Concentrating Diffuse Consumer Interests

Amazon Fights 'Wrap Rage' With Easy-Open Packaging

The Web retailer's Frustration-Free Packaging initiative aims to reduce the plastic clamshells, coated wire ties, and fasteners that drive consumers crazy.

(story - or just go to amazon.com to see the announcement)

Good for them. Excess packaging seems like a double waste - more work for consumers, more cost for producers. I'm guessing it lowers factory costs, maybe? Or it could be something where it is a tiny effect distributed across many people, and so only when a big force like Amazon gets involved does a change happen.

I was talking about this w/ Michael Keenan in the context of Google. Google gets so many of the internet's ad dollars that it is willing to do things that make the net a better place, which have no direct benefit, just because it captures so much of the indirect benefit of people doing more shopping online. This isn't just a PR statement, I can testify that it is a genuine internal motive. During my time there, I saw this specific reason used as a justification for some pretty large projects.

We tend to think of it being bad for one company to capture a lot of a market, but as these examples show, it has some advantages, in that the company has incentive to act as a concentrated proxy for the diffuse interests of consumers. Essentially, these large companies are reducing coordination costs, and enabling groups to get benefits that they would never be able to coordinate on, because their interest is too diffuse.

Nor is the importance of this restricted to search engines or retail. In government models like proprietary community (Spencer MacCallum's, or a seastead), we have entities with local monopolies, but (due to competition between jurisidction) incentive to maximize the value of their local area. And one of the ways to do this is to act as a concentrated force for diffuse interests. Like Google & Amazon, and unlike the farcical claim of democracy to accomplish the same thing, proprietary communities directly and independently[*] profit from benefiting the diffuse interests which they serve.

(This example is relevant to anarcho-capitalism as well).

[*] That is, independent of anything else they do. If Google captures half the ad dollars on the internet, and spends $1M to decrease phishing which increases ad spending by $10M, they make $5M - $1M = $4M regardless of what else they do. Whereas in a democracy, the feedback is occasional and for huge bundles (ie a candidate), so actions are not evaluated independently.

Share this

The bottom line

Amazon hasn't talked publicly about their cost savings from controlling, simplifying, and reducing packaging, but I imagine that internally it was at least as big a factor as any concern for customer frustration.

Comparative advantage: Shoplifting

The reason for an awful lot of that bulky, hard-to-remove packaging is that it prevents easy shoplifting of small items or pieces of larger sets of toys. Amazon has no shoplifting problem (pretty much by definition, having no shop...) and so can exploit this advantage.

Frankly I think it's brilliant.