Amazon is best known for selling books, but the company is more than that. They aggregate, and in doing that they’re able to offer almost any product.
James McQuivey, Ph.D., vice president and principal analyst at Forrester Research, told Digital Book World that “Amazon, in the long run, only cares whether or not they make money from you, the customer. They don’t care as much whether they make money from you, the book-buyer, and that changes the economics for everyone who is principally concerned with you, the book-buyer, because how do you compete with the economics of aggregating all of those profit margins into one single customer relationship? No one else has the power to do that…not google, not Microsoft, not apple…not even Facebook.” To view his interview, click here.
Amazon Marketplace allows third party sellers to sell their products. Vendors can also use Amazon to store and ship inventory, which may help them boost sales and increase efficiency, but at the cost of giving Amazon data about their businesses. Now, some companies are finding that Amazon is a competitor.
James Bridle recently published a beautiful design essay about Amazon, called “From books to infrastructure.” According to the essay, “From the outset, Amazon didn’t just buy up other book retailers and distributors; it acquired statisticians, analytics, data miners and hardware technicians.”
Recently, Amazon started collecting sales taxes. One article in Slate speculates that this is so Amazon can open more warehouses and start offering same-day delivery. One of the keys to Amazon’s success is its convenience, and by offering this new delivery service Amazon can more effectively compete with local retailers.
What might this mean for book sellers? Well, instead of going to Barnes & Noble or a local indie book store, people may turn more towards Amazon for their physical books. We’ll just have to wait and see.
Tim Waterstone claims in The Daily Beast that because of Amazon and publishers, we have already lost book stores. He said that “Publishing is, and always has been, an aggressively commercial affair. There never has been enough profit to go comfortably around.” He said publishers gave Amazon too favorable of discounts, which allowed Amazon to “discount everyone else into oblivion.” Amazon was able to advertise their extremely low prices, and consumers eventually moved from physical stores to Amazon.
“It was a savagely disloyal mistake,” he wrote. “Every publisher knows that now, even finding themselves in all sorts of legal knots as they try, second time around, to control price setting in the ebook market.”
In the U.S., Waterstone said, being able to mail order books was desirable. But book stores are still important for promoting new authors. “New authors need to be found,” he wrote. “They need to be nurtured. They need to find their audience. Their audience needs to find them.”
Could all be lost with the demise of book stores? I’m not sure. Many readers are turning to online sources to discover new books and authors. Startups are popping up trying to fill this need. One example is Zola Books, which plans to help independent book stores and capture 1% of the e-book market by the end of next year, replacing Google books and then competing with Amazon.