For me, I often try to buy products from local stores, but so often things I want are out of stock or no longer offered by the store. I feel forced to go to Amazon even for household products. But it's a double edge sword because the more people buy from Amazon the less stock stores keep in their shelves. I feel bad because the stores are going out of business. But if they want to compete with Amazon, they have to do better.
Small businesses sit at the intersections of a lot of issues in American life:
1) Small businesses are vital to succesful, vibrant and safe urban spaces
2) They have high costs and small margins and are more sensitive to crime, inflation and other issues.
3) Customers like low costs and are especially put off when costs rise rapidly
4) Urban housing costs are cutting into already narrow margins, pushing workers to demand higher wages, causing even higher prices than just the cost of materials going up.
5) Amazon and WalMart (and Wish, Temu, etc) provide low costs customers want
6) These low costs are subsidized by state, federal and local governments, which provide infrastructure and even direct subsidies to these businesses for less than cost.
Governments have two choices: they can either subsidize small businesses or they can impose higher costs on Amazon and company through taxation or withdrawing subsidies. They also can and should get rid of excessive costs and burdensome regulations on small businesses, such as minimum parking requirements and high license fees (in Boston for example, many independent bars and restaurants have disappeared because an archaic state law restricts the number of liquor licences the city can issue, so they cost around $600,000).
I'm curious about your (1) because I don't see any general reason why small businesses should produce these things better than large businesses (except insofar as "vibrant" is code for "cool small businesses," although I don't know what you mean by it here). My town has an area with lots of small businesses and some of them are great but they just don't fulfill the basic needs that the chain stores in the mall do, and I don't think I would consider an urban space successful if I have to get in my car and leave it to buy Windex or pants.
This is an excellent piece to run immediately after the SUV one, good job ;)
I think one angle that isn't really brought up above is that in most (all?) of the situations you describe, it's *not* a two-party interaction, but a three-party one where there's a middleman who injects an additional layer to the conversation. Notably, such middleman is generally a giant tech company whose business model is to throw around their massive cash reserves to drive out existing business models so they can move in and collect rents. (Yes, I know there's more to it than that, and we can debate the exact bounds of what's "just business" and what's "rentier capitalism" but like Amazon is pretty explicit in their aims to lose money long enough to destroy competition so they can be the one everyone *has* to go through).
Like I get what you're saying about credit card fees (though, just for the sake of argument, I think running an online newsletter business is pretty different from running a physical shop where the fees eat into thin margins): if it were just a credit card provider offering service and convenience at a modest fee that might be one thing, but remember in reality a large portion of your customer base are *getting a decent kickback* from using that card, so the CC provider is charging the business to bribe their own customers to spend more. Which, more or less proving your point, feels like it makes the "business tacks on a CC upcharge" not quite as odious, IMO. Especially since your feeling is that "the price should be the price" but if you use a cashback CC that's *not* the case, you're getting a discount that's paid for by people using cash and from the owner's profit margins.
I think this illustrates that the modern world, particularly the tech-finance sector, really has outgrown a lot of our ideal intuitions, and I'm not sure what the "right" response is. I could rant for pages about how I don't think Amazon is likely a "net benefit" for consumers, and that our existing antitrust system relying on "proof of consumer harm as measured in prices" is inadequate for facing this kind of complexity, but I'll leave that for another day ;)
Very interesting comment. The "don't use a credit card" is a little like urbanists saying driving is morally bad - it's very conceptually tough to tell people that they're sort of doing something wrong by doing something that everyone does and that society as a whole encourages. I don't know what to make of that. I think it's natural to not like being told something like this. Like I wrote yesterday, it takes mental effort to assent to these things, and it's hard if you're not on the side that feels it intuitively to feel it intuitively yourself.
I read *a lot* of Wendell Berry last year, and while there's lots to pick at in his whole "thing" the idea that particularly modern technology and finance allow us to operate at a scale that makes these kinds of questions hard does resonate with me. And his response is that we can't *stop* these things, we can only try in our own way to disentangle ourselves as best as possible and work to make alternatives viable. And that's something that on its face sounds *deeply depressing* but I'm not sure what the alternative is (I mean, one alternative is to just complain about stuff on Twitter and make no meaningful changes, but I'm pretty sure that's not the right one)
Decades ago, I worked at a Circuit City Roadshop and we used to joke that there should be a "MyBoy" charge for all of the customers who started off the conversation with "my boy did most of the work already". To spell out why we were frustrated with customers like that:
1. There was a significant chance that the customer or their friend had damaged the car in a way that would directly affect the work they were now asking us to do.
2. Even if they hadn't done any damage, we'd still have to do the work in a way that's out of sequence compared to a typical untouched car, which meant it would take longer (your readers who aren't mechanically inclined can try reciting the Pledge of Allegiance starting at "United States" instead of "I pledge" to get a sense of the frustration involved).
3. There was also a significant chance that the customer was still going to question our competence and/or argue about having the labor discounted because they brought it to us (in their mind) partially completed. Customers who have us do the job from start to finish don't bring either of these headaches.
Regarding outside parts, the quality control rationale for not using them is real; it's also easy to cite as a pretext when your real concern as a business owner is your profits. If a business is clearly bringing a lot of positive externalities to the community I wouldn't scrutinize their claims too much.
I generally have little patience for the strain of discourse where everyone pretends that small businesses are civic institutions. Those guys are also capitalists! And exempt from a lot of workers' rights law! Maybe working as a waitress would make me more sympathetic to them but based on what I've heard about wage theft in the service industry, I really doubt it.
I am willing to pay higher prices to subsidize the things I get from local businesses besides just the products I'm buying -- convenience, expertise, etc -- but it's not because I think I owe the owner a debt of gratitude as well as a profit.
Allow me to tell you a story. Settle in. Once, long ago, there was a bike shop: Livermore Cyclery. It was a great shop. Everyone loved it (it was before my time, so I only know what I've heard). A couple years ago, shortly before I moved to town, the shop was bought by Trek Bicycle Corporation, one of the largest bike manufacturers in the world. The transaction was extremely amicable. On display in the Trek showroom is the old road race bike once owned by the proprietor of Livermore Cyclery, which has been repainted with Trek badges.
At the time the shop went 'corporate,' there were three experienced techs in the service department. We'll call them Adam, Bill, and Chuck. Adam went and started his own bike shop down the road. Great shop, small stock but excellent bikes, amazing people and amazing work, but I don't have much experience with them. They're also involved in racing and in advocacy, which is incredibly important in the NIMBY swamp which is the SF Bay.
Bill started his own service-only bike shop, in which he has been HUGELY successful (it's a bit of an open secret that servicing bikes but not selling them is the way to prosperity as an independent; most brands require you to buy an obscene minimum number of bikes which you might not be able to sell). Both Adam and Bill keep Livermore Cyclery signs in their stores.
Chuck stayed on at Trek.
I started cycling the year I moved to Livermore. I got my first bike, my brother's old bike from eighth grade, serviced at Trek, and they did great work. I quickly outgrew the bike and bought an X-Caliber 8 for a really excellent price. I've had nothing but an amazing relationship with the staff ever since, and have bought several new bikes there, and I consider Chuck and the rest of the guys my friends. I haven't had any work done with Bill yet, despite wanting to.
And here's where the story converges with the topic. Chuck and the rest of the guys will do almost anything I want to any of my bikes, with a slight asterisk for my Trek bikes. Generally speaking, they're unwilling to go beyond Trek's own recommendations (not that they won't; they just put a 180mm brake rotor on my gravel bike, where Trek says the max is 160mm). I can bring them direct-to-consumer bikes, and they'll assemble them for like $50. I can bring them used bikes and used parts, or even new parts, and they'll service, fit, and do whatever I want to any of my bikes (I like projects and I've radically overhauled a couple of my bikes), for a reasonable price.
There are many reasons for this. We're friends, I've bought several expensive new bikes from them, but also, they're corporate. Their existence doesn't depend on selling me parts. They're happy just to sell me service on all makes and models, which is great. I get the exact parts I want, at prices that are better than sticker, etc. Of course, some times I do have them buy stuff that I'd pay full price for anyway, or if I don't know what will fit or be best for a given use case. They charge me sticker price for these, plus labor, and I don't have to pick stuff out or have it shipped. Some excellent brands of bike parts, like Hope Tech, are really difficult to buy direct as well.
Bill is different. Bill is a great guy, huge passion for cycling, incredibly helpful when I need a second opinion (sometimes on those corporate limits Trek doesn't want to mess with), and by all accounts enormously talented. His prices are also extremely reasonable. But if I want work done by him, it's his way or the highway. He's told me straight up he won't fit direct-to-consumer parts or used parts. I have to order them through his dealership agreement with Giant (another of the largest bike brands in the world), and deal with the markup plus labor.
As a result, I've taken his recommendations, bought the parts myself, taken them to Trek and gotten the work done by them. I still haven't had any work done by him, and while I'd like to, just to say thanks for the time he's given me on recommendations, I'm not sure it's going to happen. Also, his shop is in an inconvenient spot compared to Trek, which is the closest to my house by far.
Trek checks all my boxes, and does it by being the big corpo brand. Maybe it could be otherwise, but maybe not too. This is a large part of what Matt Yglesias is talking about when he insists that small business is worse than big business. And honestly, as far as I can tell, the quality of service has not diminished at all compared to the old Livermore Cyclery. Certainly, I have no complaints.
All the concerns discussed in the article I'd say are legitimate to some extent if you're dealing with a small, local business, and perhaps especially one you want to stick around. These of course can be and often are good, but this necessity (or at least expectation) of reciprocity creates some friction. This is a competitive advantage that big brands have, because this kind of reciprocity is simply not required nor expected by anyone at the store, as they're all just employees of some home office a thousand miles away. Also in fact, in my particular case, all the guys at Trek are as passionate about cycling as I am and really want to give me what I want to have the most fun.
The advantage that small businesses (are supposed to) have is that they can provide unique services and products that might not be offered by the big brands. As I've now said several times, that doesn't apply to this circumstance for me. But this kind of uniqueness is a reason why I might want to pay 10% more or spend 10% more time.
In my case, Adam's shop offers me essentially nothing over Trek, but does come with these concerns, so I avoid it almost all the time.
For me personally, I have no problem paying what I'm willing to pay. I don't usually push for discounts or special treatment or anything, just because I actually believe in the principle of free exchange. I have X amount of money, and am willing to part with Y amount for Z service or product, and I don't really have a strong interest in being dishonest about that, because I also really do value Z, and honestly I have plenty of money and the marginal dollar isn't worth much more to me than the non-marginal. If I can get a better Z for slightly more money or time, fair.
If Bill were willing to offer service with customer-provided parts at a higher rate, I'd have absolutely no problem with that. If he had such a thing, I'd probably use his services. My bikes need a lot of service (I have a lot of them, I'm a big guy, I ride pretty hard, I ride unmaintained trails, and I like my bikes to be quiet), and being able to spread them over multiple service departments for faster turnover (having my bikes in the shop bums me out) would be valuable. But that's not the case.
I spend a lot of time talking & writing about board games. "Gamers" often complain that their local board game stores are more expensive than Amazon... or lamenting that they don't have a good local store. But plenty of others will talk about how great their local store is, and why they're willing to spend a few more bucks there: they can try games before buying them, the staff is helpful, it's a nice place to meet friends, etc.
I think I can generalize from this to local store-front businesses in general: To survive, they need to provide SOMETHING that the big-box and online stores don't.
They can't compete on price (their overhead is more costly) or on variety (their space is limited). So they need to compete on service - something that makes people want to come in (and come back). That might be knowledgeable staff, or it might be a welcoming space where people want to spend TIME, not just money. In the best case, it's both. And that's when consumers & businesses align.
For me, I often try to buy products from local stores, but so often things I want are out of stock or no longer offered by the store. I feel forced to go to Amazon even for household products. But it's a double edge sword because the more people buy from Amazon the less stock stores keep in their shelves. I feel bad because the stores are going out of business. But if they want to compete with Amazon, they have to do better.
Small businesses sit at the intersections of a lot of issues in American life:
1) Small businesses are vital to succesful, vibrant and safe urban spaces
2) They have high costs and small margins and are more sensitive to crime, inflation and other issues.
3) Customers like low costs and are especially put off when costs rise rapidly
4) Urban housing costs are cutting into already narrow margins, pushing workers to demand higher wages, causing even higher prices than just the cost of materials going up.
5) Amazon and WalMart (and Wish, Temu, etc) provide low costs customers want
6) These low costs are subsidized by state, federal and local governments, which provide infrastructure and even direct subsidies to these businesses for less than cost.
Governments have two choices: they can either subsidize small businesses or they can impose higher costs on Amazon and company through taxation or withdrawing subsidies. They also can and should get rid of excessive costs and burdensome regulations on small businesses, such as minimum parking requirements and high license fees (in Boston for example, many independent bars and restaurants have disappeared because an archaic state law restricts the number of liquor licences the city can issue, so they cost around $600,000).
I'm curious about your (1) because I don't see any general reason why small businesses should produce these things better than large businesses (except insofar as "vibrant" is code for "cool small businesses," although I don't know what you mean by it here). My town has an area with lots of small businesses and some of them are great but they just don't fulfill the basic needs that the chain stores in the mall do, and I don't think I would consider an urban space successful if I have to get in my car and leave it to buy Windex or pants.
This is an excellent piece to run immediately after the SUV one, good job ;)
I think one angle that isn't really brought up above is that in most (all?) of the situations you describe, it's *not* a two-party interaction, but a three-party one where there's a middleman who injects an additional layer to the conversation. Notably, such middleman is generally a giant tech company whose business model is to throw around their massive cash reserves to drive out existing business models so they can move in and collect rents. (Yes, I know there's more to it than that, and we can debate the exact bounds of what's "just business" and what's "rentier capitalism" but like Amazon is pretty explicit in their aims to lose money long enough to destroy competition so they can be the one everyone *has* to go through).
Like I get what you're saying about credit card fees (though, just for the sake of argument, I think running an online newsletter business is pretty different from running a physical shop where the fees eat into thin margins): if it were just a credit card provider offering service and convenience at a modest fee that might be one thing, but remember in reality a large portion of your customer base are *getting a decent kickback* from using that card, so the CC provider is charging the business to bribe their own customers to spend more. Which, more or less proving your point, feels like it makes the "business tacks on a CC upcharge" not quite as odious, IMO. Especially since your feeling is that "the price should be the price" but if you use a cashback CC that's *not* the case, you're getting a discount that's paid for by people using cash and from the owner's profit margins.
I think this illustrates that the modern world, particularly the tech-finance sector, really has outgrown a lot of our ideal intuitions, and I'm not sure what the "right" response is. I could rant for pages about how I don't think Amazon is likely a "net benefit" for consumers, and that our existing antitrust system relying on "proof of consumer harm as measured in prices" is inadequate for facing this kind of complexity, but I'll leave that for another day ;)
Very interesting comment. The "don't use a credit card" is a little like urbanists saying driving is morally bad - it's very conceptually tough to tell people that they're sort of doing something wrong by doing something that everyone does and that society as a whole encourages. I don't know what to make of that. I think it's natural to not like being told something like this. Like I wrote yesterday, it takes mental effort to assent to these things, and it's hard if you're not on the side that feels it intuitively to feel it intuitively yourself.
I read *a lot* of Wendell Berry last year, and while there's lots to pick at in his whole "thing" the idea that particularly modern technology and finance allow us to operate at a scale that makes these kinds of questions hard does resonate with me. And his response is that we can't *stop* these things, we can only try in our own way to disentangle ourselves as best as possible and work to make alternatives viable. And that's something that on its face sounds *deeply depressing* but I'm not sure what the alternative is (I mean, one alternative is to just complain about stuff on Twitter and make no meaningful changes, but I'm pretty sure that's not the right one)
Decades ago, I worked at a Circuit City Roadshop and we used to joke that there should be a "MyBoy" charge for all of the customers who started off the conversation with "my boy did most of the work already". To spell out why we were frustrated with customers like that:
1. There was a significant chance that the customer or their friend had damaged the car in a way that would directly affect the work they were now asking us to do.
2. Even if they hadn't done any damage, we'd still have to do the work in a way that's out of sequence compared to a typical untouched car, which meant it would take longer (your readers who aren't mechanically inclined can try reciting the Pledge of Allegiance starting at "United States" instead of "I pledge" to get a sense of the frustration involved).
3. There was also a significant chance that the customer was still going to question our competence and/or argue about having the labor discounted because they brought it to us (in their mind) partially completed. Customers who have us do the job from start to finish don't bring either of these headaches.
Regarding outside parts, the quality control rationale for not using them is real; it's also easy to cite as a pretext when your real concern as a business owner is your profits. If a business is clearly bringing a lot of positive externalities to the community I wouldn't scrutinize their claims too much.
I generally have little patience for the strain of discourse where everyone pretends that small businesses are civic institutions. Those guys are also capitalists! And exempt from a lot of workers' rights law! Maybe working as a waitress would make me more sympathetic to them but based on what I've heard about wage theft in the service industry, I really doubt it.
I am willing to pay higher prices to subsidize the things I get from local businesses besides just the products I'm buying -- convenience, expertise, etc -- but it's not because I think I owe the owner a debt of gratitude as well as a profit.
Allow me to tell you a story. Settle in. Once, long ago, there was a bike shop: Livermore Cyclery. It was a great shop. Everyone loved it (it was before my time, so I only know what I've heard). A couple years ago, shortly before I moved to town, the shop was bought by Trek Bicycle Corporation, one of the largest bike manufacturers in the world. The transaction was extremely amicable. On display in the Trek showroom is the old road race bike once owned by the proprietor of Livermore Cyclery, which has been repainted with Trek badges.
At the time the shop went 'corporate,' there were three experienced techs in the service department. We'll call them Adam, Bill, and Chuck. Adam went and started his own bike shop down the road. Great shop, small stock but excellent bikes, amazing people and amazing work, but I don't have much experience with them. They're also involved in racing and in advocacy, which is incredibly important in the NIMBY swamp which is the SF Bay.
Bill started his own service-only bike shop, in which he has been HUGELY successful (it's a bit of an open secret that servicing bikes but not selling them is the way to prosperity as an independent; most brands require you to buy an obscene minimum number of bikes which you might not be able to sell). Both Adam and Bill keep Livermore Cyclery signs in their stores.
Chuck stayed on at Trek.
I started cycling the year I moved to Livermore. I got my first bike, my brother's old bike from eighth grade, serviced at Trek, and they did great work. I quickly outgrew the bike and bought an X-Caliber 8 for a really excellent price. I've had nothing but an amazing relationship with the staff ever since, and have bought several new bikes there, and I consider Chuck and the rest of the guys my friends. I haven't had any work done with Bill yet, despite wanting to.
And here's where the story converges with the topic. Chuck and the rest of the guys will do almost anything I want to any of my bikes, with a slight asterisk for my Trek bikes. Generally speaking, they're unwilling to go beyond Trek's own recommendations (not that they won't; they just put a 180mm brake rotor on my gravel bike, where Trek says the max is 160mm). I can bring them direct-to-consumer bikes, and they'll assemble them for like $50. I can bring them used bikes and used parts, or even new parts, and they'll service, fit, and do whatever I want to any of my bikes (I like projects and I've radically overhauled a couple of my bikes), for a reasonable price.
There are many reasons for this. We're friends, I've bought several expensive new bikes from them, but also, they're corporate. Their existence doesn't depend on selling me parts. They're happy just to sell me service on all makes and models, which is great. I get the exact parts I want, at prices that are better than sticker, etc. Of course, some times I do have them buy stuff that I'd pay full price for anyway, or if I don't know what will fit or be best for a given use case. They charge me sticker price for these, plus labor, and I don't have to pick stuff out or have it shipped. Some excellent brands of bike parts, like Hope Tech, are really difficult to buy direct as well.
Bill is different. Bill is a great guy, huge passion for cycling, incredibly helpful when I need a second opinion (sometimes on those corporate limits Trek doesn't want to mess with), and by all accounts enormously talented. His prices are also extremely reasonable. But if I want work done by him, it's his way or the highway. He's told me straight up he won't fit direct-to-consumer parts or used parts. I have to order them through his dealership agreement with Giant (another of the largest bike brands in the world), and deal with the markup plus labor.
As a result, I've taken his recommendations, bought the parts myself, taken them to Trek and gotten the work done by them. I still haven't had any work done by him, and while I'd like to, just to say thanks for the time he's given me on recommendations, I'm not sure it's going to happen. Also, his shop is in an inconvenient spot compared to Trek, which is the closest to my house by far.
Trek checks all my boxes, and does it by being the big corpo brand. Maybe it could be otherwise, but maybe not too. This is a large part of what Matt Yglesias is talking about when he insists that small business is worse than big business. And honestly, as far as I can tell, the quality of service has not diminished at all compared to the old Livermore Cyclery. Certainly, I have no complaints.
All the concerns discussed in the article I'd say are legitimate to some extent if you're dealing with a small, local business, and perhaps especially one you want to stick around. These of course can be and often are good, but this necessity (or at least expectation) of reciprocity creates some friction. This is a competitive advantage that big brands have, because this kind of reciprocity is simply not required nor expected by anyone at the store, as they're all just employees of some home office a thousand miles away. Also in fact, in my particular case, all the guys at Trek are as passionate about cycling as I am and really want to give me what I want to have the most fun.
The advantage that small businesses (are supposed to) have is that they can provide unique services and products that might not be offered by the big brands. As I've now said several times, that doesn't apply to this circumstance for me. But this kind of uniqueness is a reason why I might want to pay 10% more or spend 10% more time.
In my case, Adam's shop offers me essentially nothing over Trek, but does come with these concerns, so I avoid it almost all the time.
For me personally, I have no problem paying what I'm willing to pay. I don't usually push for discounts or special treatment or anything, just because I actually believe in the principle of free exchange. I have X amount of money, and am willing to part with Y amount for Z service or product, and I don't really have a strong interest in being dishonest about that, because I also really do value Z, and honestly I have plenty of money and the marginal dollar isn't worth much more to me than the non-marginal. If I can get a better Z for slightly more money or time, fair.
If Bill were willing to offer service with customer-provided parts at a higher rate, I'd have absolutely no problem with that. If he had such a thing, I'd probably use his services. My bikes need a lot of service (I have a lot of them, I'm a big guy, I ride pretty hard, I ride unmaintained trails, and I like my bikes to be quiet), and being able to spread them over multiple service departments for faster turnover (having my bikes in the shop bums me out) would be valuable. But that's not the case.
I spend a lot of time talking & writing about board games. "Gamers" often complain that their local board game stores are more expensive than Amazon... or lamenting that they don't have a good local store. But plenty of others will talk about how great their local store is, and why they're willing to spend a few more bucks there: they can try games before buying them, the staff is helpful, it's a nice place to meet friends, etc.
I think I can generalize from this to local store-front businesses in general: To survive, they need to provide SOMETHING that the big-box and online stores don't.
They can't compete on price (their overhead is more costly) or on variety (their space is limited). So they need to compete on service - something that makes people want to come in (and come back). That might be knowledgeable staff, or it might be a welcoming space where people want to spend TIME, not just money. In the best case, it's both. And that's when consumers & businesses align.