In case you’ve been out of the loop, Amazon has opened a physical bookstore in Seattle. Yeah, a physical store from the online giant. It’s not your typical bookstore, though. For one thing, there are no set prices on titles. Rather, the price of the book is tied to the ever-fluctuating price at the online store. And rather than post a few recommendation tags on a handful of titles, nearly every book has a review posted by a reader. If you’ve posted a review on Amazon.com, your recommendation may be the thing moving books at the store.
There is now talk (unfounded and possibly baloney) of Amazon opening 300-400 small footprint bookstores around the country. The rumor comes from a mall manager, whose business might win a boost from such speculation, but let’s set aside whether or not the rumor is true and talk instead about whether or not it’s a good idea. What do I think? I think it’s a fucking fantastic idea.
Let me jump sideways for a little bit first. I want you to look at the following graph:
That’s Amazon’s earnings in black and their profit in orange. For years, the anti-Amazon crowd has poked fun of Amazon for not “making a profit.” When what Amazon has been doing is making shitloads of money. Hundreds of billions of dollars. And then taking that money and investing it in web servers, distribution centers, shipping fleets, original content, device R&D, etc. They have built a lead in several of these areas that is practically insurmountable. They now sell more goods than Walmart. Think about that. And then think about this: What are the chances that a company’s gross revenue can move up so much while profits remain at practically zero? The chances are also zero. This company is cleverly spending every penny in expanding that lead. And now they are going to do to the physical space what they did to the online one.
Here are a few things that the anti-Amazon crowd don’t seem to get and why they are going to be surprised and completely wrong about all their prognosticating:
1) Online retail accounts for 8% of total retail. EIGHT PERCENT. Amazon might own half of this. That leaves another 92% to grab a slice of. Even if they only grab 4% of this massive chunk, that’s a doubling of their retail business! Amazon is not foolish to enter a segment where 92% of the action lies. Instead, look at them as the classic disruptor: Setting up a beachhead in the low-margin and low-startup cost end of a sector before moving upstream. That’s exactly what they would be doing by moving into physical retail. And guess what? They already have the hub-and-spoke distribution network in place to feed that retail system. Not going the last mile to customers will be an increase in efficiency, not a decrease.
2) The number two thing detractors don’t seem to understand is that Amazon’s greatest strength is DATA. Data, data, data. They know what everyone buys and where it gets shipped. That means they know what to stock in every town in the United States. They also know where practically every author lives (and this is a good thing. Because…) imagine if Amazon wanted to turn their physical bookstores into event centers. An Amazon rep reaches out to local self-pub, A-pub, and trad-pub authors and sees if they want to do a reading. Emails are blasted to Amazon customers within a 50-mile radius who have bought that author’s books or another book like it. This is just one of a bazillion ideas I have about how I would leverage Amazon’s online data to bring communities together. Anyone who thinks Amazon doesn’t know their local customer base is a fool. No one knows them better.
3) More bookstores is a good thing! I’ve already seen anti-Amazon rhetoric about how these expansion plans would be awful, because Amazon already sells too many books, and when will someone stop Amazon from selling so many books! Because selling books to readers is … a bad thing? What the hell? Borders is gone. Barnes & Noble is being run by people who love board games and hate comfy chairs (remember those?). There are no more Waldenbooks in our malls. We need 300-400 Amazon bookstores, and we need them open yesterday. Give me one. I’ll manage the shit out of that fucker.
4) A fair bookstore would be a sight to behold. Can you imagine a bookstore that doesn’t blacklist books from select authors? I can’t. I’ve yet to see one. I hear there’s one in Seattle, but that’s only a rumor. You see, almost all bookstores blacklist Amazon-published titles. That’s right, they ban them. And very few carry many self-pubbed titles. If the Seattle store is any indication, Amazon plans to push what readers enjoy. That’s going to mean a lot more self-pub titles (printed by CreateSpace), and more A-pub titles (where authors earn nearly double what New York publishers pay). The more these books are sold, the more money flows to artists and not big city suits. Fair bookstores would be freakin’ awesome. Sign me up, Jeff. I’ll manage the shit out of that fucker.
5) Amazon is already innovating in the physical space. Their “Treasure Truck” just went mobile in Seattle. This truck is full of a certain single daily deal (like a GoPro for $70 off), and you use an app to track down the truck, purchase the daily deal, and pick up your item. The GoPro deal sold out in 45 minutes. Not only did they move merchandise, but every deal is a chance to interact with customers. This is advertising and public relations WHILE MAKING A SALE. Oh, and collecting data. Through the app. Freaking genius.
6) Back to my graph about profits: Amazon brings in a lot of money. A LOT. Think about Google and all the money they bring in. Enough to build a fleet of robotic cars. Why? Just because. Well, Amazon doesn’t do just because. They don’t have gourmet, local, organic, 3-mile-radius, Michelin chefs serving 9-course tasting menus to coders on their lunch breaks. With all the money they save on being sensible, and ruling the roost when it comes to web servers, Amazon could easily foot the bill on 300-400 small bookstores. This would be an excellent use of their income. The rest of my list details why from an operational standpoint:
7) Device sales. Amazon makes some of the coolest devices on the market. Their e-readers are a marvel, and every avid reader should own one. And the Echo is a game-changer. The more people can interact with an Echo, the better. Their Fire tablets are also an unreal deal for anyone who is already a Prime member. A small device kiosk would kick so much ass. Not to mention all the cool limited-time promotions they could tie to these devices. Hop onto their free WiFi with your Kindle, and read a select daily freebie in your favorite genre (12 freebies a day in the top dozen genres). Or get an in-store price promotion. Or snag a limited edition e-signed Kindle book from a local author who is going to be doing an event soon. (Seriously; I could manage the shit out of these fuckers).
8) In-store pickup. These stores are already getting daily deliveries. Why not toss in customer orders as well and skip the last-mile bottleneck? Now all Prime members get free 1-day delivery to their local store and affordable same-day delivery. Unlock the in-store Amazon locker to collect your order. And oh, did you see that the latest David Gatewood anthology is out? You can get it in paperback or e-book. In fact, since David included the Kindle edition in Matchbook, the e-book comes FREE when you buy the paperback (and a handy sticker on the book proclaims this). Eventually, the local Amazon bookshop becomes what the USPS store used to be. And when Amazon announces their own delivery fleet to duplicate what UPS and FedEx offer, they become your favorite local shipper as well! Set the delivery address and pay for shipping right in your Amazon app. Drop off while you pick up your recent order. There are free Amazon boxes of various sizes right there by the counter.
9) Advertising and public relations. Amazon does little of the former (their first Superbowl ad ever is running today) and really doesn’t need to do much of the latter. They don’t need to. Everyone knows about Amazon, and their customers absolutely love them. Prime memberships are exploding. But the stores would do a lot of both PR and advertising, enough so that even if the stores operated at a small loss, they would be totally worth it. We’ve already seen how Amazon loves to not make a profit (you pay taxes on profits. Reinvested money is free money). But advertising is traditionally a massive write-off for companies. These physical stores could be seen in the same vein, as an ad write-off. But the biggest PR boost would be twofold: The tired meme of “Amazon doesn’t pay taxes” would become null and void. As would the idea that Amazon is killing off bookstores. With 400 locations, and if B&N closes a third of its stores as planned, Amazon would be the #1 physical book retailer in the country. That wouldn’t silence the critics, but it would make them appear even more foolish than they already do. Of course, publishers would hate all of this, as they seem hellbent on preventing the #1 bookseller from selling more books. But authors and readers would rejoice.
And now, drumroll, because I saved the best for last:
10) We would FINALLY have a chain bookstore from a company that values authors. Independent bookstores largely have this nailed. B&N never has (I say this as a former employee and an author who has both tried to get events there and one who eventually succeeded). Amazon could do amazing things if they teamed up with NaNoWriMo and CampNaNo. (I’m on the NaNo board if they want to talk. I would run the shit out of that partnership.) In addition to book readings and signings, how about writing workshops? I would love to see a 4-part series put together by a local author, attended by fans and aspiring writers, all to celebrate a culture not just of reading but of creating. For the Amazon stores with a print on demand machine, these authors could have their works available and print out their own copies as needed. What about a dedicated signing table, with a scheduling app that helps local authors sign up for 3-hour slots on a first-come basis. They can sit and chat with shoppers about their books. Let the author buy the books in advance, have them drop-shipped to the store, and commit to shelving a handful on commission after each signing. These books would be discounted heavily over time to make room for the next authors’ works. Eventually, they are “returned,” which entails the author picking them up from the store if they want, donated to libraries/charities if they decline. Payment goes right through their CreateSpace account. And a large monitor behind the table revolves pictures of past and future authors, with the pics taken right from their Amazon author pages (and other info from the same pages, including product blurbs and reviews).
Bookstores are needed in communities. Especially bookstores from people who love books, treat customers well, and respect the artists who create them. There’s no other company better in all three regards than Amazon. Do they dominate book sales already? Damn skippy. And they deserve every bit of the marketshare they’ve claimed. If they keep treating their customers and creators the way they have, I hope they get as much of that 92% as they can gobble. What I’ll do is start to complain the day they begin treating customers and authors the way the old guard already does. Until then, the more disrupting they do, the better.
Now where’s my store? Give me a job, Jeff. This writing gig can’t possibly last forever.
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