Amazon.com, Inc.: AMZN Owners Need to Understand the Paris Pushback

Advertisement

The good news is, people living in Paris, France, can now order most groceries and have them delivered to their doorstep within a couple of hours, thanks to the launch of Amazon.com, Inc. (AMZN) Prime — which includes a speedy delivery service — in the metro market.

Amazon.com, Inc.: AMZN Owners Need to Understand The Paris Pushback

The bad news is, Paris mayor Anne Hidalgo is none too happy about it, not only citing the potential pollution it might cause for the city, but the threat it poses to many of the city’s smaller merchants.

Though owners of Amazon stock will be pleased to know Hidalgo doesn’t have the authority to single-handedly stop Amazon’s delivery service in France, she has begun to put out feelers that could turn into a logistical nightmare for Amazon’s delivery operations in that city.

Of course, Hidalgo also has the option of accepting the fact that this is 2016, the internet isn’t going anywhere and even in Paris, things eventually will change.

Two Sides to Every Coin

The mayor’s office wasn’t shy about voicing its concerns regarding Amazon Prime’s grocery delivery plans for the city called home by 2.2 million individuals, saying “While this operation is liable to severely destabilize the commercial equilibrium of Paris, this large American enterprise only decided to inform authorities a few days before its launch.”

The city’s chief of artisanal and independent business oversight, Olivia Polski, went as far as to call Amazon’s delivery service as “unfair competition,” in that the company will be able to sidestep some taxes and regulations that smaller shop-owners can’t.

And to be fair, the point of view has merit, and there is some truth to the claims that Amazon has an unfair advantage.

Then again, is that Amazon’s fault?

On the pollution front, maybe more delivery trucks will add to Paris’ pollution. Then again, maybe they won’t. Even with drastic efforts to curb pollution (exhaust as well as noise), Paris remains one of the world’s dirtiest cities due to an abundance of automobiles.

It’s also worth noting Amazon has tried bicycle-based messengers for one-hour delivery efforts in more populated areas like New York, where automobiles can be less time-effective than bikes. It’s entirely possible Amazon’s efforts in crowded Paris will end up relying on bicycles as well. Nobody knows. The service only launched last week, and will certainly need time to be tweaked in a real-world setting.

As for Amazon being unfair competition to the city’s current merchants, maybe, but that’s a short-sighted point of view.

The reality is, the presence of an Amazon Prime delivery service in Paris, France, also means jobs for Parisians. Perhaps more than that, it also means a large-scale buyer for the country’s farmers and meat suppliers.

The mayor’s stance also overlooks the distinct possibility that if it wasn’t Amazon putting such a service in place, it very likely would have been another company doing the same. The EU recently cautioned its member nations against outright bans on “sharing economy” businesses, as they essentially ignore the realities of employment and commerce in the new economy.

While the warning was largely in response to red tape faced by Airbnb and Uber, the same principles apply to Amazon’s fledgling delivery efforts in Paris.

Bottom Line for AMZN Stock

As for the impact the advent of Amazon Prime deliveries in Paris may have on the value of AMZN stock, it’s likely to be little … to the point of being immeasurable. That’s not to say, however, Hidalgo’s concerns should simply be dismissed.

While more so in Paris than most anywhere else, the Parisian mayor’s protests are something of a microcosm of a pushback companies like Amazon and Uber have quietly found in other markets they’ve entered.

Uber, for instance, should arguably be registered as a taxi service. In a similar vein, courier service vehicles should arguably be registered as commercial vehicles, even if driven by a contractor. Most are not.

For the time being, most states have looked the other way. Most other nations have too, though not quite as often. With Amazon being a company built on paper thin margins though — and relying on contracted workers to do much of its delivering — one piece of the wrong legislation could have dire consequences for this one big piece of the company’s business model.

While owners of AMZN stock don’t necessarily have to tremble at the prospect, Paris’ pushback is nothing to ignore. Other cities and certain industries could be emboldened by Hidalgo’s protectionist efforts, creating a sizeable headwind for Amazon.

In the meantime though, Hidalgo may want to start digesting the reality that no matter how hard she tries, she can’t prevent the inherent changes the internet and a gig economy brings to the way world works.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2016/06/paris-amazon-amzn-stock/.

©2024 InvestorPlace Media, LLC