Getting Kindle into Bookstores: Amazon Baits the Hook

Amazon wants your business -- and to be part of your business -- independent booksellers.

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Odds are you’d never see Barnes & Noble bite, but Amazon’s making an intriguing pitch to booksellers to begin selling the company’s popular Kindle e-readers and Android-powered tablets.

The deal, which Amazon calls Amazon Source, is as follows: add the Kindle to store shelves and receive a 10% cut of the price of each digital book sale for two years from the date each device is sold. To sweeten the pot, Amazon’s dangling a 6% discount off the list price of its Kindle line, as well as a 35% discount off Kindle accessories.

I’m nearly two decades removed from inside knowledge of print-related retail sales margins, but in the mid-1990s, margins on the computer books I sold were in the 50% range. If that margin’s the same (or better), 10% sounds a little stingy, to say nothing of the deal’s implicit request that stores hold a metaphorical gun to their heads by selling a platform that accelerates their transition to novelty and/or antiquarian status.

Here’s Amazon’s pitch:

We created Amazon Source to empower independent bookstores and other small retailers to sell Kindle e-readers and tablets in their stores. We crafted two unique programs with two different kinds of stores in mind, but retailers in select states can choose whichever program they prefer. Through the Amazon Source portal you can order inventory at wholesale prices, communicate with our account management team, and download professionally-designed marketing and merchandising assets to help drive your sales.

Sound a little Borg-azon to you? Me too. In essence, Amazon’s offering to make independent booksellers Amazon proxies in trade for a tiny slice of the biz on a relatively short timescale. Amazon doesn’t need independent booksellers to sell its devices — it’s always going to cost Amazon less to ship direct to consumers — but with Amazon Source, it gets to tap into a market it’s currently at odds with and in-said-market’s-best-interest banished from.

No surprise, Amazon’s VP of Amazon Kindle has a different take on the matter, telling USA Today “If you run a bookseller, or any retail store today, many people walking through doors are interested in buying print books and digital versions. This makes stores more relevant to customers.”

He’s not wrong, but the question’s whether consumers are really ready to bid farewell to print books. If this hastens the demise of independent booksellers as they help Amazon shift its audience over to e-reading, do we care? These independent booksellers won’t be Amazon proxies forever. As noted above, Amazon makes more money selling direct to consumers. If brick-and-mortar booksellers think they’ll be able to thrive as e-reader sales surrogates, they need to think twice, and Amazon’s two-year cap on the deal may be telling.

1 comments
EnderWiggum
EnderWiggum

This would not appear to make sense for true bookstores.  However, I wonder if Amazon's rules would allow me to open a token storefront somewhere, basically selling only Kindles.  If my overhead were low enough, and i really pitched the cheaper price of the Kindles, there might be a way to make money off the 10%.