I get a lot of news digests delivered to me (in addition to reading two print newspapers) and I was struck by this article in Marketwatch about Amazon Prime and their free freight program. It turns out that you can buy a 1500 pound safe and get the item shipped free as part of the plan. The vendor itself said they charge $700 for this service. Various analysts debated the cost of this free freight option. Hey, they are building customer base, right?
We always thought they were losing money on their book business to drive business to their other sales categories. But what kind of business are they planning to pick up by targeting super heavy safes? I just don't get it.
Later I walked over to our local hardware store to buy some more temporary hooks. We need them to hang these new cute cloth totes from Out of Print (The Very Hungry Caterpillar and The Wizard of Oz) when I saw that Amazon placed a bus shelter ad a block from the store. Sell your books for up to 70% of retail! So I thought to myself, are you telling customers that you will buy the paperback edition of State of Wonder back for $11.19 and then sell it to folks used for $10.34 (the Amazon price listed?)
Yes, I think that's what you are implying, even though the ad does say "up to" 70%. Lose 85 cents on every transaction? Yes, that's the Amazon way. Heck, we're building our customer base and market share.
I'm sorry, I just don't understand it. I'm not angry or anything, and don't begrudge them the strange game plan they have. I just don't see why stockholders accept this hall of mirrors. It's been said that Amazon's true profit center is data warehousing. If that's the case, why not focus on that and scrap the retail altogether? Or sell things at prices with a reasonable markup and still keep a huge chunk of the retail pie because the site will still win the convenience edge? I've read a lot of business books in my day and this simply leaves me dumbfounded.
And speaking of strange decisions, why is Staples putting Amazon lockers in its stores when they compete on every product line? Recently when a publisher was asking me to bring in special signing pens for an event, they linked me to the A word. I know that office supplies is a big category for them and they are as competitive there as they are in books. So how the heck do you convert an Amazon customer whose already made an Amazon decision to convert to a Staples purchase? For surely the "rent" on the lockers can't make this work for Staples--there has to be a customer proposition too, right? But no, a business analyst said this is a big win for Staples because it will take up excess space. That doesn't seem like a long-term win to me?
I mention State of Wonder as an example because of several reasons. First of all, it is the current selection on Chapter a Day. Secondly, Patchett and Karen Hayes's Parnassus Books has just had another round of publicity, with an article in the December issue of The Atlantic, and a profile in Shelf Awareness (an industry newsletter). Who knew their space used to be a tanning salon?
Which leads me to Paul Tough and How Children Succeed (signed copies available). We sold books this morning at Mr. Tough's event with Mike Gousha, part of Marquette University's On the Issues series. And Tough said to me (I'm paraphrasing) as he was signing stock, "I don't know if I'd want to be an independent bookseller right now, but I've learned on my tour that there sure are some great stores out there" and he was not referring to us, as we were just two people and a card table, and for all he knew, that's what Boswell looked like as well. Only maybe two card tables. And we chatted about several amazing stores he had recently visited, and I had to agree, they were pretty amazing.
But I guess you have to work very hard when your competitor sells everything at a loss, right?