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