All I want for Christmas… is an ethical online retailer

Consumer Affiars Expert Eleanor Thomas notes that the coronavirus pandemic has led to a surge in consumer demand for online retail which has served to benefir the large online retailers at the expense of independent businesses. Eleanor argues that in order to support independent businesses we should all use smaller, more ethically oriented online retailers.

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Eleanor Thomas
On 19 November 2020 13:26

The power and influence of retail giants has grown exponentially since the coronavirus pandemic began.  While millions around the world continue to endure  spiralling unemployment, disrupted education and an emergent mental health crisis, Amazon CEO, Jeff Bezos, has seen his wealth increase by a staggering $74 billion.

It comes as no surprise that the coronavirus pandemic has led to a surge in consumer demand for online retail. But what is surprising, and alarming, are the trading standards and unethical nature of many online retailers. It’s time for the monopoly that the likes of Amazon and eBay have over consumers to be disrupted.

COVID-19 has showcased the nation at its best. It’s fuelled solidarity amidst a time of unprecedented uncertainty. But, it has also showcased the nation at its worst. Price exploitation among online  retailers, such as Amazon and eBay has left a sour taste in consumers’ mouths.  Described as ‘price gouging’, the practice common among large online retailers, including Amazon and eBay, sees in-demand products sold at extortionate rates. The issue became particularly acute at the height of the pandemic where many essential goods saw significant price inflation. The consumer campaign group, Public Citizen, exposed this during the height of lockdown. At the height of the pandemic, price gouging for goods such as hand sanitiser, toilet roll and cleaning products saw prices increase by up to 1000 per cent of its pre-COVID rate. Various news outlets, such as The Sun, confirmed that eBay was selling cleaning products from Carex and Dettol at twice the price they were retailing for in supermarkets.

More recently, Amazon and eBay have attracted controversy for featuring fake Remembrance Day brooches and badges, the proceeds of which failed to reach relevant veterans’ charities, such as the Royal British Legion.

On top of their price gouging, sites like Amazon and eBay also fall short in terms of consumer transparency. A study undertaken by The Washington Post found that for every dollar shoppers spend on products from third-party sellers via Amazon, the site takes one-third (35 per cent) in commission. Unsurprisingly, due to Amazon's required revenue share third-party merchants inflate their prices to cover the mark-up costs. This is mirrored with eBay, which charges a 10 per cent commission fee and a 3.5 per cent processing fee for consumers, but are slow to disclose this to their customers.

A new entrant to the already competitive online retail space is Wholee Prime, which is looking to transform the online retail industry. It pitches itself as a disruptor by removing the commission fee for third party consumers and allowing customers to buy directly from the manufacturer. Wholee Prime emphasises their USP that the price paid is the price set by the manufacturer, which saves consumers from having to pay for hidden costs and prevents them from falling victim to price exploitation. Consumers are guaranteed a fair price every time.

But, the unethical practices of sites such as Amazon and eBay are not limited to their pricing strategy.

The coronavirus pandemic has shone a light on the severe working conditions for staff. Reports published throughout the peak of the pandemic found that Amazon failed to provide enough face masks for workers, failed to implement regular temperature checks, and refused to offer workers paid sick leave. The world's growing dependence on Amazon - and its expanding profit margin - came at the expense of their staff.

Unfortunately, the poor treatment of Amazon’s staff is not a new phenomenon. A 2018 report found that across the US, 10 per cent of full-time Amazon workers sustained serious injuries throughout the year, twice as high as the national average. Employees are pushed to meet extremely high targets, subject to minimal breaks and are constantly tracked. In the UK there are regular media reports of Amazon staff suffering from increased anxiety and depression as a result of the working conditions at the online retailer.

It’s widely recognised that Amazon and other online giants are stifling competition among smaller independent businesses. The pandemic has exacerbated this issue. In the UK, two-fifths of SMEs have had to permanently close. More recently, Amazon has attracted criticism for abusing the EU’s competition laws. Margrethe Vestager, the European commission’s vice-president, reported that Amazon has used ‘big data’ to illegally hamper competition in France and Germany.

We need to see the emergence of a new generation of online retailers that work with independent businesses rather than against them. One organisation that exemplifies this is bookshop.org, which has just launched in the UK. This online store describes itself as a socially conscious alternative that allows readers to buy books online while supporting their local independent bookseller; it is an ethically driven online retailer. It’s the likes of online retailers, such as Wholee Prime and bookshop.org that offer the path to a new more ethical and transparent vision for online retail.

The dominance of online retail giants like Amazon and eBay is bad for competition and bad for consumers. Their unethical nature has stunted competition, endangered their staff, and exploited their customers. The need for more ethically oriented online stores has never been greater. That’s all I want this Christmas.

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