Is e-commerce wage war brewing?

For the past generation, Amazon.com Inc has been the centerpiece of a prevailing view that the growth of the internet has had a deflationary impact. Online shopping brought transparency to every aspect of the economy, increasing competition and taking pricing power away from companies that used to have it.
Now Amazon may be leading the marketplace in a new direction with its growing emphasis on employee pay, shifting away from its deflationary role to add some upward pressure on inflation. The latest data point on this shift came, when Amazon announced it was giving raises of up to
$3 an hour to 500,000 of its workers.
Amazon’s been under scrutiny for its labour practices over the past several years as it’s become a larger employer at the same time society became more focussed on worker treatment and pay.
As Amazon founder and Chief Executive Officer Jeff Bezos noted in his letter to shareholders this month, the company raised its minimum wage to $15 an hour two and a half years ago, and now seeks to become “Earth’s best employer.”
It’s natural to be a little cynical about the new tone. The closely watched recent unionisation vote by company employees in Alabama shows there’s a push for workers to have their voices heard. Democrats, now controlling both the White House and Congress, are seeking to increase the national minimum wage and strengthen unions while questioning the power of big technology companies. All of this impacts Amazon, so it makes sense that the company would seek to play nice while it’s in the spotlight.
But there are other strategic reasons for Amazon to suddenly be more employee-centric. Bezos is known for the comment, “Your margin is my opportunity” — implying that Amazon can grow sales and market share by charging less than its peers.
Retailers’ business viability requires charging more for a product than it costs to acquire it. When a competitor like Amazon manages to charge less — either by being more efficient or by simply accepting a lower profit margin — it threatens that business.

—Bloomberg