July 9, 2012
“Come to hell with us, Amazon”… and other Conradian invitations from the world of business
by Sal Robinson
I must confess, I never expected a Reuters report on Amazon’s entry into Brazil to end like this:
“‘They are going to face the same kind of problems we always had,’ said Sergio Herz, director of Livraria Cultura, one of Brazil’s top bookstores with a dozen locations.
‘Until now they were in heaven and we were in hell. Come to hell with us, Amazon.’ “
Business news suddenly feels a lot like the warm-up before a pro-wrestling match.
Herz’s aggressive stance is to be expected: Amazon will be a direct competitor for Livraria Cultura, which sells e-books through its website and also sells the Brazilian e-reader, the Alfa. But whereas the Alfa goes for about 800 reais (approximately $400) on the Livraria Cultura website, the Reuters article suggests that Amazon will be playing its usual loss-leading game with the Kindle.
“To gain market share quickly in Brazil, Amazon will likely sell its most basic Kindle model at a subsidized price of under 500 reais ($239), three times more expensive than in the U.S. but still below rival products.”
Amazon has chosen to start with a digital-only bookstore, to tap into Brazil’s mighty online retail market—$10.5 billion last year and growing—and to avoid the logistical difficulties that Sergio Herz is probably referring to: high labor costs, complex taxes, and weak infrastructure. But there are many outlets for e-books already in place, including the first Brazilian e-bookstore, Gato Sabido, which started up in 2009 and has a sort of space cat for its logo. Bookstore chains like Livraria Cultura and Saraiva sell e-books, and so do more general retailers—Extra, once a supermarket chain, now sells e-books right alongside the flat-screen TVs and diapers. So this is no open terrain Amazon is coming into. Amazon’s foothold in Brazilian e-book and e-reader sales—Brazilians currently account for 1 percent of the traffic to Amazon’s websites—may turn into the kind of market domination we’ve seen in the US or it may falter and fizz out in a complicated, crowded marketplace that it doesn’t really understand.
Me, I’m just waiting for the Sergio Herz/Jeff Bezos face-off.
Sal Robinson is an editor at Melville House. She's also the co-founder of the Bridge Series, a reading series focused on translation.