Dan Sweet

Could Amazon “go good”?

Thanks to Tweetdeck and  a Twitter search for “P&G” (my future employer) I came across an interesting post by Ryan Jones over at       m-cause.

The post is titled, “Could Amazon.com be doing more of this?”  In the post Ryan relates the tale of his recent online book purchase and enumerates the reasons that he decided to give Better World Books his business instead of Amazon.

  • BWB gives 10% of their profits from used book sales to literacy partners.
  • Free shipping.
  • All new BWB book purchases are shipped carbon-neutral.
  • BWB is a certified B corporation.  (great explanation by Ryan linked)
  • They are a triple bottom-line company. (people, planet, profit)

Ryan ends his posts asking if Amazon might start applying some of BWB’s ideas in their business.

My short answer is “no”.  I think Better World Books is awesome and I’d love to see Amazon as committed to doing good as BWB is, but I don’t think we should hold our breath waiting for it to happen.

As a finance guy, my first thought is the shareholder.  Amazon has them, while BWB is private.  While Amazon shareholders might care about the environment or global literacy as individuals, collectively, they only care about earning a return on their investment.  Therefore, Amazon shouldn’t increase its costs by shipping carbon neutral unless they think that carbon neutral shipping is valued by enough of their consumers that they can offset the costs by increasing prices. Unfortunately, we aren’t at a point yet where the general consumer cares enough about things like carbon-neutral shipping for companies to make a compelling business case for it.

Even though I am a finance guy, I still hate it when people use “the shareholder” as a copout.  The first few weeks of business school it seemed like I ran into this mythical “shareholder” everwhere I went and it drove me nuts.  Accounting had shareholders, Finance had shareholders, Marketing had shareholders, and even Ethics class had shareholders.  I had always been under the impression that the CEO and the board ran the show and what they said goes.  But no, apparently even the CEO and the board must answer to the shareholder.  At least some of them do.  Carl Icahn has a whole blog about how tons of them apparently don’t answer to shareholders.  Check it out here. I subscribed to the blog for a couple of months and it makes for some good reading but after a while you get the idea and all of Icahn’s rants start to sound the same.  The point is that company leadership is more than willing to disregard the shareholder when it benefits them personally.  So why can’t we just disregard the shareholder whenever we want to “do good”?  The problem is that “doing good” is very subjective and one person’s “good” may be another person’s waste of money.

Costco and Starbucks are two companies I can think of off of the top of my head where the company leadership has decided to pay their employees above-market wages and/or benefits.  They get routinely questioned by Wall St analysts as to why they aren’t being better stewards of shareholders’ money by running a leaner business.  Their defense is that this is how they have always run their business and if you had looked you would have known that before you invested.  As long as these companies have delivered financial results, the market has accepted these divergences from the norm.  As Starbucks has stumbled more recently, the pressure is back on to cut costs in these areas.

One could argue that Amazon is dominant enough in their market that they could get away with tacking some sort of social mission on to their existing business model and get away with it if they wanted to.  However, most companies prefer to keep the peace with their shareholders so I don’t expect this will happen.  For now, the best action you can take to support the kind of business practices that Better World Books embodies is to vote with your dollars and buy from BWB whenever possible.  If the word spreads and enough others do the same, pretty soon Amazon will be forced to have some MBA create a model to prove out the economics of things like carbon neutral shipping in terms of impact on customer loyalty and market share.  The market works, it just works slowly.  If you want it to work faster then start the next visionary company and help it along.