“The Best of Both Worlds?” – Not So Sure…

Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.

Amazon made the headlines once again with the introduction of Amazon Source. This is an outreach to independent bookstores to sell Amazon Kindles. The headline on their site states, “The Best of Both Worlds.” Needless to say, many bookstore owners and others in the publishing industry have coldly responded to this offer.38enso

Dustin Kurtz on the Melville House blog pulled together comments from 21 different independent booksellers from across the USA. The reactions are pretty pointed and describe the offer as “dagger described as an olive branch” and “a Trojan Horse style attempt to gain access to our customers.”

The media has been equally critical. There are excellent posts on this new service in Forbes; Publisher’s Weekly –“booksellers say no”; Shelf Awareness – “indies astounded”; TechCrunch – “audaciously courts” and the HBR Blog states that “indies should negotiate a better offer.”

Amazon Source offers bookstores a 6% discount on Kindles and then 10% of the eBook sales for the next two years. For Kindle accessories, they will sell at a 35% discount.  This seems like a paltry amount.

Kindles range from $69 for the basic model to $379 for the tablet Fire HDX.  At 6%, the store makes between $4 and $23 per sale. Let’s use $15 as an average. Plus the bookstores get 10% of eBook sales. Assume the average person spends $100 a year on eBooks, which comes $10 per year or $20 for the entire two-year span.

Basically Amazon is offering roughly $35 per customer ($15 for the device and $20 for eBook sales).

Some thoughts:

  • At $35 a pop, it just doesn’t seem like this is even a good use of floor space and time taking away from the selling of physical books. If the store sells one a month, that is annual revenue of only $420.
  • Retail space is valuable. Bookstores typically get co-op or placement money for promoting books. So, this space is basically being ‘given’ to Amazon for free.
  • Over 500 stores already sell Kobo devices. Kobo expects to have 1,000 stores (there are only 2,200 stores in the ABA) by the end of the year.  This experiment has not created a lot of sales and many entered into it to thwart the advances of Amazon.
  • Many stores jumped in with Google. That was a disaster and only created a lot of excess work, confusion and wasted efforts. Then they joined with Kobo. Changing a third time in three years is just confusing.
  • Amazon is hyper-aggressive (remember the Amazon price check app where people were encouraged to price check in the stores on their phones and then buy from Amazon?) and has never been a friend to independent booksellers.
  • Amazon is the undisputed leader in eBook sales. This program allows stores to join in on it. An “if-you-can’t-beat-them-join-them” attitude.  But that runs counter to the attitudes of many indie bookstore owners.
  • With eBook sales flat over the past year and holding at 30% share, the future of print is secure for now. This should help bricks and mortar stores maintain their customers, as the market is more predictable.
  • Borders originally turned over their Internet customers to Amazon. Many of the best customers were sent to the competitor and lost forever. Borders through their Waldenbooks arm had millions of members in their Romance, Mystery and SF clubs.
  • Amazon is a giant Internet retailer. They dominate that world. But Amazon has no bricks and mortar footprint.  No doubt, more people shop online than ever before, but millions still want to visit stores. This is Amazon’s play to go after the best book customers that are not on their platform.
  • What is next? Amazon wanting to sell Kindles in public libraries?

Amazon continues to innovate and put new ideas into the marketplace.  They are disruptive by design. Will this succeed? Or are they too toxic for independent booksellers to partner with?

Time will tell. I read many tweets on this today, but this was one of the more creative:

38ensoIn case you have not seen the Twilight Zone episode, view it here.

10 thoughts on ““The Best of Both Worlds?” – Not So Sure…

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  2. Jack W PerryJack W Perry Post author

    Nate — appreciate your comments. I don’t think the Kobo deal is much better for bookstores. So, if it is also $35 per customer, that doesn’t seem like a good use of space.

    Co-op must be offered to all booksellers. So yes, Indies get it too. Many publishers offer either a % of net sales or special newsletter and/or placement.

    Most definitely there are non-bookstores that can play here. But that was not my focus of the piece. For those stores that don’t sell primarily books, it could be a good deal. But again, I question the very small margins.

    I agree, maybe libraries would want to sell Kindles?

    Thanks again for your comments. Although we don’t always agree, I enjoy your perspective.

    Jack

    Reply
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  5. PeterTurner

    It seems like the question her is whether the marginal benefit of selling Kindles and serving eBook consumers in this way benefits bricks-and-mortar booksellers more than it hurts them. The difference between what Kobo has offered and what Amazon is offering is the transactional experience and data, that is, Kobo’s sales are directed through the bookseller’s own website. Not so with Amazon’s offer. Put simply it’s about customer and customer data migration from print to eBook and bricks-and-mortar to online. Of course, if you’re a bookseller who doesn’t know what to do with customer data, or doesn’t want to, then that piece of the equation is moot.

    A while ago I suggested a way bricks-and-mortar booksellers might benefit from the phenomena of eBook customers browsing in-store only to buy online. What about supporting eBook readers who want to browse, scan, and buy eBooks while benefiting from affiliate fees from ALL the eBook retailers via a geolocating mapping APP. Bookstores would then benefit from being a curated, browsing-friendly environment, while also capturing some customer data. And by encouraging instore customer traffic bookstores might also see an add on benefit of increased sales of physical books.

    It might be a crazy idea, but crazy ideas may be just what our industry needs more of.

    Reply
    1. Jack W PerryJack W Perry Post author

      Peter – Thanks for the clarification of the differences between the Kobo and Amazon deals.
      I don’t think your ‘geolocating’ idea is crazy. But even if it is, I agree, must just be what we need.

      “If we weren’t all crazy, we would go insane.”

      Reply
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