I Want Amazon Bookstores

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:

Amazon 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.

 

 

COMMENTS (43)

This is an awesome post with so many great points. I work in a tourist area where i see many people reading traditional books. When i talk to them about the indie authors i love, of course, theyve never heard of them. This would be a great way to open the door and connect tradiitional paper book readers with new authors.

BRAVO! Hugh Howey! [You can’t see it but I’m clapping.] Interesting observation, thoughts and points. I think there’s tremendous potential, for authors–especially, good, undiscovered one–with what Amazon is doing. I’m excited to see how it all plays out.

Two comments:
1. If Amazon were to do physical retail in a big way, they wouldn’t expect to have to “use their income” to “foot the bill” for the stores. They would only open a large number of number of stores because they’ve figured out a model that is cash flow positive.
2. I’m on board with the idea of “e-signed Kindle books”. It’s what I’ve been working on for almost 5 years over at Authorgraph. ;)

Great comments, Hugh. What’s good about your ideas is that some of them could even be done without an Amazon bookshop, perhaps by authors getting together.

By the way, Evan Jacobs, I’m noticing more people are getting interested in Authorgraph which is great.

Great post, right on point! I enjoy reading, period, but I enjoy it a little bit more if I find the book in an actual bookstore as opposed to online. It is a little bit like listening your favorite song in the radio (remember those times?). Anyway, thanks for your thoughts!

Book essentially done. Have had push back on finishing due to conflicts of ideas or is it just straight hacking? I don’t know. Haven’t been able to successfully deliver a clean copy to Friesen. Not sure of any obligations, because I paid and only asked for commas etc to be changed. Although not admitted, other changes happened anyway whether by hacking or not. Just wanted to deliver a clean copy, but many already know the jist, just the story is interesting and drives it home. Please act if going to ASAP.

Hugh you’re once again on point. I hate being an idie and not being able to see my book in a local bookstore kills me. It was you that guided me through self publishing a few years ago and I cannot thank you enough for it. The day job, because i’m not to your level yet… and yes I said yet (new books are coming soon) is managing at Walmart and I hate it. I have seen so many changes in this company in the last two years and they fear what Amazon is doing out there…eating into their business! This concept of bookstores for us indie authors gives us a new hope that we can have a shot of being seen out there. I, for one, am ready to see that happen.

I’m in for the Canadian side of these operations!

Hey Hugh, great post! I am on board with any one/group/business/raindancer who can level the playing field for the indie author. Big business (aka Big traditional) has for far to long barred the gates to competition. Perhaps if they had been smarter about their methods, they would not be sitting in the position of having to bow to Amazon in time, to have any share of the market. I think the traditional publishing world is about to get a taste of their own medicine. Get in line, big five, and take an number like the rest of us.

They can also bring some of their bookstores to Australia.

“We’ve already seen how Amazon loves to not make a profit”.

And yet Jeff Bezos owns $44.8 billions. http://www.forbes.com/profile/jeff-bezos/

Maybe he gained that fortune, the fifth in the world, playing lottery. And maybe he doesn’t pay himself a better salary than one of his warehouses workers. I wouldn’t bet very much on this, though.

Most of that is stock value. Not cash. But he’s done well enough as a VC not to have to take a big salary from Amazon. I think he pays himself around $100k/year.

Well, Hugh, maybe you are right about the $100k/year (which is really not much for a CEO). But his vision of business is not a benevolent one. Disrupting? Yes. Innovative? Yes. But definitely not benevolent. Business is business is business.

That’s simplistic. Business can be benevolent. It’s all along a scale. You can’t paint every business with the same brush. Everything we’ve seen from Amazon is that they value customers and authors. What more do you want? Heck, they don’t even take large profits, which is the normal complaint from the anti-capitalists. If you just judge Amazon by everything they have done to this point in history, it looks like a damn charity organized for the benefit of regular-joe-and-jane consumer.

Hugh, from a business perspective, it is as interesting argument. From the view of a struggling author it is an interesting argument. From the view of benefit, it falls short on the legs of how Amazon treats its workforce, the culture of fear and violent communication it fosters as well as how it treats its communities that host its offices. Also, publically traded companies with billionaire owners funnel all their surplus cash into overseas banks ( avoiding supporting local communities) and building private warchests via options and dividends. I would prefer a Company with Benefit Corporation values owning the market (Google bcorp).

Regards,
Ethan

What Ethan Freckleton said.

Plus:

– Amazon has not always been supportive for indie authors. Before the Createspace and the Kindle era, when it made more business sense to court big publishers, Amazon courted big publishers, and it was very difficult for an indie author to have her book referenced on Amazon
– In the past, Amazon has been known to make authoritatively disappear indie erotic books and ebooks
– Amazon was not the first to give a 70% margin to authors. Amazon aligned on Apple
– At least 90% from the ebooks exclusive to Amazon, because in Kindle Select, are not visible to the readers because they don’t sell enough. When, in this world or any other world, do you make a favor to your suppliers when you make them sign a deal (even if it’s only 3 months, it’s 3 months tacitly renewable, which makes all the difference) that is guaranteed to screw 90% of them?
– If we want to determine whether Amazon is a benevolent company, we have to think outside its suppliers and customers. Does Amazon act in all fairness towards its competitors? I don’t think so. I would go as far as to say that the notion of exclusivity to the scale that Amazon is doing it, for a retailer, is an evil one
– Yes, Amazon blurs the line between its functions as a retailer and a publisher with KDP Select (publishers are known to get exclusive deals with authors, in the theoretical purpose for the books to be delivered as widly as possible), but the advantages of KDP Select will only benefit a select few from the people who have signed, by making them entirely dependent on Amazon, and even if the number is superior than the select few of traditional publishing, it is still a select few, which is right for a publisher
– KDP Select impacts all the ebooks which are outside of it, making them less visible, which is wrong for a retailer, especially an online retailer

All of what I describe above is perfectly in Amazon’s right. They have a right to do all of that. Because it’s business.

Authors who use KDP Select have the right to do so. Because it’s business.

But calling Amazon a benevolent business is being oblivious both from the past and from what happens right now.

Hey Alan, what companies do you like better as a reader? As a writer?

They are the best of the bunch. It’s not even close. You can cherry-pick all you want, but I can line up worse behavior on the other side and then some. And I have a much longer list of everything Amazon does right.

If you want to hate anything badly enough, you can use bias confirmation to justify that hate. I’ve worked with all the retailers, and I can tell you that in my opinion, Amazon is the best for writers. The most fair. The most benevolent. Google is the worst. Smashwords right behind them. Then B&N. Then Apple. Kobo is awesome, and I put them up there with Amazon. Sony was terrible.

I can’t agree with the idea that all of these are companies, so they are all equal in their treatment of others, and so none can be benevolent. That’s weird reasoning. We’ll just have to disagree, friend.

Hugh, you are putting words into my mouth. I didn’t say that all the companies were doing business, and that made them all equivalent to each other.

There is no hatred about Amazon on my part. Amazon has done many right things that benefited the two sides, indies and Amazon.

Theoretically, we have to make the difference between the customer in us and the supplier. As you and me are human being, I acknowledge that it’s not always feasible.

For example, I owe a Kindle Paperwhite, and I love the work the Amazon’s engineers have done with that device.

I also love, when I buy MP3 on Amazon, being given credits by Amazon to buy more.

I acknowledge the great quality of service that Amazon provides to its customers.

But the supplier in me makes me buy most of my ebooks on Kobo, because I strongly disagree with KDP Select – even if I need to convert my epub into .mobi files for me to be able to read them.

That’s a human bias on my part, as it is a human bias on your part to credit Amazon with being a “benevolent business”, just because Amazon hasn’t screwed authors on the same level than traditional publishing.

I acknowledge there’s a world of difference between what traditional publishing is doing to authors and what Amazon is doing, but I also recognize that they are not on the same playground. History matters.

Granted, Amazon Derangement Syndrome exists because Amazon is disruptive. So is indie publishing.

That is not making Amazon a partner we indie authors can blindly trust. It’s a business partner, and, as a small business myself, I think that it’s dangerous to let my loyalty as a customer change my vision as a small business.

That was my point. No hard feelings between us, Hugh.

I LOVE these ideas but you know what I would really love? For Amazon to open a Createspace in Australia. Currently trying to get my paperbacks into the country is murdersome due to shipping costs and the general exchange rate. Ive tried searching for a similar POD company here is Aust but cant seem to find something thats going to offer me the same quality. I dont know why Amazon isnt taking advantage of this in Australia where we need to get behind out Indie authors more, especially to get diverse and new writers into the market. I know that we now have our own Audible site and Kindle site but they really need to get behind the paperbacks and open up some stores,

I wonder if the’ll be selling POD books from the stores?? They are also about to open one in San Diego and hiring staff right now,
Keep the wind at your Stern Mr. H.!!

Joe and Vernadene

This post is amazing. I really like the connection to distribution and hub as a reference. Great read. Really great read! So good I posted it lol.

Great ideas, Hugh, as always. Some of them, like authors getting together for reading with a POD might, eventually, not even need a physical bookshop – just a POD printer.

I’ve noticed, Evan Jacobs, that more and more people are getting authorgraphs from your site.

An Echo? Invite a listening machine into my house for the excitement of adding more personal data to the data data data guys, and anyone else with access? I’ve already got a smartphone telling such companies where I am at every moment and what I’m doing. Hmmm. Can’t wait to get that TV with a camera in it so with a wave of my hand I can change the channel. “What? Watching you, sir, while you watch your TV and do whatever else you might be doing? Of course, we are. That’s how good our customer service is. That’s how we are able to improve your daily TV experiences. Oh, and might we suggest that those orange socks don’t go well with your purple pants? Perhaps you’d like these yellow silk socks instead? Click here to purchase now and we’ll take you directly back to Big Bang Theory. Thanks for watching us so we can watch you!”

I’ve been to the physical Amazon store here in Seattle several times, and it is already by far my favorite bookstore. The books are well organized and well laid out, the selection is first rate, the employees are friendly and helpful, there are comfortable chairs everywhere where you can peruse your finds, and because the prices are linked to Amazon online discounts, the new books it sells don’t cost much more than those at used book stores. It’s a lot of fun to browse the books even if you plan to order them online later. More such stores will do nothing but good for readers and writers.

Very cool to hear. I can’t wait to visit one of these. There were so many things I wanted to change about the bookstores I worked in. Be nice to see what they’ve done to innovate a very established model.

I’m interested, Hugh (I’m a new indie bookseller…)

What would you have changed about the bookstores you worked in?

Shane

I’ve done entire blog posts about these. Google “Bella’s Bookshop” and see if it comes up for you.

Cheers Hugh, I’ll do that.

By the way, the Wool/Dust/Shift books are prominently displayed in the science fiction and fantasy section of the Seattle Amazon store.

Great post Hugh. Spot-on. I will also take this opportunity to express my sympathy to those poor commenters suffering from Amazon Derangement Syndrome. Get well soon!

Such a sweet sentiment. I hope they recover as well.

Just curious: are you referring to my comment about the Echo?

Heck Yeah! My earlier comment got bounced here (too many swear words? :), but the bottomline: darn fine job of brainstorming this, Hugh. And willing to bet Jeff Bezos will be reading it soon.

If all this is true, why then publish your novel, Hugh, the traditional way, via Houghton Mifflin Harcourt, if you believe so strongly in Amazon’s model?

https://twitter.com/JohnJosephAdams/status/695346952314032128

This is not meant as an ad hominem attack, but I think this does weaken your argument, no? If the Amazon model is better than all others, then why go the traditional route at all?

When I get offered time-limited print-only deals, I take them. This is a 5-year deal, after which I get the rights back. And it’s print-only. These are unheard of, and it’s what I think should be the new norm, so I gladly sign the deals hoping to set precedent for other authors.

There is some pain associated, as I hate removing titles from CreateSpace. But it’s not lifetime + 70 years like most deals. And I can afford to experiment.

Heck, what’s not to like? If Hugh likes it, I love it.

I don’t know anything about the book publishing business, but two very good friends of mine are AVID readers. I will past this conversation on to them.

I just recently joined Hugh’s blog here as I found his posting about jumping up and going out and getting started on a sailing adventure inspiring. I did that in my youth as well, and never regretted it. Not only did I want to go off exploring the world by boat, I wanted to design those sailboats as well. I’m still involved at 73 .

I was also surprised by the coincidence in his use of title ‘Wayfinder’ & a book by Sterling Hayden titled ‘Wanderer’
“As if that wasn’t enough, in 1963 the actor Sterling Hayden published his book Wanderer;
“They never taught wandering in any school I attended. They never taught the art of sailing a vessel, either. Or that of writing a book. It’s all so mysterious and – yes – enchanting. And that is what I suppose this book is all about.”

Since its first publication in 1963, controversy has surrounded Wanderer, the autobiography of Sterling Hayden. Just as he approached the peak of his career as a movie star, Hayden suddenly abandoned Hollywood, walked out on a shattered marriage, defied the courts, and set sail with his four children aboard the schooner WANDERER. A broke outlaw, he escaped to the South Seas.

Wanderer is the inspirational story of a complex and contradictory man; a rebel and a seeker, undefeated by failure to find himself in love, adventure, drink, or escape.
http://www.sheridanhouse.com/catalog/travel/wanderer.html

So this was the era I began to get interested in boats. You can see the influences I was under; get on a sailing vessel and take off somewhere. Motor Sailers seemed to offer the best of all worlds for this adventure. And those designs by Rhodes & Alden were my favorites. ”
http://www.yachtforums.com/threads/motor-sailers-by-philip-rhodes-john-alden.6710/

Great post Hugh, Interesting statement, notion and points. It could be tremendous and enormous that amazon is doing mainly for authors!! That’s nice to hear. Thanks for sharing.

Okay, I am trying to learn something here, so I am not joking on what I am about to say. I think this is part of what Hugh is trying to explain. Let’s say you have a good but obscure book called Truffle. You can find Truffle in independent brick and mortar stores along with other books that are good, not main stream and not best sellers, in some of these independent stores across the country. You might find one or two copies. In the Amazon brick store, you won’t find Truffle or even a way to find Truffle easily, because Amazon is going to showcase the best sellers. Some best sellers are great with merit, some best sellers cater to the mainstream and are formulaic. And the Amazon bookstores can unfairly beat out the independents by offering cheaper books, possibly pushing an independent bookstore to go out of business. These independent bookstores are willing to sell books like Truffle. But if Truffle is available online at Amazon and other online retailers and self published, the Truffle author will make more money online and reach a broader audience compared to the sales in the independent bookstores across the country.

Astonishing assessment, and great to see some speculation on the long-term goals being played out here. It’s difficult not to feel optimistic – Amazon have been wonderful from a customer-service POV. The big question is whether bricks & Mortar will pay for Amazon, simply because such a massive outlay will be required. Any expansion here may need to be inevitably slow. But will be interesting to observe.

It occurs to me that all these bookstores that are busy losing their cool over Amazon Books might do better to worry about Amazon Prime Now. It’s already in a lot more places than Amazon Books, sells items at the same price as on Amazon with no delivery fee (but a small tip for the driver), and can adjust its stock a lot more readily than a bookstore. The Amazon Prime Now in Indianapolis only carries 500 books right now, but it could very easily add more at need. And you don’t even have to leave your home to shop, and you get what you ordered on the same day!

Being way up here in Nova Scotia I figure it will be a loooooong time before I see an Amazon bookstore of any real size – but I’m ready for it too.

Great blog, Hugh.

Love. This! Hugh’s ideas gave me chills. I would love a book like that in my neighborhood