Amazon saves brick-and-mortars? AmazonSource

Amazon saves brick-and-mortars? AmazonSource

Bookstores selling Amazon selling.

That’s basically what’s happening with a new, innovative…even mind-boggling program from Amazon announced in this

press release

Here is the key concept:  your local bookstore can sign up for a program with Amazon. They then sell Kindles in the store, and the store gets ten percent of the purchase price of the Kindle store books you buy on it for the next two years.

It’s an extraordinary idea, and certainly, some bookstores may jump on it.

After all, it may feel like they are going to get ten percent of e-book sales for two years without doing anything…free money, right?

I’m a former brick-and-mortar bookstore manager, and a big fan of Amazon…but like the Golden Ticket in Charlie and the Chocolate Factory, entering the magical world of a genius may not always have positive results. 😉

At the site for the program

https://source.amazon.com/

Amazon calls it “completely worry-free”.  They say:

“If you decide that e-readers and tablets aren’t the right fit for your store, we’ll buy back any tablet, e-reader or accessory that was on your first order, no questions asked.”

This is short-term thinking for the store. If you can get into it with no risk on the hardware, and you simply sit back while the money rolls in from e-book purchases, why not do it?

I’m not telling people not to do it.

It certainly could be a benefit.

It also feels a bit to me like Amazon may have just started a two-year death clock on the independent bookstore, though.

When you sell one of your customers a Kindle, you may be selling them on the idea that they don’t need to come into your store any more.

You get some money from their Kindle store purchases for two years. When those two years are up, you don’t…and will your customer then stop buying e-books from Amazon? Seems unlikely.

For this to work for stores, people have to continue to buy both e-books from Amazon and p-books (paperbooks) from the stores. Yes, many people buy both. One of the questions is going to be whether or not the customers will continue to buy their p-books from your store, when you’ve sold them a Kindle Fire HDX 7″ that lets them buy the same p-book online from Amazon.

I would think that p-book discounts may start showing up in our Special Offers when this deal gets rolling (maybe early next year).

There are a lot of subtleties and complexities to this, and when books are written about Amazon fifty years from now, this may be seen as one of their most brilliant moves.

  • It’s great PR (Public Relations): “Amazon saves Mom & Pop bookstores”
  • Customers feel like they are “donating” to their local stores
  • Every bookstore that joins becomes a salesperson for Amazon
  • Every bookstore that doesn’t join loses a competitive advantage with their customers
  • People who buy Kindle Fires, in particular, will buy other profitable items, partially because they may become Amazon Prime members. That may make sense in terms of what it will cost Amazon. Buy $200 a year in e-books from Amazon, it only costs them $20 (plus administrative costs). Will they earn more than that $20 on your other purchases (“diapers and windshield wipers”)?
  • Veteran booksellers are incentivized to get people to buy Kindle books. Those booksellers may then start writing reviews and blogs, and become Amazon Associates, and make much more of a transition to online (and specifically Amazon)

Amazon has a cost for this for about two years: how many of those bookstores will still be around in two years doing what they are doing now?

If Amazon launches real digital storefronts for bookstores (perhaps something like I wrote about here: Hey, Amazon, buy this: BookAnd), I think many of them may go that way.

It gets even more interesting.

There are actually two programs as part of this announcement. One is for bookstores, and includes the e-book component. The other is for other stores, and gives them a deeper hardware discount, but no e-book cut.

That part about non-bookstores is fascinating. This certainly may mean that your local convenience store, hardware store, grocery store, and so on, start carrying Kindles.

They also risk opening their doors to the wolf, but in a very different way. Depending on weekly (perhaps daily) content sales is different from “Somebody kicked in my door and I need a replacement right now”.

Here is something else: it isn’t available in every US state, just these:

Alaska, Arizona, California, Connecticut, Delaware, Georgia, Illinois, Indiana, Kansas, Kentucky, Massachusetts, Montana, Nevada, New Hampshire, New Jersey, New York, North Dakota, Oregon, Pennsylvania, Texas, Virginia, Washington, West Virginia, Wisconsin

Why is that?

I suspect it has to do with how friendly the state is to Amazon, especially tax-wise. I know California and Amazon (after a messy situation) worked out a deal and are now effectively partnering (Amazon now has fulfillment centers there). I also understand that Maine and Amazon are in dispute right now…and Maine isn’t on the approved list.

Another thing: Amazon is not requiring exclusivity. A store can continue to sell Kobo devices, for example. There may be legal strategy behind that, but there will also be the idea for people that they support the bookstore if they buy the Kindle (in a different way than the other devices). Additionally, space is at a premium in stores (you are always fighting the rent), so will people really allot space to several different brands of devices? You know who used to do that? Borders…and they aren’t around any more.

Do I think this is an evil move by Amazon? Not at all. If I was managing a bookstore still, I’d probably do it.

It feels more like…Amazon is giving stores two years to get their things together as the world of bookselling transitions. Some people may see that as an eviction notice, but maybe it is more like a reverse mortgage: “We’ll pay you now for ownership later.”

I should be clear: I don’t think this wipes out independent bookstores, because many of them don’t need to make a profit. They are there because people love to be in a bookstore, both from the selling and buying sides. They love the community feel and the expertise of the sellers. They like being in the company of other booklovers and, yes, thousands of books all around you. Those stores, and that experience, will be around for a long time.

However, strictly in terms of business, I think the clock is now ticking…

This post by Bufo Calvin originally appeared in the I Love My Kindle blog. To support this or other blogs/organizations, buy  Amazon Gift Cards from a link on the site, then use those to buy your items. There will be no cost to you, and a benefit to them

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7 Responses to “Amazon saves brick-and-mortars? AmazonSource”

  1. jjhitt Says:

    I think they’re actually playing catch-up here. Kobo has been doing something similar for a while now. In fact it was my favorite (themed) bookstore’s partnering with Kobo that first tempted me to buy a Kobo.

    Details:
    http://www.murderbooks.com/kobo/help/about

    • Bufo Calvin Says:

      Thanks for writing, jjhitt!

      Certainly, there are some similarities. You can see one promotion of the Kobo program here:

      http://www.indiebound.org/ebooks

      However, the Amazon thing seems like it will be much clearer to people. Buy a Kindle store book, 10% goes to the store. I’m curious: do you know how much of your purchases go to that store?

      I think it being Amazon and Kindles will make it a lot more impactful for many people…

      Here’s a good Forbes article comparing the Kobo program and Amazon Source:

      http://www.forbes.com/sites/jeremygreenfield/2013/11/06/amazon-courts-local-bookstores-with-new-source-program/

      • jjhitt Says:

        Interesting comparison, thanks. What gets me about such programs is it requires the buyer to do something special or extra when they make their purchase. Usually something like “click the link found on OUR site, do not go directly to Amazon”. A few very conscientious buyers will do this consistently, most will not.

        I understand retailer’s problems with “showrooming” (look at it in the store, go home and buy online). The sad fact is that is how many of us shop today. You want online discounts, but you want to see and touch before you decide.

        I’d like to see a system that rewards retailers for being a showroom. Something like a reward code that gives a small discount to the buyer and a kickback to the retailer.

      • Bufo Calvin Says:

        Thanks for writing, jjhitt!

        Yep…leave it to Amazon to make it easy to spend money! 😉

        Well, the Blockbuster “showrooming” issue was recently resolved…when they decided to close all the retail stores they own. 😉

        It has been suggested that stores should charge the publishers for showrooming their books: “You want me to display this book in my store? That’s a dime a day until it sells.” Of course, it would more likely be a flat fee for the publisher for a month.

        Would publishers go for that?

        I think it would be more likely to push the publishers into more direct marketing…

  2. Curryanne Hostetler Says:

    Actually I think brick and mortar should do it and add new things like shook reading clubs Coffee and books with ereaders etc. new ideas and marketing. Things have changed and it is time for b&m to grow and transform

    • Bufo Calvin Says:

      Thanks for writing, Curryanne!

      Barnes & Noble has, of course, had coffee shops for a long time, and quite a few of them do things like book clubs. They’ve been transforming: moving to a lot of non-book items, like games and apparel, for example.

      I’m curious: what’s a “shook reading club”?

      I do think it could make a lot of sense for places that are coffee shops now to sell Kindles and do social events built around them. If you sold Fires, book clubs could be a possibility, but so could movie/video clubs, and game nights (using apps).

  3. The Year in E-Books 2013 | I Love My Kindle Says:

    […] AmazonSource: this program encourages bookstores and, importantly, other brick-and-mortar stores, to sell Kindles and Kindle books. I get the impression that there was a widespread enrollment, although I don’t know. More information: Amazon saves brick-and-mortars? AmazonSource […]

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