A friend just sent me an article from NPR about stores banning books that have been published by Amazon. Essentially not wanting to help a competitor, Barnes and Noble and others, including independents, have chosen to simply not carry Amazon published books to exact revenge on the giant. It has me wondering about the ongoing debate about paper versus eBook, and online versus bricks and mortar.
I love reading. I love that books capture ideas like a snapshot from so many wonderful minds for us to experience any time and any place. I like that they come in different sizes, and colors and textures. They’re a version of time travel where you can find out what so-and-so was thinking back in 1988, or 1819. So I hang out in bookstores whenever I can, searching for the unusual, virtually always finding something I hadn’t known about, and leaving with more new books for the big stack that I’m always trying to read (yes, I know I pay prices higher than Amazon). But in making this particular decision, B&N is guaranteeing that they will make zero dollars on Amazon published books. And they are making sure that Amazon makes full boat on the books they sell through their own platform, rather than sharing in the success of these books. I wonder if this makes B&N stronger, or is one more step towards making them irrelevant.
The article mentions that eBooks is only 20% of the market. It doesn’t specify, but I suspect this is by dollars, because by units I believe eBooks is closer to half the market. (I’ve read that eBooks outsells all other formats combined on Amazon. That seems like a lot of writing on the eWall).
So what to do?
How does a bricks-and-mortar store that pays rent and stocks thousands of titles and pays those knowledgeable employees I enjoy chatting with stay in business when Amazon is selling those same books for nearly wholesale prices? Bookstores typically buy at 40% off the cover price through a distributor. Amazon buys at distributor prices closer to 55% off the cover price, and sells at nearly 45% off. For example, Stephen King’s Doctor Sleep is currently $16.88 with a cover price of $30.00, a 44% discount. King’s Joyland is $7.60 with a cover price of $12.95, a 39% discount. (B&N’s online prices are $17.21 and $7.90).
This is a difficult situation for an independent bookstore that purchases books through Ingram distribution at 40% off the cover price, essentially the price at which Amazon sells direct to consumers. Unless customers are willing to pay more to walk into a bookstore to find books, Amazon wins on price (and Prime free shipping, and low or no sales tax, and a great search interface, and a wish list, and automated recommendations).
I don’t pretend to be able to see the future. But the paper process of bookstores with inventory, and the shipping costs of moving books to the stores, then moving them back if they don’t sell, and destroying the returned books, is clearly not particularly efficient in terms of dollars, trees or fossil fuel.
Add to this melee the instant gratification of purchasing an eBook one minute at a fraction of even Amazon’s paper price, and reading it on your favorite eReader the next, and the future of bricks and mortar looks beyond grim.
Kobo has a business model that shares some eBook revenue with your local bookstore. I like the idea that I can buy an eBook and keep my local store open. But it remains to be seen if it will be enough.
So if you were the CEO of Barnes & Noble, what would you do in this environment? How would you best serve your customers?
I would carry Amazon published books and make sure they were available for the Nook just to keep my readers away from the Kindle. I’d make sure that the Nook eBooks I sell could be read on every reading device available using state-of-the-art Nook reading software (yes, they are working on this. They have a nice iPad reader for example). And keep updating the Nook itself so that it’s a powerful competitor to the Kindle (comparison here), especially because the Nook supports the more open ePub standard for books.
I’d update the IT infrastructure for my stores and stop shipping books around needlessly so the stores could operate at far less than a 40% mark-up. What would you pay to walk out of the store with the book in your hand and not have to wait for Amazon to ship a title to you? An extra 10%? 20%?
I would make sure that if you were in my B&N store and wanted the online price that I could take your order right there to the B&N site and ship it to you, matching Amazon’s price, so you, my customer standing right in front of me, doesn’t have to go outside and place the order on Amazon using your cellphone, for which I make exactly zero.
I might even reverse engineer the Kindle and make a Nook software reader for it that would hook to my online store and let Amazon take me to to court and see how the antitrust laws shake out (recall the reverse engineering of the IBM bios that spawned the PC clone revolution). All this so I could sell directly into Amazon’s market and compete with them for all those eBook eyeballs by writing better software for the Kindle than they do. I’m confident there are fabulous hackers somewhere who would have great fun with this.
There are other things. Amazon has a publishing arm, why not B&N? Amazon has an exclusive Select program with 400,000 titles, why not B&N? Amazon is trying to help customers find discounts with it’s new Kindle Countdown Deals that can help new authors be seen. B&N?
And if I were a little independent bookstore, I would ask people to place the Amazon order through my website right there in the store so that I would get the 4% affiliate money for the order. After all, I showed the customer the book. The least I should get is the affiliate funds like any other website in the world that made a referral.
Does any of this matter, or are we heading for an Amazon world? And I haven’t mentioned Apple, who themselves have 20% of the eBook market. Could they step in and rock Amazon’s boat?
I sure don’t know which way this will go. I do think paper books will be around for years because many people think they’re wonderful (yes, I’m guilty). I’m not so sure about the 40% margin bookstores.
Now I’m curious. What you would do? Please comment.