As you may've heard, Ama - er, um - SPECTRE recently put forth an offer to independent booksellers to become part of their 'team'. The gist of it is that we can sell their gizmos and their e-files and get a slice of their action for a period of two years. Here's their press release on the deal.
From The Verge you get the math on this 'offer':
"Let’s clear up some numbers in this article.
Amazon is offering a 6% discount on wholesale purchases of Kindle devices and up to a 30% discount on accessories. That means a KF HDX would cost a bookstore $216. Amazon will then give them a 10% commission on ebooks sold (and only ebooks sold, not apps, movies, music, audiobooks, or ebook rentals). Given that the upper limit selling price for a trade ebook is around $15, they’re looking at a maximum of $1.50, but with average prices in the 6 or 7 dollar range they’re looking at chump change in commissions.
Also, because of Amazon’s proprietary DRM, the bookstores can’t sell their own ebooks directly to try and get more of the pie.
The second option is to forgo the commissions in exchange for a 3% increase on the margin for the devices. Yeah… $7.50 isn’t going to convince anyone.
The thing is that people running independent bookstores aren’t stupid. For them to survive in the current state of the physical book selling market means that they’re actually probably very business savvy. So they are going to be able to see right through the smokescreen here. Business Insider summed it up perfectly: “Amazon has a plan to get indie bookstores to kill themselves”.
In every respect this is a terrible ripoff, especially when Kobo is offering a much better program through the ABA." [We here at SMB are part of the Kobo program.]
The New York Time's David Streitfeld asked JB for his thoughts on this and he's what he sent back:
I can't help but see this as a misleading attempt to counter the in-roads that Kobo has made with readers and fans of independent booksellers. Recently, we've read of Amazon shutting down part of its publishing due to a lack of success and profits (and stories about how Amazon itself is still not profitable). Something about this move has a feeling of retreat.
This release really doesn't provide much info. What's the discount that they're offering to booksellers on their gizmos? If independents can't make much money on the sale of the devices, they're at a disadvantage - selling the competitor's hardware, enriching the competitor, and not making much in return. There's also the issue of how an independent's customers get to the place to order they e-books. Are our customers just clicking on link on our website that then takes them to Amazon's? All that means is that they're selling independents the opportunity to become a new set of portals to funnel customers to Amazon. We help Amazon grow its business and, in return, we get a thin slice of the sale? That's not cooperation; that's being willingly complicit in your own execution.
Here's the final Streitfeld's article in the New York Times.
Since then, there have been any number of reactions, some bemused, some scornful, some perplexed, and some outraged.Here are just a few noted by Melville House Books on their website:
“We are not enticed in the least by the latest ‘offer’ from Amazon. It’s a dagger disguised as an olive branch – the latest effort by Amazon to gain traction with indie customers and loyalists.”
— Lissa Muscatine, Politics and Prose, DC
“Hmmm, let’s see. We sell Kindles for essentially no profit, the new Kindle customer is in our store where they can browse and discover books, the new Kindle customer can then check the price on Amazon and order the ebook. We make a little on their ebook purchases, but then lose them as a customer completely after two years. Doesn’t sound like such a great partnership to me.”
— Carole Horne, Harvard Book Store, MA
“If past experience is any indication, Amazon is not doing this to be sweet to indies.”
— Dorothy Massey, Collected Works Bookstore, NM
and our personal favorite -
“They can go fuck themselves.” — Sarah McNally, McNally Jackson Books, NY
Shelfaware ran a story with similar quotes:
David Bolduc, owner of the Boulder Book Store, Boulder, Colo., called participation in the program "sleeping with the enemy. If anyone thinks Amazon is going to do you a favor, you better have someone walking behind you so you don't feel the stab. Their whole entire business model is predatory.... I don't see any possible way to live in the same ecosystem as Amazon. They don't want anybody else. They want to be the go-to source for everything in the world."
For me, it's a Main Street issue," said Anne Holman, co-owner of the King's English Bookshop, Salt Lake City, Utah. "If I sell their Kindles after everything they've already done to indie bookstores, where would I be? It's about more than just bookstores: it's about the bike shop across the street, it's about the restaurants.... And it's not just the booksellers they've put out of business, it's the electronics store down the street, it's the other small businesses. I like our small businesses ecosystem and want it to flourish."
Nor should you think these reactions are limited to US booksellers. From The Bookseller:
Sheila O'Reilly, owner of Dulwich Books in London, told the Bookseller: "I think I would search my heart and find that morally I just couldn't stock the Kindle. I know Amazon employ lots of people in this country but they also have head offices in Luxembourg and Ireland for tax avoidance reasons and I couldn't ignore that. If it was more of a level playing field between Amazon and independents, then maybe I would think about it, but it isn't."
David Dawkins, manager at Pages of Hackney bookshop in East London, said Amazon "has made a point of aggressively diverting people's habit of using the high street. The company has made it clear that is what they want to do and I would be very surprised if this signals a change in policy towards independent retailers and the high street. I also wouldn't want our customers to think that we were doing trade with 'the bad guys.' I think we may lose quite a lot of respect if our customers thought we were sleeping with the enemy."
Other news on the subject of SPECTRE:
~ There's been a great deal of press about Brad Stone's biography of Jeff Bezos and his creation. Then there was MacKenzie Bezos' heated criticism of the book. If you don't know what to think or who to believe, here's a story about an early employee the company and his view on Stone's book who posted a four-star review of the book on SPECTRE's own site. Shel Kaplan - the former employee - thinks Stone got it right.
~ Last month, towards the end of October, Ama - er, um - SPECTRE announced that it was raising it's minimum amount an order needed to achieve to get free shipping from $25 to $35. Whether this was to recoup some revenue due to the policy, or to drive people toward their Prime service whereby the customer pays upfront for a membership and then is enrolled to get services whether they use them or not, is anyone's guess. (Free shipping on all orders is one of the services.) Either way, they're moving to do less for free and to use their pervasive computer systems to make suggestions to people so that they'll buy just a little more to get up to the now higher free shipping total.
~ SPECTRE announced a joint plan with the United States Postal Service to provide Sunday delivery.The Postal Service plans to use flexible scheduling to do this and says it will hire no new employees, though we've seen nothing about what this will cost in payroll. Is SPECTRE going to eat these charges or are they to be passed along to their ordinary consumers (Prime members will pay no shipping charges for Sunday delivery)?
~Then there is the inexplicable phenomenom of SPECTRE being a massive, worldwide outfit that still makes little to no profit for its stockholders, an anomoly on Wall Street.
Derek Thompson wrote in The Atlantic in October "Defenders say Amazon is trading the present for the future, spending all its revenue on a global scatter plot of warehouses that will make the company indomitable. Eventually, the theory goes, investors expect Amazon to complete its construction project and, having swayed enough customers and destroyed enough rivals, to “flip the switch,” raising prices and profits greatly. In the meantime, they’re happy to keep buying stock, offering an unqualified thumbs-up for heavy spending.
But this theory assumes a practically infinite life span for Amazon. The modern history of retail innovation suggests that even the behemoths can be overtaken suddenly. Sears was still America’s largest retailer in 1982, but just nine years later, its annual revenues were barely half those of Walmart. “The economic countryside is littered with the carcasses of companies that thought they had a [durable] competitive advantage,” says Alex Field, an economic historian at Santa Clara University. “Just look at BlackBerry or AOL.”
Amazon is not as insulated from its rivals as some think it is. Walmart, eBay, and a bounty of upstarts are all in the race to dominate online retail. Amazon’s furious spending on new buildings and equipment isn’t an elective measure; it’s a survival plan. The truth is that the company benefits from a beautiful but delicate tautology: Amazon has won investors’ trust with a reputation for spending everybody to death, and it can spend everybody to death because it has won investors’ trust. For now."
Greg Satwell, writing in Forbes Why Amazon Is A Lousy Business
Benedict Evans wrote this past August, "Equally, the problem with saying 'we can't tell from outside how Amazon is really doing, but it will become profitable, just wait and see' is that you could be waiting for ever without ever knowing if you're wrong."
Eugene Wei is one who thinks SPECTRE's business model is genius, that in this model short-term profits are not the point and are unimportant. Which business model is it that he approves of? The original one where there were to be no warehouses at all, that everything would be done in the great flowing river of the internet, where it would have no physical presense, no stock, no stockers - just office workers sitting at computers and sending customers' orders to manufacturers. Is that the genius business model, the one that was ditched long ago?
Oh - in case you were wondering if we were going to become part of SPECTRE's continuing efforts at Global Domination...
Do you really need us to answer that?