December 7, 2011
Amazon offers people $15 to walk out of bookstores
by Dennis Johnson
Congressman Wright Patman, author of the Robinson Patman Act
By the standards of the Robinson Patman Act — our key anti-trust law enacted in 1936 to prevent big business from predatory practices — Amazon.com seems to have been criminal to a historic degree. After all, if the basic description of predatory pricing doesn’t fit Amazon, who does it fit? (As Wikipedia nicely describes it, “predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors.”) Of course, while anti-trust enforcement is the last thing to expect from the Wall Street-friendly Obama administration — or from anyone since the days of Ronald Reagan — Amazon’s latest announcement takes its standard of predation to a whole new level.
As Businessweek describes it in a report by Rachel King,
Amazon.com Inc. wants shoppers to do a price check the next time they’re at the store.
The world’s largest online retailer is offering a 5 percent discount to entice users to try its new mobile app that compares their prices with brick-and-mortar retailers.
How does it work? The app, called Price Check, allows shoppers to look up Amazon’s prices by scanning physical products at a store using their phones. Customers will get the discount, as much as $5 off, on three qualifying products on Dec. 10, the Seattle-based company said today in a statement.
Notably, as a report at All Things D by Tricia Duryea adds, the scanner promotion (see our earlier report about the scanner app) will also “serve as a way for Amazon to increase usage of its bar-code-scanning application, while also collecting intelligence on prices in the stores.”
This, just after we report upon a survey about “show rooming,” the practice of using bookstores to examine books that are subsequently bought online. Of course, that MobyLives report found it interesting to observe that the survey in question meant brick-and-mortar bookstores were a crucial part of almost 40 percent of Amazon’s sales. We asked then what it would mean to Amazon shoppers, then, if those stores went out of business.
We ask it again, in light of a promotion that clearly means to hasten that …
But meanwhile, surely paying people $15 to walk out of bookstores — after collecting surveillance data — is even more in violation of Federal anti-predation laws than anything Amazon has ever done. And while we can expect a reaction from the FTC is to be as unlikely as ever, what about reaction from the rest of the book business?
What do you say?
Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.
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22 Comments
As employee of one of those brick-and-mortar book stores, I’m appalled and incensed that Amazon has gotten away with not only this but other practices that are literally killing the American book store. There is no way we can compete with their pricing. And we shouldn’t have to: Amazon is well known for taking losses on their book sales in order to entice buyers to their site because they know the customer will most likely find something else to buy there. Meanwhile, true booksellers are becoming an endangered species.
I just reminded our bookstore staff of our general policy: to not use Amazon’s website while helping customers search for books. If you are a brick and mortar store, do you use their website when researching books? I know this has been common practice at many brick and mortar stores for years, but we feel that it would be hypocritical of us to be mad about them taking advantage of our resources if we take advantage of theirs, so unless it’s an esoteric, self published, out of print, or only-available-on-Amazon rare thingie that a customer is researching, we use any website BUT Amazon to help the customers who are in our store.
Yes, Amazon’s behavior is disgusting and predatory. The company neatly symbolizes all that is destructive about finance capitalism – bogus value, win-at-all-costs competitiveness, bullshit marketing, untrammeled growth, mindless consumption – and all citizens who value community, social conscience, and fairness ought to be ashamed to shop on Amazon. I hate the fact that it constitutes by far the largest segment of the book market. I feel sullied every time I go on its website to check on the ranking of a title. It’s about as appealing as checking a rectal thermometer. And yet.
How do we berate ordinary people for shopping convenience and price when that’s what they’ve been trained to look for and take advantage of? In short, isn’t Amazon a near perfect expression of the ass-backwards value system our society embraces as a whole? I me mine. More more more. Cheap cheap cheap. Consumers, not citizens.
As a publisher, I am saddened and sickened by their ascendancy in the marketplace but, lo and behold, there are our books, listed on their site, selling in ever-greater numbers year after year. Will they stumble and falter some day? Big retailers always have. Will they have done enormous damage between now and then? Of course. Do I try in every possible way to support independent booksellers and public librarians who serve their communities of readers with such intelligence and passion? You bet. Will it make a difference? I just don’t know.
So what is the proper response? To petition a supine federal government to take action? To get on the bully pulpit as you have done? To make sure our own shopping choices and those of our colleagues cleave to our beliefs? To do everything in our power to lessen our dependence on its data management and collection? To educate authors and agents to fullest extent possible? To encourage any and every alternative? To all these I answer “yes.” But there is one thing I am not ready to do — de-list our titles. Are any of us ready? Perhaps someday we will be, when the community of writers, publishers, booksellers, and readers understands and affirms the value of the work we do together and acts on that understanding and affirmation. If Amazon, because of its behavior, continues to lie outside our community we will have no use for them then.
Hello from The Bookshelf in Canada! This is our 39th year as a bookstore…but we are a cinema and resto-bar as well. Looks like amazon thinks that we are part of their associates program….so they owe us some $!!! Thanks mobylives, I read you every day.
Hello from The Bookshelf in Canada! This is our 39th year as a bookstore…but we are a cinema and resto-bar as well. Looks like amazon thinks that we are part of their associates program….so they owe us some $!!! Thanks mobylives, I read you every day.
Thanks, Paul, for this really brilliant and inspiring comment. As to delisting — it’s something someone always asks me after my slightest criticism of Amazon, and it always puzzles me a bit, because as an activist publisher the main idea of what I do is to get our books just everywhere. I’d be content to let a Nazi bookstore carry our books, as that would increase the chance that one of our titles could actually lead to change. I mean, ultimately, it’s not about preaching to the choir, is it?
Which is not to say there are reasons we simply can’t do this. It would in fact be a dangerous thing for any of us indies to try, as it would be losing what has become, as you say, the biggest account for all of us. Rejecting an outlet that represents perhaps a quarter of the average independent publisher’s business would in many instances mean the death of your company — the books you mean to champion in such a move would instead disappear.
And then there’s the fact that you or I pulling our books would have absolutely no impact on Amazon, and most likely wouldn’t impress the general public or the media purporting to serve them all that much either. I can attest to this firsthand: As has been documented elsewhere, in 2004, after I complained publicly about being asked by Amazon to pay what sure looked to me (and our lawyer) like an illegal discount, all Melville House titles disappeared from the site. I couldn’t get anyone — not our then-distributor, who managed our Amazon account, not the press, not anyone, to join us in protest, and who could afford to sue Amazon? Valerie and I were the proverbial tree in the forest, fallen. We paid the bribe.
None of which is to say, however, that something quite different wouldn’t happen should the Big Six delist as one. I’ll note that the only time I’ve ever seen Amazon blink was when three of the big six acted in solidarity with Macmillan after Amazon pulled that company’s buy buttons because they wanted to do business with Apple. That was also the first and only time I’ve noticed headlines about Justice Department and Federal Trade Commission interest in investigating Amazon (all of which ended, seemingly, when Amazon capitulated and replaced Macmillan’s buy buttons).
It was a great moment of publishers finally standing up for what’s right, but an impossible moment for thee and me to similarly inspire as little publishers. Still, delisting is a powerful tool for the powerful.
– Dennis
The Price Check app is awful (and, as you imply, potentially in violation of anti-trust laws), but for the time being, it does not apply to books. Amazon lists eligible product categories as limited to Electronics, Toys, Sports, Music, and DVDs.
I just had a public library employee use the mobile app to find the title of a book for me when the online catalog was not working. Worked great.
Thanks for writing. I look forward to visiting your store. Meanwhile it would be interesting to hear if Amazon is impacting the Canadian marketplace as it is here … or is Indigo giving them a run for their money? — Dennis Johnson
This promotion does not apply to books, so I don’t see why anyone will be walking out of bookstores.
hello dennis, i think amazon affects us much more than chapters/indigo….they, who once brought in couches for people to browse on, are now getting rid of books so that they can sell couches…their bricks and mortar stores have had huge sales in the last month and yet our sales were up slightly in november…we have had some different projects which seem to be bearing fruit, and our cinema is up quite a bit this year so that has really increased nightly traffic.
we are investing quite a bit of $ in a website which will try and bring the spirit of bricks and mortar to the web and endeavour to excite people about ideas…which is what happens in our store. we would like to interview you for one of our longer pieces…we hope to launch in the next 3 months!
we sold books at an event with lawrence weschler and he told the audience melville house’s book, the debt, was the most important book published this decade. i love the pink cover!
hope to talk to you again. barb minett
our website right now is very bad…so don’t judge us by that!
True enough, and thanks to you and Lexi Beach, who mentioned this earlier, however I would read Amazon’s statement saying the offer “included” electronics, etc., but was not “limited to” electronics, etc., to make that unclear and not-so-certain. Perhaps they will wait and see what they get? In any event, it does nothing to leave me less appalled and suitably alerted — if not books this time, then soon, obviously, and no doubt with a vengeance. — Dennis johnson
I should say, that overall you have many excellent points and the article was the basis for a good discussion in my household. Thank you!
The fundamental problem is not just that Amazon’s pricing is predatory but that they actually aren’t really in the book business, that is, the business of selling books to cover overheads and make a reasonable profit. They are in the customer acquisition business and the customer data associated with that. But they are also the publishing industry’s largest retail “partner.” I would argue that the whole relationship is false, in that the publishing industry and Amazon’s business have no mutually shared interest. What’s good for Amazon is largely bad for publishers; what’s good for publishers is largely bad for Amazon–strategically that is. The source of this goes back to the decision publishers made many years of extending the same discount schedule and selling terms to on-line retailers as they did to bricks-and-mortar retailers, when these business models were so fundamentally different.
But what next? The notion that, at this stage, the major publishers would or could stand up to Amazon and alter the playing field, seems like a pretty remote possibility. More likely publishers who are able to acquire customer relationships and build on them will find that the direct-to-consumer business holds open the possibility of a very different publisher/retailer/reader business model. There will always be a large segment of readers who buy books or any “product,” based on price alone. Since competing with Amazon on price isn’t an option, publishers need to devise other sources of value for readers.
I hope and believe this is possible.
Sounds like you’re hanging in there. “Up in November” is good. Hey, up is the new … way up …? But good to hear an ambitious take on the future. As for us talking — you know where to find me. Thanks for passing along the Lawrence Weschler story. — Dennis
Dennis, you have been upholding independent publisher values for a long time, mostly by publishing damn good books. Keep the Amazon issue on the front burner and know you can count me among your many supporters. Peter — I think you are right on, about both things: 1. Amazon is no “partner” — its interests are inimical to those of the publishers who take their mission (and their community of readers) seriously. 2. We publishers have got to establish ever closer ties to our readers and create other sources of value for them. Well said, not easy to do, but absolutely a must.
Regardless of whether or not books are part of this promotion, independent retailers need to stop complaining and either do something about it, or just disappear.
Frankly, I’m surprised small, independent retailers(be they book sellers or other retail outlets) still exist in the numbers they do. Yes, they offer a more ‘personal service’, but most people care about price and selection. A big chain or web-based business can almost always offer me a greater selection and a lower price. Those are the things that matter to almost all consumers. After all, assuming someone didn’t have a weird sense of loyalty to the ‘mom and pop’ businesses, why would they choose to pay more or shop somewhere with a reduced selection? That’s madness.
So, what can you do about Amazon and their ilk?
Get together with other local businesses and offer native applications for the platforms that matter(Android and iOS) that allow consumers to easily buy from your websites or perhaps offer browser extensions that try to nudge people in the direction of your site(or local group of sites) when they Google something.
Playing the victim card is rather tiresome; it just says that you can’t compete.
Sure, you can’t always compete on price with Amazon, but the internet and native mobile applications allow you the opportunity to compete on a level playing field.
When someone Googles a book or something your own website sells(and you better have one, or you may as well just not exist, so far as a large and growing percentage of consumers are concerned) you should have an ad up there. It costs as little as 10 or 20 cents(depending on the competition for those keywords) to advertise and grab a consumer’s attention when they search for that item.
Really, I could have made this comment a lot shorter: the fact of the matter is that just complaining and banning the use of smart phones in stores(not everyone does it, but some stores do, I’m sure) just says that you can’t compete on price, so consumers will ignore you. You have access to the same quality tools that Amazon does to promote your store and products; if you’re serious, have a good e-commerce website, utilise Google’s advertising to get local consumers(you can target people who are searching locally and use your wishy washy ‘shop local’ style slogans to grab them) and then have engaging presences on the web and mobile phones to keep those customers.
If, on the other hand, you’re not willing to make the effort and utilise tools like a good website and social media, just pack up your store and go home. Less people will miss you than you hope.
You make it sound as if it were a level playing field, when in fact Amazon is getting away with numerous illegal acts — such as not collecting sales taxes and receiving illegally large discounts, things we’ve reported on here for years– that give them insurmountable advantages over other retailers. How, exactly, are the retailers you call whiners supposed to fight back? They can’t, no more than any other business has ever been able to fight back against monopolies. This is one reason we have a government, with laws regulating fair business practices. And that is where this fight needs to take place. It’s callous and inaccurate — and needlessly insulting — to label people observing such as “playing the vicitm.”
I need to point out, as well, that it’s odd to express surprise that brick and mortar bookstores have survived despite the forces arrayed against them, odder still that you seem to think there’s no reason for this. Clearly there is, and it’s called consumer demand.
You also overlook the survey, cited above, showing nearly 40 of Amazon’s sales relied on showrooming. It seems even Amazon needs brick and mortar bookstores.
– Dennis Johnson
Yes, in the US(I’m in England, where we pay sales tax – which we call VAT – on many types of products and this is charged by on-line and off-line retailers) Amazon does not currently pay sales tax. They have, however, agreed to the idea of paying it in principle on a national scale.
I imagine it’ll be a few years until that happens, but when it does, you’ll no longer be able to complain about Amazon being sales tax-dodgers.
Then you’ll have to adapt or die. That’s what happens when the internet comes calling. And frankly, many independent retailers will die because they didn’t do what I’ve suggested. They’ll be too busy complaining about the big bad bully stealing all their lunch money that they won’t fight back and, in the end, consumers will just stop shopping with them and that’ll be that.
Your point about Amazon needing off-line retailers is laughable; as any savvy business should do, they’re exploiting every resource and channel they can to crush the opposition. That retail outlets still exist(an artefact from times past that the free market will ultimately correct, except in certain industries such as food – things people need immediately or to buy in person, essentially) is something Amazon can use to make more money. When many independent retailers simply go out of business, Amazon will still make money. Claiming they somehow need those retail outlets almost makes me laugh out loud.
In the US, I believe all but one of your major national book retailers no longer exists. We no longer have people who’s job it is(for the most part – exceptions always exist)to hand write books. Candle makers generally no longer exist. So it will be with libraries, independent book and electronic retailers, physical media formats like DVD and blu-ray.
If there can be dozens of companies offering to sell me an e-book or some type of consumer electronics product when I Google whatever it is I want, how have these other companies survived against such a ‘monopoly’? They’ve used modern technology to prosper.
Independent publishers should be embracing things like Kindle, Nook, iBooks and Google eBooks to find new markets and sell more. That said, publishers are also being disintermediated by the companies above, who offer an easier route (and a much bigger cut of the profits) for authors.
Progress, consumer demand and the free market eliminate inefficient operations.
Yes, I’m ahead of the curve from a technology respect in that I’ve been demanding electronic versions of books and films and music for longer than most and I’ve been using web-based services and ‘the cloud’ for longer than most consumers, but consumers ultimately catch up with the trend us early adopters start and guess what? Small retailers who can’t match the selection of large chains or on-line retailers will die. They will cease to be. That is, unless they use modern technology to stay alive longer. But most won’t, because they’re too busy complaining about the bullies(be they Netflix, Amazon, Google or someone else) who are using modern technologies and economies of scale to eliminate inefficiency and offer consumers better experiences and pricing.
I will say(well, type) it once more for effect: companies who complain about Amazon are whiners. You’d be much better served by embracing technology in order to survive, nay prosper.
Let’s say we have a bookseller located in Michigan. A small, three person company that’s being crushed by Amazon, just like other local retailers. They’ve seen friends go out of business because they didn’t try new things, weren’t willing to risk their business, the business that was being slaughtered by big, scary on-line companies.
They decide to try something. They use the company’s(or their own) savings to have a good, modern e-commerce website built, they set up accounts on twitter, Facebook and Google+ to promote their little brand, they use AdWords to target local consumers looking for a new, popular book and eBay to sell both new and old stock. They make the effort. They go above and beyond with on-line and phone support, something which Amazon does, but can’t compete with because this company knows many of their customers on a first name basis.
The company I’ve described above would likely prosper. At the very least they’d survive longer. They could hit the jackpot and grow. They could get together with other businesses with which they have synergy and build out those on-line properties. Even if they failed and still got destroyed by Amazon it beats the hell out of complaining and doing nothing, which is what a lot of small retailers are doing.
Your position that legitimate competition is possible in this scenario is the thing I’m disagreeing with, and allowing your insecurities to lead you to respond with superiority and insults does nothing to further your persuasiveness, nor accuracy. Your eagerness to insult me, for example, seems to have made you miss that it isn’t my survey regarding Amazon’s reliance on “showrooming.” Nor is that survey “laughable” — the fact that “showrooming” is such a wide-ranging phenomenon right now makes it significant, certainly worthy of study, not snide dismissal. Or look at the way you can admit, well, yeah, the tax situation is real, but nonetheless you go on to insist it won’t be, in some murky future, so that means “complaining about it” is worthy of ridicule, as if “complaining” were immoral in itself. The fact is Amazon is breaking the law across the land; your comment that the company has “agreed to the idea of paying it in principal” is beyond bizarre — they’re breaking the law, and the protest of national retail organizations is something much more than “complaining.” (Your own complaint that retailers are doing nothing beyond complaining pretty clearly indicates you haven’t even read the article above.) Again, you’ve managed to both dismiss an important point and throw in insult to boot. In short, you’re a textbook example of the phenomenon I wrote about last week — the digital champion who falls back on anger and snobbery and insult rather than engage in a discussion about a future where two amazing technologies, both in demand, can coexist, and the marketplace is dominated not by unfair practices and monopolies but rather by consumer demand. — Dennis Johnson
What insecurity/ies am I trying to cover up, doctor? Clearly I’m a misguided poor fool who needs your help!
Jokes aside, what’s wrong with being a digital champion? The future is digital delivery of everything, that is a reality.
It’s been shown in the past that more efficient technologies(the printing press versus monks who hand wrote books being just one good example) ultimately remove the less efficient from the marketplace. That’s not some pipe dream or insult or wishful thinking, it is what it is. Because as you seem to love saying Amazon is not collecting sales tax, that advantage alone will clobber retailers.
Let’s leave the sales tax thing alone for a while(we’ll get back to it later) though.
Ignoring that issue, what makes you think that small, independent retail outlets that sell items that aren’t time-sensitive(such as food or drink, that people need or want immediately) will survive?
Amazon has a multitude of advantages over independent outlets and as someone who thinks the more efficient business type should and will win, I want rid of the types of businesses you so vehemently support and want to prosper.
That said, when I described how small retailers could survive and perhaps prosper, I was generalising that most are just crying because the bully took their lunch money and aren’t trying to fight back. I was generalising because most local businesses(at least in my experience) don’t take advantage of technology as they’re stuck in the victim mentality. I’m confident that some businesses in fact do have good websites, do use social media etc to try and prosper, but they’re in the minority. I’d imagine that there are studies to back that up being done or already out there.
I mocked the “showrooming” survey not because it’s invalid(it isn’t and I fully understand that people use retail outlets to try out or look at an item before ordering it on-line, I’ve done it myself) but because the idea behind it(and its supporters) seem to think that Amazon will somehow suffer without retail outlets on which to abuse/prosper.
If all physical retail outlets disappeared tomorrow, web-based retail companies would still sell things. So the idea that Amazon ‘needs’ these companies, is ridiculous.
On to the sales tax issue.
Yes, in the US, to the best of my knowledge, Amazon collects no sales tax. That would be illegal, if they actually operated any kind of physical presence in the states that tried to force them to pay.
To my knowledge, any time an individual state(California being an example that comes to mind) has tried to force Amazon to collect sales tax, they closed their affiliate programme in that state.
I’m sure you’d love it if all web-based companies collected sales tax for every state in which they sold items, but the reality is that in the US they don’t have to. If they did, Amazon would have been sued a little, to say the least.
Now, it could be that I’m wrong and haven’t been following this issue closely enough and they have been sued, but, as far as I know, Amazon has agreed to collect sales tax nationally and without legal challenges once a law comes in that covers this.
So let’s stipulate that I agree that it’s unfair that in the US Amazon doesn’t collect sales tax, giving them a huge advantage over brick and mortar stores. Let’s also stipulate that in 3 years from now, Amazon is collecting sales tax and that you can no longer complain about how unfair that is.
Based on those stipulations, I’d like to see your arguments for why brick and mortar stores(especially those that aren’t part of huge retail chains) should exist at all. What benefits do they bring, really? Why should I care that it’s Joe’s Local Coffee Co and not Starbucks or Costa Coffee that’s serving me an overpriced beverage?
Clearly, you know my arguments as to why no independent retailer should exist and that every type of media that exists should be delivered over the internet, but I’d like for you to clearly lay out your defence, as it were. Why should local retailers survive when the internet exist, given that monks were driven out of business by the printing press?
Oh and for the record, I realise that your argument for small businesses has nothing to do with your potential extermination at the digital hands of Kindle and other self-publishing systems, but I thought I’d add that in simply because I feel that publishing houses(both independent and huge) as well as record labels should disappear.
Without picking on your company on industry, it seems to me that a record company can’t really offer anything except promotion, as a band can now do everything else themselves through the use of modern technology.
I realise that book publishing and music publishing are different and I’m not attempting to insult you, your company or your industry, but I do see some similarities in both businesses.
Finally(and I’m not attempting to be rude or condescending here – I get told I come across that way and it’s almost always unintended) please separate your paragraphs and break them up with line breaks; it makes things easier on the eyes.
More importantly it seems to me is the fact that due to low pricing the variety and quality of titles might be at risk. That is the reason we have what is called “Buchpreisbindung” (Fixed Book Price Agreement/Law) in Germany. The line of reasoning is that books are cultural assets that deserve special protection. Of course, that is a topic not without debate as well.