Are Amazon’s at-cost face shields an act of goodwill or predatory behavior?

Discussion
Photo: Amazon
May 15, 2020
George Anderson

Engineers at Amazon.com’s Prime Air unit have developed face shields that will soon be made available at a very low cost to frontline healthcare workers on the e-tailing and tech giant’s site.

Amazon, which began the process of designing and manufacturing the shields in March, gave the first 10,000 it produced away for free. The company is looking to bring another 20,000 to market within a few weeks with prices about a third of the cost of those currently sold on the site, which range from $12 to $35. Amazon’s plan is to begin selling shields solely to medical professionals before eventually making them available to the general public.

“We have decided to start mass-producing these face shields and aim to make hundreds of thousands available over the next few weeks, at-cost,”  wrote Brad Porter, a vice president and distinguished engineer leading Amazon’s drone and robotic initiatives, on the company’s “Day One” blog.

While healthcare professionals and organizations are undoubtedly pleased to gain access to personal protective equipment at a reasonable price, there is also a concern in some quarters that Amazon is looking to buy a significant share of the market with its shield pricing strategy.

Even so, Michael Kades, director of markets and competition at the Washington Center for Equitable Growth, told BBC News, that while some may worry about “Amazon’s predatory behavior,” many more will be pleased that it is making lower-cost shields “at a time of crisis.”

Amazon has faced criticism from within and outside its organization related to worker safety issues, and the company has had its vaunted supply chain severely tested by increased demand for groceries and other products as most of America has been largely locked down to stay-at-home orders and calls for social distancing. The company has also had to respond to third-party sellers that have attempted to take advantage of the public’s fears by price gouging customers on items in high demand.

The company has taken public steps to address its various critics, including recently announcing it would spend $4 billion or more in the current quarter on COVID-related expenses.

DISCUSSION QUESTIONS: Are concerns about Amazon’s motivation for developing face shields at-cost for frontline healthcare workers valid or overblown? Do you think that other large retailers are likely to follow Amazon’s lead in developing their own private label personal protective equipment for healthcare workers and/or the general public?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Frankly it doesn’t matter. They’re making them for an urgent need. If it’s for PR or just magnanimity, the end result is positive."
"While Amazon can certainly afford to give these away for free, there is nothing wrong with covering their costs of manufacture."
"Amazon is providing protective gear to people who need it at a fair price and that should be recognized and appreciated."

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28 Comments on "Are Amazon’s at-cost face shields an act of goodwill or predatory behavior?"


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Art Suriano
Guest

No matter what the deed is, there will always be someone complaining. It’s just the way it is. The fact that Amazon is providing needed protective face shields for frontline healthcare workers at a fair price is a nice gesture. But the critics can’t leave it there. Will Amazon make a profit? I’m sure. Is Amazon a business? Yes. Don’t businesses need to make a profit? Yes! So maybe we can look at this as a small opportunity for Amazon but a big win for the frontline healthcare workers and others able to finally get a much needed protective face shield.

Mark Ryski
BrainTrust

Amazon is damned if they do and damned if they don’t. The negative attention Amazon has received has been well-earned – Amazon has handled some issues, like the safely of their employees, very poorly. But even when they do attempt to do good, like announcing that they will dedicate $4 billion to help fight COVID-19 or make face shields for a low cost, new questions and concerns are raised. Given Amazon’s market position they will always be scrutinized and criticized. Amazon making private label PPE is their prerogative and frankly, given the shortages, I’m glad they are.

Suresh Chaganti
BrainTrust

This is a good move that will stamp out the price gougers and discourage opportunistic sellers elsewhere for an essential, limited-time and time-sensitive market.

While people may be suspicious of Amazon’s motives, this does not come remotely close to anti-competitive behavior.

Dave Nixon
BrainTrust

That’s a GREAT point, Suresh. I hope it does keep out the ridiculous price gouging that has been happening. If that is an outcome, it is a great one.

Zel Bianco
BrainTrust

You know what? Let’s worry about that once things are under control. Right now, our frontline healthcare workers deserve to have their needs taken care of for a change. I do think Amazon should donate the shields though.

Neil Saunders
BrainTrust

I see this for what it is: a gesture of goodwill during a time of national crisis. The suggestion that this is part of some vast conspiracy to corner the market in face shields is just silly.

Jeff Weidauer
BrainTrust

Anything Amazon does can be seen as predatory depending on the lens one uses. The effort here is for the greater good, although it will certainly have long-term benefits for Amazon.

Kevin Graff
BrainTrust

I’m not one to trust Amazon and its forays into private label. However, this is more than fine with me. In fact, it’s a good business move that also demonstrates a social conscience on their part. I don’t say this too often when it comes to Amazon, but — well done!

Ananda Chakravarty
BrainTrust

Frankly it doesn’t matter. They’re making them for an urgent need. If it’s for PR or just magnanimity, the end result is positive.

Michael La Kier
BrainTrust

Private label or “own brands” have existed since the dawn of retail and there has always been tension between retailers and brands as a result. While Amazon can certainly afford to give these away for free, there is nothing wrong with covering their costs of manufacture.

Jeff Sward
BrainTrust

Amazon has bigger fish to fry than cornering the market on face shields. I think a simple “thank you” might be in order. They are helping to make a quick dent in a moment of urgent need.

Ben Ball
BrainTrust

Well put!

Dave Nixon
BrainTrust

Truth, Jeff.

Bethany Allee
BrainTrust

It’s mostly goodwill, and for the bit that doesn’t fit inside the mostly – our frontline needs this equipment. Get it done. One thing I’ve seen in regards to face masks is how sign companies are pivoting their business, because they have the right equipment to make face shields — and they’re charging about $15 per shield. Brilliant business pivot that can benefit larger chains and independent shops.

Ben Ball
BrainTrust

Sure it’s a good PR move for Amazon, and it provides a real benefit to healthcare workers. Is Bezos smart enough to anticipate that one of the more lasting changes to come out of the COVID-19 crisis is the addition of face shields for healthcare providers? Maybe, probably. Does that make what they are doing now wrong or immoral? Not in my book. As I just saw Jeff Sward post — “Amazon has bigger fish to fry than cornering the market on face shields.” Amen, Jeff!

Dave Nixon
BrainTrust

Is it predatory behavior or capturing of market share? Have we forgotten our retail roots using a “loss leader” approach or do we just like to bash Amazon?
They could have held back their $4 billion investment in solving for the crisis and then where would we be?

Georganne Bender
BrainTrust

No good deed goes unpunished. Let’s just look at this as an act of good will. At this time when supplies are scarce we should be grateful to Amazon for doing what it can to help out.

Rich Kizer
BrainTrust

Here is a statement I have found to be my favorite: No company stands so tall as when it stoops to help others in times of need. It is easy to find faults with huge companies, yet the best continue to serve and survive. That is what is important.

Kathleen Fischer
BrainTrust

Whether their motives are altruistic in nature or purely business – or more likely some combination of both – Amazon is providing protective gear to people who need it at a fair price and that should be recognized and appreciated.

Gene Detroyer
BrainTrust

I bet all the PPE companies that were “gouging” states, cities, hospitals and people are really upset.

Shep Hyken
BrainTrust

The old saying “no good deed goes unpunished” comes to mind. Amazon offers something to the community for free or at cost and gets accused of having ulterior motives. Maybe that’s the case, but I don’t see any of the other manufacturers providing free or at-cost protective equipment.

Customers like doing business with the brands that “give back.” While brands are charitable and community-minded, they know there is a “law of reciprocity” and customers will positively respond. Good for Amazon for adding to some of the positivity of community-minded brands.

Kenneth Leung
BrainTrust

Here is the thing, face shields and masks I think will become near essential items in the U.S. going forward for the next year just like in Asia where it is normal for face coverings to be used in mass transit and crowded situations. It is important to get access and drive the costs down to gain maximum usage. Whether it is Amazon or another manufacturer we need the items. In the case of frontline workers they need it more because they have to change them out so often. Good for Amazon or any vendor capable of creating supply at a low cost.

Ken Lonyai
BrainTrust

I disagree with most here. When the world’s richest man owns an e-commerce retailer with 50%+ e-commerce share, it’s PR spin to offer masks “at cost” versus giving them away–especially only 20,000 masks, that’s not being magnanimous. And, when that steps on vendors on the platform, it’s potentially highly inappropriate.

There are lots of ways to be a good citizen, prevent price gouging, and not hurt the vendors that have largely grown the company, but don’t be fooled–this isn’t it.

Ken Wyker
Guest

I think it is an awesome move and I think that selling them at cost is a strategic choice to achieve the most good. They could certainly afford to give them away, but they know that pricing affects demand and giving them away might not be the best solution and could actually backfire. They might be flooded with orders and sell out of available supply too quickly. Charging the minimum sustainable amount avoids hoarding, which would likely occur if they were given away.

Gene Detroyer
BrainTrust
I bristle a bit when I see comments about the “world’s richest man.” Bezos is and the reason is he built an incredibly valuable company. Amazon’s market cap is over $1 trillion. Bezos owns 11.5%. The balance of the stockholders are worth $900 billion. Thank you Jeff. What is he supposed to do? Because he is rich, should Amazon give more away? Should they sell them at a loss? Amazon is business and businesses are not and never should be charities. Now, if he wants to sell his stock and buy the shields and give them away, that is a whole different story. But, then imagine what would happen to Amazon’s value when the headline reads (Bezos sells Amazon stock.” Certainly at this point in time Bezos is not as generous as Gates, Buffet, Bloomberg and Soros. But he has given away about $3 billion. One can hope that as he joins the 60 year old crowd that he will be more generous. Jeff Bezos is the American dream on steroids.
Ken Lonyai
BrainTrust

Gene — I’m surprised that your summary of billionaires is that misguided.

When a company owned by the world’s richest man pushes this kind of shallow PR to deflect ongoing press about its troublesome response to protecting its own employees, both are fair game for scrutiny. So if you want to be Bezos’ apologist, more power to you.

Let’s say they raise the giveaway to 100,000 shields from (20,000) at a production cost of $10 and compensate sellers for lost sales with three times that amount. That would be $4,000,000. Chump change for both a billionaire and a corporation. Is that what you’re defending?

Have you come out publicly like this in support of Amazon employees asking for better COVID protection, for Amazon employees that stood up for better protection and were fired for “unrelated reasons,” and prior to this situation, for Amazon employee’s efforts to unionize to gain better working conditions, or are you just a supporter of billionaires and shareholder profits? Please let me know Gene.

Ricardo Belmar
BrainTrust

Success and popularity are quite fickle. There is such a thing as being “too successful” in the eyes of the beholder and this is just that scenario. It doesn’t matter whether Amazon gives them away for free, sells them at cost, or if Bezos himself “bought” them with his own Amazon-earned cash/stock and turned around to give them away.

No matter which option they choose, there will be those who applaud them and those who criticize them. I wonder what the reaction would be if it was Walmart or Target doing this? Either way, the point is they have found a low-cost way to create a critical item that our healthcare workers desperately need. That alone is something worth appreciating — and the fact that by selling them at cost they will (hopefully) shut down any price gouging on their marketplace. Perhaps a better test will be what happens when all 20,000 are sold? Will they produce more, and will those be sold at cost? Let’s wait and see….

James Tenser
BrainTrust

While it’s not inappropriate to examine every move Amazon makes with a skeptical eye, I’d give their face-shields initiative a moderately positive review. So long as the company is focusing distribution on healthcare entities, I’m fine with their at-cost pricing. Those folks need PPE and I’m fine with Amazon undercutting the predators out there.

I’ll reserve judgement regarding what happens if they begin offering the product to the general market. Perhaps they have plans to license the design to manufacturers in the future, at which time normal competition will keep prices in check. As others here observe, this represents a tiny market sector for a very big company, so I don’t smell any conspiracy.

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Braintrust
"Frankly it doesn’t matter. They’re making them for an urgent need. If it’s for PR or just magnanimity, the end result is positive."
"While Amazon can certainly afford to give these away for free, there is nothing wrong with covering their costs of manufacture."
"Amazon is providing protective gear to people who need it at a fair price and that should be recognized and appreciated."

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