Amazon to bookstores: Help us make you irrelevant

November 7, 2013

Amazon founder and CEO Jeff Bezos shows off the most recent Amazon Kindle tablets earlier this year. Bezos is also the owner of the Washington Post. (Amazon)

Amazon on Wednesday announced a new program, Amazon Source, aimed at persuading small retailers to sell Kindle e-readers and tablets in stores. The Bookseller Program is specifically targeted at independent bookstores -- and appears to provide just enough rope for booksellers to hang themselves with.

Amazon will sell the Kindles to the retailers at a modest 6 percent discount from the current MSRP and accessories at a 35 percent discount. The booksellers will then get their profit on the devices and add-ons, plus a 10 percent commission on the price of e-books purchased via their customers' Kindle devices for the next two years. But the problem here is that if customers switch their primary literary consumption to e-books, they aren't as likely to buy as many physical books. And at the end of those two years when they earn a commission on a customer's Kindle purchases, the bookstores will probably still be out of a significant chunk of that consumer's business.

Print books aren't as dead as they might seem. In fact, the most recent annual numbers show a mere 1 percent drop in physical book sales over the previous years. Plus, as my colleague Neil Irwin pointed out, there's a segment of consumers who read a handful of books per year and like to keep them on a shelf as trophies. And some segments, like visual children's books, currently don't translate as well to digital formats.

Still, bookstores are having a tough time. Bookstore sales fell 9.6 percent between 2007 and 2011. And bookstore sales from January through September of this year were down 2.6 percent from the same period last year. Consumers haven't stopped purchasing print books, but they are becoming increasingly likely to purchase through an e-tailer. You know, like Amazon.

This trend is analogous to the shift in the video market from physical media to streaming content. Or, for that matter, the shift from print newspapers to the Web. And it could be argued that Amazon is offering independent retailers a way to get a cut of those sales as they look for another business model -- like, say, turning into a coffee shop. But it's hard not to see the Amazon Source program as Amazon asking booksellers to help make themselves irrelevant.

[Amazon founder and chief executive Jeffrey P. Bezos owns The Washington Post.]

Andrea Peterson covers technology policy for The Washington Post, with an emphasis on cybersecurity, consumer privacy, transparency, surveillance and open government.
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Andrea Peterson · November 7, 2013