03 May, 2016

The peculiar politics of redlining. Amazon.com’s everything store … not for everybody?

Among the three (or more) dimensions of sustainable development (SD), the social is considered essential but is often - if not usually - overlooked in current policy schemes and practices that pretend to foster SD. Just to name two examples: There are probably plenty of cases known where green upgrading came at a certain cost in terms of social equity and or what is conceived of as the just city. However, this was rarely questioned or set in relation. Also, the re-discovery of core urban districts for quality housing has fuelled a sort of urban renaissance, which was (and still is) euphorically welcomed by urbanists, planners and architects. Not surprisingly, the flooding of inner cities with money, investors and wealthy inhabitants also contributed to the squeezing out of the less affluent local populations. Such developments, which have been spreading quite massively across major metropolitan regions worldwide recently, have brought some new attention to a rather old topic: urban inequality. 
   The related literature in urban studies, geography, and social sciences is extremely vast, and the attempts to provide just living conditions in general, and to upgrade neighbourhoods labelled as ‘disadvantaged’ in particular, are numerous. Whereas the causes for inequality can be rather distinctive, taking into account discrimination by race, gender, income, labour market access, education or simply family background, the impact is more or less the same: Some people are better off than others, and the concentration of the less wealthy in certain urban districts often turns into structural inequality, setting off a vicious circle of deprivation, disinvestment and selective outmigration. This chain of events is extremely difficult to reverse, and while the upgrading of a deprived neighbourhood is often appreciated by city officials, the existing social balance is almost always compromised.
   The techniques of drawing a line between the good and the bad have proven to be manifold. Residents of a stigmatized neighbourhood may face difficulties to open a bank account or credit card based on their ZIP-code, or their bank loans or insurances turn out to be more expensive. The variety of the related means of distinction is huge. However, these days a rather peculiar case of high-tech electronic commerce joined the politics of redlining: Amazon-Prime, the flat-rate customer programme operated by the online giant from Seattle, USA. Amazon-Prime requires the payment of an annual membership fee (currently US$99 in the U.S.), which allows the client to benefit from certain discounts and services offered for subscribers exclusively. Amazon has now started to reserve certain products for Prime-customers, among these being same-day deliveries, that is, the desired goods will be delivered to the door within a few hours after the order has been placed.
   Same-day delivery is only one among a range of activities with which the market leader in online-retail is trying to push forward its competitive position. Same-day delivery is currently offered in the core areas of major metropolitan regions, where densities are high of people reside, and whose purchasing power is inversely related to their time available for going shopping. In order to make this new offer work efficiently, the firm needs a sophisticated logistics system – one that has actually been in discussion for over two decades, but has yet to be successfully established. Amazon.com, with a huge backing of investment capital, started to introduce a completely new local layer of distribution depots and services, since only proximity to the customer and thus timely fulfilment make same-day deliveries feasible and economically reasonable.
   Here’s the point: Thanks to a brilliant study released on 21st April by journalists David Ingold and Spencer Soper on Bloomberg.com, we now know that Amazon-Prime inhibits a sense of redlining as well. (See article and some very nice maps here (1)). The data-basis of the journalists team’s analysis concentrated on the distribution of Prime-service according to the firm’s website, and these ZIP-codes where correlated to population and area data provided by the American Community Survey (ACS). After exploring the availability of Prime-services in major metropolitan areas, it turned out that all regions have certain blank sheets on the map where Prime is not being offered. These areas include urban districts such as South Atlanta, Georgia, The Bronx or parts of Queens in New York City, the primarily Black neighbourhood Roxbury in Boston, Massachusetts, the South Side of Chicago, Illinois, and others – all areas where a large concentration of the non-white, immigrant, and non-affluent part of the population can be found. The analysis is nicely illustrated with a dozen of colourful maps that make the findings and the underlying problem highly visible. And at first sight it seems rather obvious that there are some blind spots on the company’s services maps that coincide with the social, racial, or economic composition of the population. If there is nothing to gain over there, there is no need to deliver.
   The firm, which is known to be one of the most discrete agents in the corporate milieu, already responded publicly to the Bloomberg story only five days later, and subsequently declared to modify their deals in a more balanced way. (Learn about the backlash in Roxbury here (2)). And indeed, as company officials also pointed out, a more differentiated view of the whole setting of urban logistics in general, and same-day delivery in particular, may suggest that some of these findings are literally an outcome of coincidence. There might be mere logistical reasons why certain areas are excluded from the Prime-service so far, such as the lack of speed or a certain distance that hinders accessibility or functionality in overall terms. Same-day delivery is still rather costly, as it is crucially difficult to reach a critical mass of customers and turnover, while avoiding too many redundancies when managing inventory, distribution, and circulation. The establishment of a new, local layer of distribution in urban logistics – which is core to offers such as Prime or the Amazon-Fresh grocery delivery – adds to a system that has witnessed major rounds of consolidation in recent decades. These were mostly associated with the opposite of what Prime or Fresh represent: the concentration of fulfilment centres and handling operations, not their expansion. 
   What is currently happening as to the network structures of urban logistics is that business models are subject of a re-configuration that allows to operate at larger spatial scales, if not in the entirety of a given area, but also locally in fine grain, getting as close to the customer as possible, and in much shorter cycles of fulfilment than before. This is not only due to competitive pressures in the new economy. Most importantly, it is key to the corporate spirit of Amazon.com that must be considered all-encompassing, to say the least. Today there are a huge variety of activities assembled under the roof of Amazon.com, alongside an enormously stretched value chain. The company does much more than just delivering books and other consumer goods, which is also subject to constant improvement, as discussed above. Moreover, it enables individuals and corporations to create value within a rather diversified portfolio; it operates gigantic server farms in order to provide a proper information flow for its own purpose and also for third parties; it produces hard devices for the end-consumer, such as phones, tablets, readers, TV devices; it introduced a self-publishing platform for authors, which perfectly links the writers’ communities of practice with the large population of reviewers on Amazon websites; it deploys on-line marketplaces as a hugely successful sales platform which makes up almost half of its fulfilment volumes; it already started to produce its own TV series and films through Amazon Studio; and it is about to experiment with the operation of un-‘manned’ vehicles such as robots (inside fulfilment centres) or air drones (outdoors), promising the next big leap in establishing highly routinized, profitable delivery operations. Last but not least, it has already started to explore the orbit with the New Shepherd spaceship, for the purpose of introducing space-trips for the common customer, and thus even extending the planetary vision it pursues for changing the world of commerce.
   These endeavours can also be understood as the exploration of various “spaces of circulation”, spaces that are essentially produced by a particular politics of circulation – a practice that operates in both virtual and material regards.(3) The online-giant is used to apply these politics in quite variegated ways: within the firm, in relation with its partners and subcontractors, and also through interaction with governance authorities at local or state institutions. As the firm seems to be governed internally rather rigidly, by top-down decision-making and meticulous control of performance, there is some reason to assume that this attitude also determines the ways how it regulates government affairs, and eventually also the encounter with customers. The overall extent to which the firm’s operations are data-driven allows for an absolute level of control to be exerted that was not known before, and this approach offers some potentials for an indeed all-encompassing, if not totalitarian approach. 
   As a consequence of what was published by Bloomberg, this story not only provides some fresh insights into a problem well-known– unbalanced socio-spatial development – and reveals how this is being reproduced in recent times through new technologies and big data. It also gives good reason to speculate about the implicit and explicit power issues that are associated with the rise of a “matrix”-corporation such as Amazon.com. Finally, it proves the societal relevance not only of critical journalism but also of applied geography if you want, and it reminds us of a pertinent challenge for policy and planning that is left at various levels of decision-making: ensuring sustainable, more or less equal living conditions across different territories. Obviously, the right to the city is something that not only needs to be reclaimed from the almighty state, but also from big business.

1) http://www.bloomberg.com/graphics/2016-amazon-same-day/
3) These issues will be part of a related book chapter that deals with the case of Amazon.com and which is currently under preparation. Expect more on this to appear on this blog soon.


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