Friday, March 28, 2014

When protectionism gets too protective - a story

Diana was getting irritated at her teenage son's pronouncements at the dinner table.

"And the laws that ban Tesla sales in all those states are totally bogus!" declared Jim. "And mom, what you and the other car dealers are doing is completely unfair!"

Diana finally exploded. "I've had enough of your mouth!" she yelled back. "You think that Tesla is all cool, but what would you think if your precious Tesla broke down and there wasn't a network of independent dealers to support it? The dealer model has worked for years - if it ain't broke, don't fix it."

Jim grumbled and returned to his green beans.

Diana's scowl disappeared when her husband walked in through the front door.

As Mark sat at the table, Diana asked an important question.

"Honey," she asked, "did you have a chance to order those books from Amazon today?"

Mark was not smiling. "Actually, I didn't. During lunch I went to Amazon's web site, and I was greeted with a message from Amazon."


As a result of legislation recently enacted in your state, Amazon is no longer able to sell items directly to customers with New Jersey addresses. We are working to rectify this situation as soon as possible. Rather than fighting the will of New Jersey voters, we are striving to establish a network of independent dealers to sell goods to our New Jersey customers.

"So what does this mean?" asked Diana.

"According to the New Jersey Booksellers' Association," said Mark,

Amazon's approach is not innovative, but rather, by cutting out the dealer hurts the consumer.

The independent system of retailers that operates in New Jersey promotes price competition because a manufacturer doesn't control distribution and prices. It also promotes greater access to warranty claims, which is something direct online booksellers hate.

"And the governor agreed," Mark noted.

"Since Amazon first began operating in New Jersey, it was made clear that the company would need to engage the Legislature on a bill to establish their new direct-sales operations under New Jersey law," said spokesman Kevin Roberts. "This administration does not find it appropriate to unilaterally change the way products are sold in New Jersey without legislation and Amazon has been aware of this position since the beginning."

"But we'll still get free next day delivery under Amazon Prime, right?" asked Diana.

"I doubt it," said Mark. "The delivery schedule would be up to the individual book dealer."

"Well, we'll still get Amazon's pricing, won't we?" asked Diana.

"Maybe, maybe not," said Mark. "The dealer will need to show some profit, so it's possible that the prices may actually go up, despite the competition."

Diana's son Jim was smirking, and even Diana's glare couldn't dampen the smirk on Jim's face.
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