bound up in the NFL controversy.
An NBA controversy? Not so much.
Now let’s think back to Amazon. What is the hot-button cultural issue that Trump is supposed to be exploiting to Amazon’s detriment? Is it postal rates? Sales-tax-collection practices? Financial difficulties facing mall owners? The fact that Jeff Bezos owns The Washington Post?
None of this is the national anthem. These topics are boring to most people.
Even Uber has won most of its public-policy fights
In city after city, Uber has faced entrenched business interests that didn’t want its business to grow. Incumbent transportation firms and taxi-medallion owners wanted to stave off competition. They donated generously to local officials, and, initially, they seemed to have a lot of political support.
And in most places, the taxi owners ultimately lost, and Uber won, winning access to markets on more or less its own terms.
Why did Uber win? Because people liked its convenient service. Ultimately, the public’s desire to not have to deal with taxis has overpowered special-interest lobbying by incumbents.
Uber has achieved those victories despite a terrible public image. Now consider Amazon, which has an excellent public image, a much larger American user base than Uber, and a business model that is not doomed to unprofitability.
Trump is about to learn something Bill de Blasio learned the hard way: When you fight convenience, you lose.
Amazon will be here longer than Trump
Amazon is famous for taking the long view in its business operations – often to the great consternation of its competitors, who complain Amazon drives unsustainably low prices because it does not care about posting profits.
The company has achieved great latitude from its shareholders, who have been willing to accept “growth now, profits later” for two decades. And the company shows no sign of stopping that approach.
As such, the company is better positioned than most to withstand a temporary political controversy.
Amazon can go on doing what it’s doing, gathering an even more dominant market position, and realising this Trump nonsense will be over in a few years.
This too shall pass.
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