EL PASO, Texas (KTSM) — A recently published report by a national non-profit organization — the Institute for Local Self-Reliance (ILSR) — argues that many local government entities and school districts across the country have become increasingly dependent on Amazon to supply them with basic supplies and routine goods over local suppliers.

The report drew from purchasing records of 128 cities, counties, and school districts in 2023. Among those entities were the City of El Paso and the Ysleta Independent School District, which according to the report spent almost a combined $2 million in purchases with Amazon.

ILSR-AmazonProcurementReportDownload

The table below, obtained from the report, shows that the City of El Paso’s Amazon purchases totaled $758,314.

Meanwhile YISD’s totaled just over $1 million.

Based on the purchasing figures of El Paso, YISD, and the other entities cited in the report, the report argues that the reliance on Amazon hurts local businesses and competition, and thereby hurts local economies.

“There are many reasons that communities give for contracting with Amazon. But when they do that, what they’re doing is they’re basically taking money that they would ordinarily spend with a local or regional supplier and basically giving it to Jeff Bezos,” said Kennedy Smith, a senior researcher for the ILSR and a co-author of the report.

“The money leaves the community and not just those businesses are hurt, not just the office supply dealers and the sporting equipment stores and all of those different suppliers that supply public entities and schools, but the whole network of businesses that they support, because those independently owned businesses also hire accountants and attorneys and ad agencies and janitorial services and printers, and they use local banks,” Smith added.

The report also argued that local entities who use Amazon end up paying a higher cost for their supplies.

According to the report, Amazon uses algorithm-driven pricing that fluctuates, unlike the standard public contracts that are reached with local suppliers to lock in fixed prices.

“Amazon does not do that. They basically let their prices fluctuate, and they say that they do it so that you get the lowest price. But in reality, what happens is that they’re responding to competitors in the market who will say, ‘Oh, Amazon is charging this. So I’m going to adjust my price like this.’ And Amazon kind of keeps ratcheting it up,” Smith said.

The report concludes that local suppliers offer more value in the service, while providing higher-quality and better-vetted products.

Smith, however, said that it is up to local elected officials to take a step back and note where those changes can be made.

“Every local government can do that. And I think the first step is doing the same kind of analysis that we did. And just looking at, ‘What did we spend last year with Amazon? Do we really need to do that? Or are there things that we can buy locally that would be less expensive, higher quality, that have a better guarantee, and that are really going to support the local economy,’” Smith said.

An Amazon spokesperson responded to KTSM’s request for comment on the report’s conclusions. They offered the following statement.

“This flawed and misleading report based on data from 2023 misrepresents the facts and does not reflect the significant cost savings Amazon Business provides customers by offering everyday low prices that meet or beat other online providers and powerful tools to lower their spending. Pricing research is notoriously difficult to conduct accurately and typically lacks reliable methodology, including cherry-picked product selections, mismatched product comparisons, and comparing in-stock items with products out-of-stock at competitors. Amazon Business offers customers price ceilings that ensure they don’t pay above an agreed price, while automatically capturing savings when prices are lower.”

Regarding the report’s argument that Amazon negatively impacts local economies, the spokesperson offered the following separate statement.

“Amazon Business makes it easy for customers to search for and purchase supplies from certified local businesses and diverse sellers in their area to drive local growth, foster connections, and create a positive impact in the community.”

The City of El Paso and YISD were contacted for comment on this story, but did not provide a response by the time of writing.

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