The Seattle-based online retail giant, Amazon, will be coming to Utah with a new facility. News of the facility are met with both positive and negative reactions. A representative of a smaller online based business in the state is claiming that having Amazon here creates an unfair business advantage for his company and smaller businesses.
Chris Fawson, a professor of economics at Utah State University, said Amazon has found success in their business tactics, especially in becoming more efficient using technology and creating personalized interactions.
“If people didn’t love Amazon they wouldn’t buy things on Amazon,” Fawson said. “There’s something about Amazon that draws people to them. In that sense it’s one of the great innovations of our time. I’m sure there are people who run small commercial enterprises that feel Amazon creates an unfair position in the marketplace.”
Jonathan Johnson, who is on the board of directors for the Utah-based online retailer Overstock.com, said he looks forward to competing with Amazon. However, Johnson says Amazon has an unfair advantage coming into Utah.
“Amazon has certainly been granted a significant tax advantage in Utah,” Johnson said. “They’re bringing jobs to the state that pay the prevailing county wage, and yet they’re receiving an enormous $5.6 million tax break from the state.”
Johnson said Overstock.com has always played by the rules, but he feels like they’re competing on an unfair playing field.
“We too have asked for tax incentive for the state for much higher paying jobs and we’ve received much smaller tax incentives from the state,” Johnson said. “It’s clear that the state is picking winners and losers and letting the free market work as it is supposed to.”
Johnson said the competition for local businesses will be difficult. When Amazon arrives in Utah it will reduce shipping time and lower overall costs for consumers.
“Amazon being in Utah will create pressure in the market for all retailers to compete on price, compete on service, and compete on quality of goods,” Johnson said. “That’s the beauty of capitalism. It’s unfortunate that capitalism is marred with large tax incentives that are given to some and not to others.”
If brick and mortar stores want to compete with Amazon, Fawson said they need to have some form of an online platform.
“For example, artisans are using the Etsy platform,” Fawson said. “We tend to get our minds focused on this large branded entity and forget that it’s actually a very competitive market space.”
Even though Amazon in the Utah market place seems intimidating, Fawson said the economy is too competitive for a complete takeover.