It is ridiculous and in fact they should lower their prices...there is no reason for the Amazon increases including charging for delivery from Whole Foods. Starbucks is already so expensive I don't buy coffee there anymore, so I can't believe they are having upcoming price increases.
Don't hold your breath about Amazon lowering its prices...but raising its prices and cutting formerly free services after two years + in a pandemic... I think that is cruel and Amazon and Starbucks do it because they can.
I've always found it unsettling how media outlets will go to bat for big companies, rather than their readers.
But I do think something is missed by only looking at current profits as a metric of whether a company should raise prices. This is because past profit is not a guarantee of future profit.
One example that comes to mind is a local tent making company. Normally they make large outdoor tents for ceremonies, weddings, etc. But during the summer of 2020, orders started flooding in from restaurants. It was a hugely profitable year for them, but it was driven by unique circumstances.
You could also make the argument Amazon profited due to a unique set of circumstances. I don't like Amazon. I don't have an Amazon membership, but I can clearly see that shutting down stores and forcing people to order things online creates circumstances that benefit Amazon.
I like to look at the producer price index. I.e. how much it cost the company to make the thing they're selling you. If the producer price index matches the consumer price index, (which they pretty much do right now,) that means price hikes are proportionate, and the stores aren't making any more money off you.
I actually think your article leads to an interesting question if we consider all this: Do large companies have some kind of obligation to operate at a loss until their past profits diminish? What would the implications of this be?
Thanks for your extremely thoughtful comment, Cole—it helps me think about this issue from a different angle. I agree with what you said "...past profit is not a guarantee of future profit". I'm not sure I agree with your analogy to a tent-making company, though. Amazon has steadily made millions, then billions since its inception, but there's a reason Bezos is the richest person in the world—he pays his workers as little as possible, resists their ability to unionize and pays very little to no federal taxes, at least in the last five years or so. I don't think that is fair to anyone other than Amazon. I definitely don't think big companies have an obligation to operate at a loss for any reason. But my question is: MUST they pass on every penny of extra operating costs to the consumer while getting government subsidies just to operate?
I agree with your subsidies point. Amazon would not exist in its current capacity without years of subsidized USPS shipping rates. I don't think that small businesses passing on costs should be looked at the same way that big ones are. If they were to forego those sweet, sweet bail-out bucks; then maybe this would be a different argument.
It is ridiculous and in fact they should lower their prices...there is no reason for the Amazon increases including charging for delivery from Whole Foods. Starbucks is already so expensive I don't buy coffee there anymore, so I can't believe they are having upcoming price increases.
Don't hold your breath about Amazon lowering its prices...but raising its prices and cutting formerly free services after two years + in a pandemic... I think that is cruel and Amazon and Starbucks do it because they can.
I've always found it unsettling how media outlets will go to bat for big companies, rather than their readers.
But I do think something is missed by only looking at current profits as a metric of whether a company should raise prices. This is because past profit is not a guarantee of future profit.
One example that comes to mind is a local tent making company. Normally they make large outdoor tents for ceremonies, weddings, etc. But during the summer of 2020, orders started flooding in from restaurants. It was a hugely profitable year for them, but it was driven by unique circumstances.
You could also make the argument Amazon profited due to a unique set of circumstances. I don't like Amazon. I don't have an Amazon membership, but I can clearly see that shutting down stores and forcing people to order things online creates circumstances that benefit Amazon.
I like to look at the producer price index. I.e. how much it cost the company to make the thing they're selling you. If the producer price index matches the consumer price index, (which they pretty much do right now,) that means price hikes are proportionate, and the stores aren't making any more money off you.
I actually think your article leads to an interesting question if we consider all this: Do large companies have some kind of obligation to operate at a loss until their past profits diminish? What would the implications of this be?
Interesting read!
Thanks for your extremely thoughtful comment, Cole—it helps me think about this issue from a different angle. I agree with what you said "...past profit is not a guarantee of future profit". I'm not sure I agree with your analogy to a tent-making company, though. Amazon has steadily made millions, then billions since its inception, but there's a reason Bezos is the richest person in the world—he pays his workers as little as possible, resists their ability to unionize and pays very little to no federal taxes, at least in the last five years or so. I don't think that is fair to anyone other than Amazon. I definitely don't think big companies have an obligation to operate at a loss for any reason. But my question is: MUST they pass on every penny of extra operating costs to the consumer while getting government subsidies just to operate?
I agree with your subsidies point. Amazon would not exist in its current capacity without years of subsidized USPS shipping rates. I don't think that small businesses passing on costs should be looked at the same way that big ones are. If they were to forego those sweet, sweet bail-out bucks; then maybe this would be a different argument.
I certainly agree that small companies passing on costs should be viewed quite differently than behemoths like Amazon.