Amazon Prime Is a Blessing and a Curse For Remote Towns

If access to Prime is reduced, or in some cases, cut off, it can leave many remote towns in the lurch.

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Jul 13 2017, 2:00pm

Image: Wikipedia / Composition: Jason Koebler

One dozen five-gallon barrels of hydraulic oil. A 2x4x8 of lumber. A pallet's worth of 10-ply, heavy-duty truck tires. These are just a few of the heavy, cumbersome orders one Redditor on the Alaska subreddit claimed to have ordered from Amazon Prime, with free shipping, before users started to notice difficulty finding eligible products.

"They destroyed the Prime program for Alaska, and it's probably my fault," ratamack wrote.

For many remote and rural communities in the US and Canada, the arrival of Amazon Prime, with its low prices and free, expedient shipping was a boon. Hard-to-get or expensive products were now accessible, and reasonably priced to boot. For the cost of a membership (which now runs $99 per year), residents were able to get deals on everything from food to diapers to truck tires.

But sometimes when something seems too good to be true, it is. Prime has proven to be a bit of a double-edged sword for many of these communities. Residents become dependent on Prime as local retailers struggle to compete. If access to Prime is reduced, or in some cases, cut off, it can leave many remote towns in the lurch. A spokesperson for Amazon declined to comment for this story.

Amazon shipping to Alaska, Hawaii, and Puerto Rico takes up to seven business days, and expedited shipping costs additional fees, even for Prime members. Many Prime users in remote areas have said they suddenly have trouble finding Amazon products that are eligible to ship at all.

"I was trying to buy some basic small car parts to do a repair," Noah Sunflower, a Prime subscriber in Anchorage, Alaska, told me via email. "I'd fill up the cart and think I figured out what I wanted and then when I went to check out, there was nothing that would ship to Alaska. Plus there's no feature that allows you to sort for vendors that will ship to Alaska. It's the worst."

This is particularly problematic when residents in remote communities have gotten used to the benefits of Prime. In Iqaluit, Nunavut, in Canada's arctic, parcel shipping to the local post office is two to three times the national average, according to Canada Post. Locals estimate as much as 90 percent of those packages are from Amazon, and considering they can order staples like diapers for half the price of the local retailers, it's no surprise.

But after Amazon ended free shipping for Prime customers in some remote parts of Canada in 2015, many Iqalummiut are worried worried Amazon would cut off their regions from free Prime shipping, too.

"It would be very, very bad, I don't want to say pandemonium, but maybe something akin to that," David Marineau-Plante told the Canadian Broadcasting Corporation.

On its website, Amazon doesn't specifically say which communities aren't eligible for free Prime shipping; instead, it says it uses the following criteria:

Stacy Mitchell, the co-director of the Institute for Local Self-Reliance, told me it's likely only a matter of time before Amazon either cuts off the free shipping or increases prices for remote customers. Mitchell recently co-authored a report on Amazon's impact on the economy.

"Shipping is subsidized by Amazon in order to lock consumers into their ecosystem and to destroy competing retailers," Mitchell said. "They are an extractive force, economically. All of the dollars these communities are spending in Amazon are leaving the local economy completely."

Mitchell pointed to Wal-Mart, which shuttered 154 of its rural stores last year, leaving many communities struggling to reorient their buying habits. When major retailers are able to undercut the local competition, it could be at a loss. In the long run, those companies aren't going to swallow those losses and will either have to increase prices or skip town.

Amazon has been experimenting with a drone-delivery technology, which could provide a sustainable solution for serving remote communities, but so far it hasn't rolled out this program widely.

But Marianne Bickle, the chair of the the Department of Retailing at the University of South Carolina, told me that if a retailer is not doing well in a particular market, staying there doesn't do anybody any good. Bickle said she can't imagine Amazon bleeding money to keep Prime members in remote locations. And if it does change or limit service, that will provide an opportunity for local retailers to grow back into the market.

"All we have to do is think about Sears and Kmart," Bickle told me. "They're almost non-existent and it's because they really ignored certain signs for decades. It's not bad for that community because when someone leaves, someone else will come in."

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