Primeless price penalty at Amazon brick-and-mortar stores

Primeless price penalty at Amazon brick-and-mortar stores

Well! Amazon was perhaps cleverer than I was.🙂

That’s not to say that hasn’t happened before, of course, but I think this one is smart.

When I was recently on The Kindle Chronicles podcast the host, Len Edgerly, asked me what I thought (as a former brick-and-mortar bookstore manager) about Amazon’s approach to opening their new, very limited, physical bookstores.

I replied that I thought they were doing it in a good way…using the stores primarily as showrooms for the website.

Well, in this

GeekWire post by Taylor Soper

it appears that they’ve gone a step further.

There are pictures in the post which show that people shopping in the Seattle physical Amazon bookstore (where my sibling’s first novel, One Murder More ((at AmazonSmile: benefit a non-profit of your choice by shopping*)), has been featured) see signs explaining that there are two prices possible for each book.

Amazon Prime (at AmazonSmile: benefit a non-profit of your choice by shopping*).

members, who usually pay $99 a year, pay the same price for the book that they would at Amazon.com.

Non-Prime members pay list price for the book.

That can be really significantly different…and Amazon doesn’t usually charge the list price. The list price for John Sandford’s latest book (in hardback) is $29.00. Amazon is selling it, at time of writing, for $17.40…a savings of $11.60.

I should explain what “list price” means.

A publisher puts a “list price” (like an MSRP…Manufacturer’s Suggested Retail Price) on a book. Many bookstores discount the book from there, especially popular books.

My guess is that the majority of, say, New York Times fiction hardback bestsellers are sold below list price…not just at Amazon, but overall.

This changes that, at least for Amazon’s brick-and-mortar stores.

Why would they do that?

It’s simple. You can join Prime right there in the store, and get one month free…and buy the book at the discount.

Prime members, reportedly, are much more loyal to Amazon, and spend a lot more on the profitable physical items…what I call “diapers and windshield wipers”.

In other words, Amazon is using the physical stores to get people to join Prime.

Certainly, other stores do that…you need a membership at Costco to shop there. This doesn’t require you to have a Prime membership to buy books in the bookstore, but you’d save money, Sure, you could cancel before your one-month was up and pay nothing, but I would guess that more than 50% of trial memberships end up being paid memberships.

All things considered, I think this is an intelligent strategic move by Amazon. What do you think? Would that put you off if you went into the store? Do you think it will get people to join Prime? Feel free to tell me and my readers what you think by commenting on this post.

Update: thanks to reader Ana whose comment helped improve this post…

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* I am linking to the same thing at the regular Amazon site, and at AmazonSmile. When you shop at AmazonSmile, half a percent of your purchase price on eligible items goes to a non-profit you choose. It will feel just like shopping at Amazon: you’ll be using your same account. The one thing for you that is different is that you pick a non-profit the first time you go (which you can change whenever you want)…and the good feeling you’ll get. :) Shop ’til you help! :) By the way, it’s been interesting lately to see Amazon remind me to “start at AmazonSmile” if I check a link on the original Amazon site. I do buy from AmazonSmile, but I have a lot of stored links I use to check for things.

 

13 Responses to “Primeless price penalty at Amazon brick-and-mortar stores”

  1. Karen Says:

    Hi Bufo, I subscribe to your blog but haven’t received an update since 11/2. Would you please check into it with Amazon? Thanks.

    • Bufo Calvin Says:

      Thanks for writing, Karen!

      Yeah, it looks like something might be up. You letting Amazon might also help, but I’ll try to follow up. I haven’t changed anything myself…

      • Karen Says:

        Hi Bufo, I was on the phone with Amazon’s Kindle support line for 45 minutes on Friday to no avail.

      • Bufo Calvin Says:

        Thanks for writing, Karen!

        Yow! -:o

        That was above and beyond! I have e-mailed the blog publishing part of Amazon to alert them…I’ll let you know when I hear back.

      • Bufo Calvin Says:

        Amazon says:

        Hello Bufo,

        “Sorry for the inconvenience caused.

        We have escalated this issue to our technical team, they are currently investigating on it and will get back to you once we get an update from them.”

    • Lady Galaxy Says:

      YAYAYAY! I just got an updated ILMK download on my K3! It contains the most recent website post as well as the other articles posted after the “blackout.”

      • Bufo Calvin Says:

        Thanks for writing, Lady!

        Woo hoo! Thanks so much for letting me know!

        A “blogjam” like that is very frustrating to me! All I can do is let Amazon know, and then I have to wait to see what they do. My subscribers pay Amazon for blog delivery on their Kindles (and I get a royalty on that), and they should be able to count on reliable delivery…having it go almost a week without a delivery is dismaying.

  2. Ana Says:

    “members, who usually pay $99 a month,”

    Ahem, $99 per year, maybe?

  3. dsmallc Says:

    you can’t mean that Prime members normally pay $99/month

    • Bufo Calvin Says:

      Thanks for writing, dsmallc!

      You are correct.🙂 At least, you are correct that I didn’t mean that…I suppose it’s possible I could have meant it.

      I appreciate you taking the time to point out my error!

  4. Edward Boyhan Says:

    There are at this point only 3 B&M Amazon stores: Seattle, San Diego, Portland? An article I read about this (I forget where) says they’ve been “soft opening” this since August, and that since then store traffic (which had been moderate) had dropped off a cliff.

    I’m not sure Amazon cares — I see this as just one more push to increase Prime membership. I’m not sure I see the bigger strategy here if store traffic is low?

    I just finished reading a not very good Sic-Fi novel: “Sycamore” by Craig Falconer which is mostly about an augmented reality/augmented person technology involving contact lenses that interact with what you are looking at, record everything you look at on servers so you can replay your life (Facebook on steroids), and which you can control via touch using a “seed” which is surgically implanted in the user’s left hand. About half the book describes the technology, and half explains all the governmental/societal ills that will result (one thing: “precrime” idea from Minority Report).

    Amazon figures (in my mind at least :grin) in that consumers who are “seeded” can use their AR contacts and seed to buy things. A deal is worked out between the provider of the seeds (for free — think Google who targets ads at your contacts) with a shopping company (think Amazon) such that seeded consummated purchases get a 20% discount (think Amazon Prime).

    Just sayin (:grin)

    • Bufo Calvin Says:

      Thanks for writing, Edward!

      Currently open: Seattle, Portland (OR), and San Diego. Coming soon: Dedham, MD.

      Home page: http://amzn.to/2evS1WB

      The stores don’t need to support themselves, and they partially serve a symbolic purpose. It’s important to note, though, that as a former brick-and-mortar retail manager (books mostly, but also a game store), that low traffic right now is fine. There are certainly stores that make 80% of their sales from the middle of November through the first week of January (the latter due to returns), and are almost ghost towns the rest of the year.

      My guess is that the store ares relatively valuable for Amazon…their per square foot return on book sales may be much lower than, say, a Barnes & Noble, and they could still profit more by enrolling people in Prime.

      The tech in the book you describe sounds entirely within the realm of possibility now. The bigger challenges would be social (regulatory, and particularly consumer acceptance).

      Augmented Reality can change advertising in really fundamental ways by being much more subtle. For example, an advertisers products could be shown in brighter, richer colors on the shelf…and not in an obvious way. People’s eyes would still be attracted to it. Another thing they could do: make it so that you appear to see the label regardless of whether or not it is actually facing you. So, as you glanced at another shopper’s cart, you would see “XYZ baked beans” label, even though it was facing down. When that had happened to you ten times, you’d be, I believe, more inclined buy that brand of beans…

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