Small booksellers should resist Amazon's offer to sell its Kindle device for a small commission, columnist Lee Schafer says.
Andrew Harrer, Bloomberg
Schafer: Bookshops should skip Amazon's latest offer
- Article by: LEE SCHAFER
- Star Tribune
- November 14, 2013 - 2:23 PM
No bookshop owner savvy enough to have survived into 2013 should even consider Amazon.com’s recent offer to let them resell Kindle e-readers for just a thin margin.
It would feel a little like a popular vegetarian restaurant prominently featuring its new sirloin steak dinner.
In talking to bookshop managers and combing through publishing industry blog posts, marketing doesn’t seem to come up nearly as often as trust. What to us may appear to be a straightforward effort by Amazon.com to acquire more e-book customers on the cheap looks to retailers like some darker, more ambitious effort to crush them.
They still talk about 2011 and Amazon.com’s Price Check promotion, offering up to $15 in discounts to anyone using Amazon.com’s price comparison smartphone application in a store. So, paying your customers to snoop on us? Really?
In fact, it is a little surprising to see the same company that launched Price Check announce its Amazon Source program to retailers with the sunny language of cooperation and partnership. “Amazon Source enables independent bookstores and other retailers to sell Kindle devices and accessories, and earn money while doing so,” it said.
The offer to booksellers was a 10 percent commission on any book purchases on a Kindle they sold for the first two years, a feature that may not even be available in Minnesota. So for Minnesota stores, it looks like just a 9 percent discount on devices and 35 percent on accessories.
The co-owner of Micawber’s Books in St. Paul, Hans Weyandt, said he first learned of Amazon Source from a book publisher’s e-mail. “The first thing I did was go online to make sure it wasn’t, like, an Onion joke piece.”
He said he was more baffled than anything else by what he found, adding that he would have enjoyed sitting in when this proposal was approved by Amazon.com’s management. It’s such a non-starter for him that he had no plans to even discuss it with friends at other shops.
“They’re going to pay us 10 percent to basically find more customers for them,” Weyandt said. “On some level it’s hard for my response to not just be laughter. Because it is just so ridiculous.”
He’s right, of course. Move the margin for the retailer from 9 percent to 90 and it’s still ridiculous. That is, if the independent owner thinks clearly about what the store’s brand means to its customers.
Amazon.com is known for selection, convenience and low prices, a combination so powerful that the eventual extinction of traditional bookshops has been predicted for a decade or more.
Independent bookstores have had no chance to compete on selection or price since the earliest days of Amazon.com. Micawber’s, located near the University of Minnesota’s St. Paul campus, has maybe 15,000 titles this week. As early as 1998, Amazon.com founder Jeff Bezos had boasted of a selection so big that an Amazon.com bookstore would fill six football fields.
It wasn’t just Amazon.com hurting independents, of course. The likes of the Barnes & Noble had price and selection advantages, too, although not enough to keep themselves from losing ground to Seattle-based Amazon.com. Then the Kindle e-reader came along.
Amazon.com began selling most e-book titles at $9.99, cheaper than it was buying them from publishers. And talk about convenience. Who needed overnight delivery when a new title started downloading to Kindle right away?
So the number of independent bookstores continued to decline.
Since 2009, however, they have managed to more than stabilize. Using membership in the American Booksellers Association as a proxy, the segment grew by about 20 percent in the past five years, to 1,971 stores.
Some store operators have figured out how to build a reputation for specializing in a particular category. Some have become skilled at hosting events or at using social media tools.
But the best of them understand that the value proposition, the basic idea behind what makes a customer buy anything from a business, is far more than the product. If buying decisions were only about the product, a printed book, none of these independents could last another year.
Customers of stores like Micawber’s are hardly unaware of cheaper and faster books from Amazon.com. When I walked out with James Salter’s novel “All That Is,” it cost me $26.11. In checking later at Amazon.com, it would have cost $20.21, cheaper in part because Amazon.com wasn’t planning to collect any sales tax.
It was still a purchase worth making at Micawber’s.
If customers value the greeting from the staff, the smell of the books, the creak of the floor when browsing, the smile that comes from reading notes on the shelf with the idiosyncratic “Staff picks,” those aspects of the shopping experience become part of what’s purchased.
Whether there are enough customers valuing the overall experience to let a shop survive long-term is anybody’s guess. But one of the most foolish things any owner could do today is place a Kindle on the counter.
Just display it, not even sell one. These are at-a-glance reminders of the Amazon.com value proposition and a thumb right in the eye of the shop’s owner.
And sales have been healthy enough for the independents to make it easier to say no. Micawber’s makes more money than Amazon.com, as that company famously just reported another net loss. Manager Martin Schmutterer of Common Good Books, also in St. Paul, said sales are “up substantially from last fall.”
Like Weyandt, Schmutterer hasn’t for a moment seriously considered selling Kindles. Common Good sells e-readers made by Kobo, a technology platform that independent retailers banded together to pick for an electronic book option. Schmutterer said he only “hesitantly” sells a Kobo.
So when Schmutterer learned of Kindles available from Amazon.com, “my thought is we have a perfectly good e-book platform already,” he said. “On top of that, why would we do business with the company that is trying to put us out of business?”
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