Amazon Encourages Affected Shoppers to Buy Hachette Books From Competitors, Anticipating Long Negotiation

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Amazon has finally ended its deafening silence in the matter of its protracted negotiation with Hachette.

The company has put out a statement explaining to customers what’s happening and why and even encourages affected customers who need to buy certain books and are unable to wait for them to be in stock at Amazon to¬†“purchase a new or used version from one of our third-party sellers or from one of our competitors.”

The company anticipates a long battle with Hachette, “though we remain hopeful and are working hard to come to a resolution as soon as possible, we are not optimistic that this will be resolved soon.”

Over the past several months, Amazon has been in a contract negotiation with Hachette, one of the world’s largest publishing companies, and has used increasingly noticeable tactics to get the publisher to agree to contract terms that would give Amazon more control over book discounting and make Hachette pay a higher “co-op” fee (marketing dollars publishers spend with retailers for in-store placements) — at least that’s the rumor. Until this statement, Amazon was completely silent on the matter and Hachette had only released a few written statements.

At Reuters today, commentator Jack Shafer called Amazon out for not giving customers any reason why it was harder to buy Hachette books. Perhaps this is Amazon’s response.

Amazon’s statement:

We are currently buying less (print) inventory and “safety stock” on titles from the publisher, Hachette, than we ordinarily do, and are no longer taking pre-orders on titles whose publication dates are in the future. Instead, customers can order new titles when their publication date arrives. For titles with no stock on hand, customers can still place an order at which time we order the inventory from Hachette — availability on those titles is dependent on how long it takes Hachette to fill the orders we place. Once the inventory arrives, we ship it to the customer promptly. These changes are related to the contract and terms between Hachette and Amazon.

At Amazon, we do business with more than 70,000 suppliers, including thousands of publishers. One of our important suppliers is Hachette, which is part of a $10 billion media conglomerate. Unfortunately, despite much work from both sides, we have been unable to reach mutually-acceptable agreement on terms. Hachette has operated in good faith and we admire the company and its executives. Nevertheless, the two companies have so far failed to find a solution. Even more unfortunate, though we remain hopeful and are working hard to come to a resolution as soon as possible, we are not optimistic that this will be resolved soon.

Negotiating with suppliers for equitable terms and making stocking and assortment decisions based on those terms is one of a bookseller’s, or any retailer’s, most important jobs. Suppliers get to decide the terms under which they are willing to sell to a retailer. It’s reciprocally the right of a retailer to determine whether the terms on offer are acceptable and to stock items accordingly. A retailer can feature a supplier’s items in its advertising and promotional circulars, “stack it high” in the front of the store, keep small quantities on hand in the back aisle, or not carry the item at all, and bookstores and other retailers do these every day. When we negotiate with suppliers, we are doing so on behalf of customers. Negotiating for acceptable terms is an essential business practice that is critical to keeping service and value high for customers in the medium and long term.

A word about proportion: this business interruption affects a small percentage of Amazon’s demand-weighted units. If you order 1,000 items from Amazon, 989 will be unaffected by this interruption. If you do need one of the affected titles quickly, we regret the inconvenience and encourage you to purchase a new or used version from one of our third-party sellers or from one of our competitors.

We also take seriously the impact it has when, however infrequently, such a business interruption affects authors. We’ve offered to Hachette to fund 50% of an author pool – to be allocated by Hachette – to mitigate the impact of this dispute on author royalties, if Hachette funds the other 50%. We did this with the publisher Macmillan some years ago. We hope Hachette takes us up on it.

This topic has generated a variety of coverage, presumably in part because the negotiation is with a book publisher instead of a supplier of a different type of product. Some of the coverage has expressed a relatively narrow point of view. Here is one post that offers a wider perspective.

http://www.thecockeyedpessimist.blogspot.com/2014/05/whos-afraid-of-amazoncom.html

Thank you.

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4 thoughts on “Amazon Encourages Affected Shoppers to Buy Hachette Books From Competitors, Anticipating Long Negotiation

  1. I’m glad to see Amazon breaking it’s silence, and it does confirm what I had thought/seen regarding my own books. Which is, they aren’t keeping books on hand, and as books are being ordered it is the response time of Hachette that is determining the shipping dates. I’m also encouraged by the concept of the “author-pool” and hope that (a) Hachette does agree to match it and (b) we learn more about the details of how it will be allocated.

  2. Bollocks. The “author pool” means nothing if the books are not being sold on Amazon. Yes, it may be the retailer’s responsibility for deciding which books get stocked, but it is still disrespecting the buyers by showing its hand. Clearly, Amazon needs to decide which side it is on, and go about the business of conducting itself in a business-like manner. Its claims of being “customer-focused” has been tarnished by its very behavior, which leaves both the authors and the readers out of the argument. Hachette is well within its rights to balk at a contract which gives Amazon a favorite advantage over its competition, when the other booksellers do not engage in these tactics and are even forced to discount prices to match Amazon’s in order to win customer loyalty. This situation will rectify itself when Amazon recognizes its fiduciary responsibility to its customers and suppliers and stocks the books while the contract dispute is in progress. This contract demands legal intermediation, which Amazon refuses to accept.

    • Um, you are aware that Barnes and Noble did the exact same thing to Simon and Schuster recently, ironically during the launch month for Hugh Howey’s trad-publishing paper version of the Silo Saga, right? Nothing Amazon is doing is anything it invented. Book retailers and publishers have been going through this for decades. The difference is that Amazon is big enough to turn the tables and treat publishers the way they are accustomed to treating authors – as interchangeable vendors.

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