The huge online retailer Amazon currently dominates the online market of print book sales, and has even begun to open brick and mortar bookstores in its expansion into the market. Its command of online sales is unparalleled and it’s interesting to see whether or not they will begin to command the sales of books among brick and mortar bookstores as well. With their foot in that door, only time will tell as to what kind of success they have in a different world of publishing, with competitors like Waterstones recognising this threat. They may have to fight hard with the giant to stay in business.
Amazon has dominated online print sales for many years, beginning with its introduction into the publishing industry in 1995. Between then and the present day it’s risen to dominate the industry, towering above its competitors.
According to a survey by RBC Capital, Amazon sales were at around 90%, where the next highest, eBay, was around 38%. The companies closest in rivalry are also huge, but don’t come close to Amazon, which owns roughly 40% of print and digital sales in America.
Brick and mortar book companies have the benefit of seeing what Amazon did to online competitors, so they know what to expect. It’s anyone’s guess as to how Amazon will do in this area.
The US giant has opened stores in Seattle and San Diego, called Amazon Books, and planned one in Boston among other places. The company put many stores out of business in the past, including the bookstore company Borders, and damaged Barnes and Noble. How far this competitiveness will continue to push others out of the way is a subject of interest and hugely important for the future of the book industry, as we could be looking at mainly or only Amazon stores, with other retailers gone bankrupt. Amazon then would have the ability to do what they liked with complete control, for example, raise prices and since they’re the main outlet for books, the public would be limited in choice.
Brick and Mortar Bookstores
Giant Barnes and Noble were hurt by the discounted prices and other factors imposed by Amazon, but have survived. Their brick and mortar chain is strong and they also sell online, whereas Amazon dominates online but have only recently begun to expand into brick and mortar bookstores. For now, Barnes and Noble are ahead with bookstores, and have hindsight, witnessing what Amazon did in the digital market. If Amazon begins to expand more and more into print, it’s uncertain who would win the struggle for dominance.
Barnes and Noble will be one of the largest threats to Amazon’s brick and mortar expansion. It’s been around since 1873, and Amazon only joined the book market as a whole in 1995. The history of Barnes and Noble is intriguing. Leonard Riggio, a former clerk who attended New York University aimed to compete with Barnes and Noble in the 1960s. He aimed to compete with them at first, believing he could do better at serving students. He eventually acquired them himself. Following this, the store apparently became “one of New York’s finest bookstores, known for its knowledgeable staff, wide selection and great service.”
As one of the oldest bookstores around today, it achieved many great things, including becoming “the first bookseller in America to advertise on television”, and “the first bookseller in America to discount books by offering New York Times bestsellers at 40% off publishers’ list prices.”
Despite this history of success, it now faces a very real threat, just like other well established giants like Waterstones and WHSmith do.
This speculation also stretches to other countries. What could become of huge retailers like Waterstones, the number one retailer in the UK and other giants worldwide? The future could be one where only or mostly huge Amazon warehouses exist, distributing literature to customers, with every other book company forced out of business, from small to large independent stores and others. But Amazon could also fail and be pushed out of the market. It’s unclear at this stage.
Customer satisfaction will be a key factor in this. Amazon focus on their customer rather than their competitors, as CEO Jeff Bezos believes this is important. The customers are the ones who buy the product, not the competitors, so rather than trying to outsmart their rivals Amazon has gone directly to their audience.
According to Sandeep Mathrani, the boss of a shopping-mall, Amazon wanted to open four hundred brick and mortar bookstores over the course of a few years. Amazon didn’t confirm this but did state its wishes to expand into the bookstore market, albeit on a smaller scale at first.
Amazon also offers free shipping in some cases, a tough thing for competitors to imitate, as well as servicing a broad area in the western world. Such benefits to Amazon, combined with the fact that it’s worth hundreds of billions of dollars, means it has a great advantage over other companies and could simply take losses while it establishes itself over more established rivals. It’s able to afford this, while many other businesses aren’t.
Amazon rose to dominance in a very short space of time in the online arena, pushing other companies like eBay far down the list. The print arena is another matter, for sure, with other factors to consider on different companies. Brand satisfaction, loyalty and the ability to adapt in time are elements of success that other companies can draw upon. Maybe others can even outsmart Amazon with the foreknowledge of its past dominance, ambitions and strategies. But whether or not any of these companies can battle with the huge financial resources Amazon draws upon is one major issue.
If Amazon sustains huge losses it may wish to pull out of the brick and mortar business, but this doesn’t seem likely to happen after seeing what it’s capable of doing.
Another reason Amazon holds huge advantages over bookstores is that it doesn’t only stock books now, but profits from selling almost every product imaginable. Bookstores deriving revenue from books alone lack the funding to compete in many ways.
Expansion overseas for Amazon is another factor. As well as planning more bookstores in the USA, it also plans stores and warehouses in Australia by September next year. This expansion would be huge and pave the way for even more dominance for them as a company. With such influence, is it possible anyone can compete?
However, they’re not infallible and CEO Jeff Bezos once lost ‘$3 Billion In An Hour After Amazon Misses On Earnings’. This shows how things don’t always go their way and how losses can be high. However, the company is still one of the richest in the world. Jeff Bezos is America’s second richest man, behind Bill Gates.
Innovative Amazon vs. Established Bookstore Companies
Barnes and Noble and Waterstone’s as well as all other large bookstores stand the greatest chance of surviving Amazon’s aggressive expansion. Smaller indie stores will suffer the hardest and many will undoubtedly be forced out of business if Amazon’s huge ambitions go ahead. The big companies may have to start introducing new measures to ensure advantages and consolidate themselves over Amazon, as it is a newcomer in their field, where they are much more experienced.
Amazon is innovative no doubt, but can it invade brick and mortar giants’ home territory so easily without hardships and significant drawbacks? One would say not. It’s conceivable to even say that corporations owning large bookstore chains have the power and established presence to put pressure on Amazon as it explores the waters of this new area. They already have a giant pool of consumers who visit their stores and prefer buying books in person as opposed to shopping online. Many probably also disapprove of Amazon because of this and the way it operates. If they use this to apply pressure on Amazon during its growing pains then they could conceivably interfere with its growth, inflict losses, maintain dominance or even push it back out of the market.
Amazon will definitely be able to afford the losses due to its size, but if it was losing money from brick and mortar, this would affect the company as a whole and may deem it better to pull out of the market to focus on increasing its wealth by staying where it’s most successful. It’s been mostly successful online and maybe this is where it belongs. Only time will tell.