The Klondike Gold Rush would have been a lot more convenient if Amazon had been around. Instead of starving out on the creeks, miners could have just placed an order at www.amazon.com/bannock.
This thought crossed my mind one recent Saturday as I did battle with the Shanghai-subway style crowds at a Whitehorse grocery store. I was talking to a techie friend in the cheese aisle who told me Amazon now delivers groceries to the Yukon.
Since retailing was one of the few relatively robust sectors in the Yukon’s recent economic forecast, I thought I would do an experiment and try to figure out what Amazon means for our retail industry.
Amazon is clearly making a serious effort to attack the grocery market. They had a wide range of non-perishable items, plus a “subscription” service. This gives you a discount of up to 15 per cent if you sign up to have at least five items delivered on a regular schedule. It’s an attractive idea to have staples like cereal, diapers and deodorant arrive automatically at your door.
I ordered muesli, coffee and – searching for something appropriately “Yukon” to qualify for free shipping – some baked beans. Dorset muesli was $6.49 for 620 grams, about the same as the Alpen brand locally ($6.48 for 650 grams). A pound of fancy Kicking Horse coffee was $11.95, less than the $11.47 I paid for 340 grams of Starbucks at the store.
Heinz baked beans from Amazon were more expensive $2.27 per can, while the bricks-and-mortar store offered them for 97 cents on sale (regular $1.54). However, when the shipment arrived it turned out that I had mistakenly ordered the British version of Heinz beans. As I learned at Wright’s breakfast bar at the London School of Economics, these are slightly different from the North American version.
This might explain part of the cost differential, as well as providing the most carbon-intensive beans on toast breakfast in the history of climate change.
It also highlights one nuisance about Amazon – the selection process. You have to pick from a confusing array of products offered by Amazon or its partners. I clicked on chocolate Hobnob biscuits and was shocked to see they cost $96. This was because you have to buy them in packs of 24, like at Costco. That works out to $4 per pack compared to $2.64 at the store.
All in all, my not-particularly-random sample showed many products cost about the same, a small number were cheaper and quite a few were significantly more expensive. However, you can order from the convenience of your home at any time of the day or night and delivery is free. The groceries took only five days to arrive, which is actually pretty fast considering that I have sometimes had grocery lists on the fridge for longer.
Amazon promised my beans would “ship in Amazon certified Frustration-Free packaging.” My eight-pack of beans was in its own little cardboard box. If you care about minimal packaging, Amazon groceries are not for you.
Then there are the carbon emissions. Amazon uses more packaging (bad), but doesn’t have to heat a giant grocery store here at forty below (good). I once spoke to a grocery logistics analyst in Sweden who told me that if you tracked the carbon emissions of shipping a kilo of frozen lamb from New Zealand to a Stockholm kitchen, most of the CO2 was emitted during the Volvo SUV ride from the grocery store to the house. Shipping eight cans of beans up the highway by truck is not an emission-light delivery system. But if my beans were flown here, as they may have been given the shipping time, then they were indeed a climate crime of Brobdingnagian proportions.
And how did having the Internet for breakfast taste? I tested it on a panel of breakfast experts: i.e., teenage boys. We served muesli, beans on toast and coffee (my plan to spring Internet pickled herring on them having failed, since even Amazon doesn’t sell this tasty and nutritious breakfast treat). They said it was no worse than my usual attempts at making breakfast.
They also came up with the idea that Yukoners in remote localities could get around high prices at the local store by ordering from Amazon. A good idea but, unfortunately, Northern News Services reported from Nunavut six months ago that Amazon was cutting free shipping to “remote” communities.
I don’t expect Internet grocery delivery will put our local grocery stores out of business any time soon. However, I can see people starting to order specific staples like diapers. But in 10 years, who knows? The Internet is a powerful thing. Who would have guessed 20 years ago that Mountain Equipment Coop would have over 8,000 members in the Yukon, ordering a huge amount of outdoors gear by computer?
So what does it mean for the Yukon if the Internet does hollow out the our retail sector, further undermining local shoe and apparel retailers and moving into hitherto untouched sectors like groceries?
Plenty of jobs will be at risk at the cash register and in customer service and warehousing. Owning your own retail business has long been a viable business opportunity in the Yukon, but there may well be fewer locally-owned retail businesses in the future. We may be on the losing side of a trend that sees more high-wage web-developer and logistics-robot-engineer jobs created Outside while some traditional retail jobs in the Yukon disappear.
Yukon government personal income tax revenue will also go down, since Amazon workers in Vancouver don’t pay Yukon income tax. Amazon doesn’t pay corporate income tax here either. And we don’t have a sales tax so the Yukon government skims 0 per cent of Internet orders. If fewer retailers means less demand for commercial real estate in Whitehorse, then the city’s property tax revenues will be affected too.
Backhoe operators in Fort Nelson sometimes cut us off from the Internet, but relying on them is not a long-term strategy. If you work in retail or own a business in the space, you will want to watch this trend very carefully.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He won this year’s Ma Murray award for best columnist. You can follow him on Channel 9’s “Yukonomist” show.