Amazon and Google have spectacularly insinuated themselves into the ecosystem of our consumption.

In 1998 the founders of Google celebrated their first $100,000 investment check by visiting Burger King for a special night out. The current market capital of Google is 1.7 trillion US dollars. With twenty five years of hindsight would we have encouraged Google to become the predominant globe spanning mastermind resource of everything?

For a retailer in our particular sector, Google has become the major recipient of advertising revenue, and likewise is used for the dissemination and discovery of marketing information. It is not uncommon now for a business in our sector to spend as much with Google on advertising as they do on rent, so valuable are the clicks that they bid for.

Amazon will algorithmically pursue the most popular products to sell at the lowest price until it has near 100 per cent market share on a particular product line. Like an unleashed AI market place terminator they will undercut the competition and then create dependancy with the supplier so as to then be able to dictate terms and pricing.

On a busy Saturday afternoon I took a phone call from a gentleman asking if we sold Sennheiser TV headphones … I said not and suggested he contact JB Hi Fi who I knew carried that range … oddly he told me he had already tried to ring JB in Doncaster but hadn’t been able to get through and asked me if I could recommend a store. So I suggested he contact the Bourke st JB branch, where I have found the staff helpful and engaging.

However he then went on to tell me that he had actually purchased the headphones from Amazon for $100 less than the normal retail go price and actually was simply looking for help on how to set them up as he was having issues ….

So here is the thing … this perfectly decent consumer was happy to buy the product from a global entity that exists only online… and then ring for setup advice and consultation to bricks and mortar retailers.

Whereas we at Carlton Audio Visual value the human interaction with our clients above all else, and as a consequence are dependant on the good grace of our staff and the people of our suppliers to stay in business, Amazon is strictly purveyance by algorithm and the humans that they deal with are treated as either units of potential consumption or units of potential production. An Amazon employee is paid the least possible whilst retaining productivity, while an Amazon customer pays the most possible while retaining competitive profitability. 

Amazon will pursue the most popular products to sell at the lowest price until it has near 100 per cent market share on a particular product line. Like an unleashed AI market place terminator they will undercut the competition and then create dependancy with the supplier so as to then be able to dictate terms and pricing.

The tactics that Amazon employ with our local Australian specialist distributors are both interesting and ruthless. So for example an Amazon wholesale buyer recently engaged with a local tier one Japanese Hi Fi brand distributor to make a one off purchase of all the remaining stock of a particular range of Soundbars at peak period running up to Christmas. Now it was made clear that this was clearance price with no returns and no rebates. However it turned out that the algorithms used to predict consumer behaiviour and product sell through are not always as accurate as they should be ... and Amazon were still left with a large amount of unsold inventory.

The Amazon buyers insisted that the company either take the stock back or additionally rebate the items so as to enable an even lower price sell through. They have no compunction in abrogating their own agreements as it is only the fiscal bottom line that matters above all else. 

Now if we, as an independant specialist retailer buy inventory on agreed terms and conditions and it dosnt sell through then that's our problem, and we would typically have to take a loss to resell it for whatever we could.  However Amazon will demand  that the stock be returned for credit or massively rebated,  and the threat to ensure compliance if they did not do this is that Amazon would potentially blacklist the distributor for future business.

Partly this is the old Marks and Spencer buyer model, wherein this UK company would first cultivate a state of scale dependancy upon a supplier and then squeeze them slowly but inexorably on their price and margin. Amazon does this far more effectively than the old British company and touched with AI ruthlessness that can be an irrisistable force. 

Now this particular Australian distributor reacts badly to threats and renegation of contract. So they responded with an unambiguous counter in the negative that reflected their brands premium position in the market. Interestingly I gather that in the USA the same brand has almost entirely given itself to Amazon with the consequence that it has lost its ability to promulgate their high end audio products.

And herein lies the dead end of Amazon purveyance for a quality brand. In the end Amazon is only interested in exploiting that brand for its own profit and the needs of provenance and maintaining the brands are entirely secondary. Most of our quality distributors in the specialist audio and video scene recognise this and put strict limits on what can be purveyed by Amazon in the local market. However Amazon is more than happy to source a product from an overseas purveyor and resell it into this Australian if it can turn a dollar or realise an advantage otherwise.

As I understand it, if a purveyor uses the Amazon platform to sell their product lines through and acheives some success. Then Amazon will source that product directly using their irresistable buying power to lower the cost price, then they will undercut the first platform seller of the product and take that piece of the market for themselves.

This combination of good old ruthless buying and selling practice allied to AI driven algorythmic management makes Amazon an impossibly strong competitor for a normal bricks and mortar store selling the same inventory. 

Then there is Google. In our small business ecosystem they have cultivated a dependancy on their approbation that transcends all prior norms of retailing. It is commonplace for a speciality business in our Hi Fi scene to spend more with Google on advertising than they do on old fashioned bricks and mortar rent. A business that deals with people will rise or fall on the basis of the number of stars it is awarded in its Google review page.

Incidentally the five red stars is a product of the Hi Fidelity micro industry. It is the British Magazine What Hi-Fi? that started the five red stars review rating system and now it has become the measure of all things wherin we are judged. You guys it is YOUR FAULT!

Google has promulgated a degree of dependancy in our specialist retail sector that, at the same time as allowing a business to promote itself through front page response, overtly plays competing business against each other through the highly evolved bidding system. A single click on a sponsored ad will cost on average at the moment $2.69. If you are not up for a weekly spend of $1000 plus there is not much to be gained from Google ads in our sector

Interestingly, in the old days where newpaper classified was the main medium for dissemination of advertising, $1000 per week was a typical spend with the Age Green Guide and the Herald Sun. It is my hearsay experience that companies in my sector are spending substantially more than the thousand dollars per week to retain their position on the front page of a Google response.

Wheras twenty years ago there was room for creativity in adverts in the newspaper or the telephone guide, with Google it is all about your search engine optimisation and cost per click. In this environment the competing companies are compelled to pay more and more to Google to maintain their positional and response status. The mechanism rewards those who can pay the most. Consequently for the client interaction that money that might be spent on improving the client experience in store or offering a better price is instead dedicated to improving their Google response.

Now I'm not trying to say that these companies are evil, but it is true that their single imperative is the generation of the maximum profit for themselves. There is no social benevolence or compassionate capitalism built into Amazon or Google. These distributed artificial intelligences that we increasingly have a daily discourse with, as well as a cultivated commercial dependancy upon; do not possess compassion, tolerance, love, and peace to all men, as part of their prime operating system.

One only has to consider the conditions of employ within the Amazon warehouse or the casual nature of Google mass redundancies to see how far down the path towards that terrifying Fritz Lang dystopian world of "Metropolis" we have now travelled. In this world regular humanity is treated as units of mere production and minimally differentiated consumption while there is a small class of fabulously priviliged elites who reap the material benefits while themselves being spiritually bereft.

That sounds uncomfortably like the world we now live in.