THE BLOG
05/10/2016 06:39 pm ET Updated May 11, 2017

Amazon Prime and the Economics of Race

As a patron of Amazon, I was pleased to hear the good news that the company recently had its most profitable quarter since its inception and saddened to see recent news of a discrimination scandal. A Bloomberg report on Amazon Prime's delivery services showed that, in 27 metropolitan areas, same-day delivery is not an option for members living in some of the poorer and minority-concentrated, segregated neighborhoods.

The data used by Amazon to determine where same-day delivery services will be most profitable is calculated without regard to race. Still, shocked readers were appalled to learn that people who paid the same amount for the Prime membership were denied access to the service based on where they lived.

I was not shocked. This country has a grim history concerning race, and the exclusion of businesses in low-income and racial minority neighborhoods is not a new phenomenon.

One of the strongest considerations for business entrepreneurs and real estate agents alike is location, location, location. On websites geared toward traditional brick-and-mortar businesses, experts urge individuals to consider the "demographics" of the place where they want to locate their business. In one instance, individuals were encouraged to think about the "character of the community." There is some intuitive logic to it - why open a pet store if no one in the service area owns pets? However, these phrases use coded language that is embedded with legacies of race and social class.

Demographic commercial discrimination is legitimated in business culture itself, often resulting in increased financial disadvantage for individuals living in poor and minority communities. For example, the "poverty tax" is the phenomenon where the cost of goods and services in low-income and majority-minority communities are higher than in non-minority neighborhoods. The price hikes are often presented as a necessity based on a "risk assessment" that captures the extra costs associated with providing service to those areas. Food deserts emerge when supermarkets decide to use race and income as metrics of risk and profitability, resulting in an absence of grocery stores in a particular area. Traditional taxi services have notoriously used race and location when deciding where to pick up and drop off their customers. Indeed, the consideration and the lack of consideration of race has led to uneven development, where some neighborhoods are much more likely to have private and public investment than others.

The discrepancy in Amazon's same-day delivery service may seem new because it is based online, but online discrimination has been documented in several other instances. Research has suggested signs of racial discrimination on online dating apps as well as landlord discrimination against people with minority-sounding names on Craigslist. Back in 2013, I tweeted about the sparseness of online food delivery options for residents in the low-income, black DC neighborhood of Anacostia compared to the abundance of delivery options for the newly revitalized, higher-income neighborhood of Navy Yard. The two neighborhoods are separated by two miles and the Anacostia River but are often seen in the eyes of DC residents as two (or too) different worlds.

As society continues to evolve through multiple e-technology iterations, the ways in which companies can perpetuate spatial, racial, and income inequalities becomes limitless. The Amazon case, which is a more recent and more visible example, highlights that when companies decide to pick and choose where to locate their businesses, it is not random. It reflects deliberate choices that exclude specific groups of people from services and amenities. Follow-ups from the story suggest that Amazon, after intervention by local and state government officials, has taken steps to ameliorate some of the spatial and racial discrimination in Amazon Prime service.

Shouldn't businesses make the effort to provide equal access to amenities so they can benefit from new, old, and uncaptured patrons, regardless of their location? A ZIP code should not determine whether or not you are in a different shipping class from your neighbor who is paying the same amount as you but who happens to live within the boundaries of a different neighborhood.