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Business Insider: "Amazon Has A Plan To Get Indie Bookstores To Kill Themselves "

Amazon’s 6396605885_508a1433e9[1]announcement concerning their new affiliate program for booksellers is generating a lot of press today, and there is one story in particular that caught my eye.

A reader left a comment with a link to a post on the Business Insider website (thanks, willem!) which reached the obvious conclusion:

Once a customer is on the Kindle platform, odds are they’re going to buy fewer physical books, thus killing the Indie bookstore. In essence, Amazon is telling these companies to onboard customers to a digital platform that will destroy their business.

I figure a lot of pundits are going to say the same thing, just like they did when Waterstones signed a similar deal with Amazon, so I thought that it would be worthwhile to take a few minutes and debunk the idea.

Given what has happened in the past year and a half I tend to think this conclusion is bunk, and my reasoning is pretty simple.

Consider, for example, the partnership between the ABA and Kobo. In practical terms it is very similar to Amazon Source, the new program which was announced today. This partnership has been in place for well over a year, and according to PW it has been a boon for booksellers. But that should come as no surprise; do you really think the ABA would have set up a deal if it were going to kill bookstores?

5598534_f549075727[1]If that’s not enough, consider Watersones. That UK bookseller has been in bad straits for the past several years, and then they signed with Amazon. They’re not doing too badly; over the Christmas quarter they boosted sales by 5% and lost £37 million. If selling Kindles were going to lead to their demise then shouldn’t their sales have decreased?

And what about Indigo, Whitcoulls, WHSmith, and Kobo’s other bookseller partners? If selling ebooks were really going to result in the death of brick and mortar bookstores then do you really think so many bookstore chains would have signed up?

And finally, if Amazon were capable of killing bookstores then why are more opening every year?  There have been any number of articles which point out the growing number of bookstores in the US. The bookstores are thriving because they offer services that Amazon cannot, including book signings, community events, and more.

I think the resurgence of b&m bookstores will do just fine with this deal (and not just because few will sign up). To put it simply, many bookstores are emphasizing what e-commerce has a tougher time delivering: community and a personal touch. And that is how they will thrive.

 images by Arthur PennantNeil T


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fjtorres November 6, 2013 um 4:26 pm

I think indie bookstores are doing (relatively) well because most are located close to readers and don’t expect customers to travel long distances to get to them. Which is go say they are convenient enough to enough readers to survive and maybe prosper in a market of declining pbook sales.
The days of readers making long treks (pilgrimages) to oversized warehouses that think themselves cathedrals of culture are long gone. Customers expect service and convenience comparable to what they can find online and will vote their wallets accordingly. Local B&M retailers don’t have to match online on everything but the need to come close enough for their intrinsic advantages to make up the difference.
Selling reading gadgets and doing online sales–with same day counter pickup whenever possible are the minimum the should be doing. Whether partnering with Kobo or Kindle or going it "alone" with Bluefire, Overdrive, or Txtr is a matter of strategic posturing, but they really need a digital strategy to go along with a POD strategy and better stocking strategies.
And a lot of Indies are doing that.
But a lot more aren’t.
A lot more keep on drinking the traditionalist kool-aid and buying the anti-Amazon, anti-indie publisher, anti-social FUD.
Those are ones to whom selling an ebook reader is going to seem a road to oblivion.
But odds are, those stores are already headed there.

Peter Turner November 6, 2013 um 5:37 pm

While I agree with your conclusions, your comment about how bookstores are thriving is misleading. The absolute number of bookstores in the US has been in steady decline. Indies are doing okay in large part because of Border’s demise.

fjtorres November 6, 2013 um 7:07 pm

And B&N' s fade.
B&N is closing a third of their stores, which will open up large stretches of the country for indies.
Going by a recent report, the Borders implosion released 10% of the book market: Amazon soaked up 6% and B&N nibbled 1%. The other 3% was spread among the rest of the players but mostly indies. So there is some room for well-run indies to grow.

flyingtoastr November 6, 2013 um 8:04 pm

[citation needed]

All the reports I’ve seen showed BN getting between a 3 and 5% bump from the Borders decline.

fjtorres November 6, 2013 um 11:09 pm

No it isn’t.
B&N fans can go dig up Shatzkin on their own.

Ray Kumar November 6, 2013 um 9:29 pm

I wonder why indies can’t work out a deal with their book distributors to enable them to pro-actively price-match Amazon and end the showrooming problem. Essentially, let Amazon be the price setter and just look up the Amazon price when ringing up the register and promote that policy for all to know.

I think publishers, now that they are discovering the perils of a future with only Amazon as their sales channel, would embrace an arrangement to allow the indies to still eke out a margin, however slim. And the indie bookstore, unlike Amazon, does have a cost edge in not having to pack and ship the book.

Moreover, from personal experience, whenever I visit B&N, I walk out most of the time without buying a book, but I do drop some decent money in the attached Starbucks. And as B&N is popular with families with kids, why haven’t I seen a bookstore dovetail into a McDonald’s?

What I am getting at is that indies with some spunk, creativity and alliances with synergestic businesses can I think establish a competitive business model that will be difficult for Amazon to steamroll.

flyingtoastr November 6, 2013 um 10:25 pm

Because Amazon’s prices are unsustainable for a B&M store. Amazon operates on margins of 1-2% on most of their items (when they have positive margins at all, which seems to becoming increasingly rare for the company given their financial reports), and it’s functionally impossible for a physical store to do the same. The publishers can’t do a huge amount to help either since their own margins are pretty small to begin with and Amazon was able to extract a clause in the ebook settlement that prevents them from being treated differently than any other vendor.

Ray Kumar November 7, 2013 um 8:12 am

Amazon’s 1-2% margins that are often talked about are its operating margins. Their Gross Margins are something like 28%. That is in the aggregate and perhaps is better for their books business as I think their higher priced electronic goods are sold at slimmer margins as it can still fetch decent absolute $$ profits.

As for the ebook settlement, I think it is just for ebooks, and indies are pretty much a physical book business. And moreover, if the operating legal requirement is a level playing field that publishers should offer, I don’t see what is there to prevent publishers from offering indies the same price (not a better price) as for Amazon when they price-match?

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