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July 8, 2013 / schulerbooks

The next chapter for Amazon pricing: A few thoughts about David Streitfeld ‘s New York Times article.

To those of us in the bookselling world, the article by NYT reporter David Streitfeld – “As Competition Wanes, Amazon Cuts Back Discounts” – published on July 4th, comes as no surprise. Astute users of the Amazon website will have noticed that books were usually the only product category to be discounted so heavily. Books were “loss leaders” for the company from the very beginning. With brick and mortar stores in many mid- and small-sized cities now gone, along with their expertise and specialization, so are the options available to readers. As Mr. Streitfeld writes about Amazon’s book pricing strategy:

Even as Amazon became one of the largest retailers in the country, it never seemed interested in charging enough to make a profit. Customers celebrated and the competition languished.

Now, with Borders dead, Barnes & Noble struggling and independent booksellers greatly diminished, for many consumers there is simply no other way to get many books than through Amazon. And for some books, Amazon is, in effect, beginning to raise prices.

Stephen Blake Mettee, chairman of the board of the Independent Book Publishers Association, said that Amazon was simply following in the tradition of any large company that gains control of a market. “You lower your prices until the competition is out of the picture, and then you raise your prices and get your money back,” he said.

With a great deal of competition gone from local communities, Amazon has far less pressure to continue its extreme discounting of titles. Readers who took advantage of the artificially low prices, and assumed an illusory guarantee from Amazon that they would remain low forever, now face the possibility that Amazon has decided it’s time to “get their money back.” In far too many cases, the local bookstore option is now gone, taking with it the personalized recommendations, author signings and community gatherings that went hand-in-hand with, and enhanced the whole experience of, reading.

A short time ago, we posted a quote from author William Kent Krueger on this page. It seems prescient in the wake of this article: “Buying from independents is in our own best interest. It assures that no one large entity will control what’s available to us as readers.”

To a very real degree, Mr. Krueger’s “one large entity” has come to pass. It’s likely that Amazon will widen the scope of its price increase policy; they can make that decision without the constraints of competition that would have existed sixteen years ago when they first started to sell books at a loss. An enviable position for them, far less so for the communities who no longer maintain an independent bookstore, or employ passionate readers to share their expertise and spread their love of literature.

Read the full article: http://www.nytimes.com/2013/07/05/business/as-competition-wanes-amazon-cuts-back-its-discounts.html?pagewanted=2&_r=0&ref=general&src=me

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