Is Amazon Really Killing Inflation?

 

 

Amazon is operating as a biggest retail is US market. According to the figures presented by Digital Commerce 360, Amazon revenue from US consumers was 30.7% in first quarter of 2021 which was around 21% in 2020. However we can still justify the cause because of COVID-19, which contributed as a surge in online shopping.

Although it is a good gesture as consumers spending contributes to the GDP somehow, but it’s being said that consumers spending on Amazon is not enough to trigger the GDP scale upwards. However, it could be in future.

Amazon as a Job Provider:

Amazon has changed the traditional retail and played as a booster for struggling players by reducing the company’s overhead costs as compare to other retailers, hence undercutting the rivals on prices and operating on little profit margin.

 Lowering costs would tend to make companies pass on their costs to consumers which would accelerate inflation. Moreover, minimizing costs would limit the ability of companies to pass on any wage increase to employees. Ideally, unemployment is accompanied by wage growth, which in return fuels inflation, according to Philip Curve.

This logic is somehow disrupted by Amazon as they employed approximately 1.3 Million employees worldwide and 400,000 jobs were alone added by company.

Facilitating Small Businesses:

Amazon acts as a facilitator of small businesses and around 60% of Amazon revenue generated for small business according to a study. When small businesses thrive, further job creation and spending are bound to happen. According to Amazon, 1.1 Million jobs were created outside the company in 2020.

Investment scale of people are going upwards day by day as Amazon became the second trillion-dollar company and holds third place behind Apple and Microsoft.

Also, we could not neglect the fact that, reducing costs, saving taxes and shuttering stores for other retailers is impacting negatively on job scale by eliminating jobs and wages.

Finally, past returns could not clearly indicate future results but Amazon’s strong performance in 2020 is a sign that company is maturing. Moreover, without hyperinflation, a trillion dollar company will never be worth quadrillion dollars because this is more than the combined value of every stock in the market.