October 22, 2012

The “fuck it, let’s just buy the country’s whole book market” approach


The shares of Brazil’s largest bookstore chain, Saraiva, leapt last Wednesday when rumors surfaced that Amazon was in talks to buy the company. Amazon had already had plans to enter the book market in Brazil (see this previous MobyLives post), reportedly in November. Though Bezos has apparently been vexed by the fact that a Brazilian technology company already owns the domain name, www.amazon.com.br, and Amazon has been trying to wrest the address away from its original owner since 2006, which is an indication of how long they’ve has been contemplating the Brazilian market. But buying Saraiva is a whole other kettle of fish.

Founded in 1914 by Portuguese immigrant Joaquim Inácio da Fonseca Saraiva, the Saraiva group now combines bookselling and publishing divisions, with 102 stores and one of the most important Brazilian publishing houses, which has large and lucrative educational and law book publishing departments. In 2008, it acquired Siciliano, the second largest Brazilian bookstore chain. Last year it had revenues of about US $930 million, according to Carlo Carrenho’s useful article on the subject in Publishing Perspectives.

If the rumors about Amazon and Saraiva are true, this would represent quite a turnaround for the latter—last March, Brazilian money mag Istoé Dinheiro reported that Saraiva was allegedly using its bargaining power with local publishers to discourage them from signing deals with Amazon, to the point that Amazon was considering filing an antitrust suit against the company (to which we can only say: Ha!).

Carrenho sees three possible routes: either Amazon acquires the whole Saraiva Group, or it acquires just the bookselling division (online and brick-and-mortar), or it acquires just Saraiva’s online store (which, like Amazon, sells much more than books). The third option seems like the most logical from Amazon’s point of view: get a foothold from which to sell Kindles and e-books, picking up an already established brand and an online store that closely matches Amazon’s areas of experience. At the same time, it seems unlikely that Saraiva would want to let go of what promises to be the place where more and more Brazilians will be buying their books.

And there are signs that the Brazilian book market is trying to manage and control Amazon’s heavy-footed advance into the country. Carrenho writes:

DLD (Distribuidora de Livros Digitais) is a consortium of seven big Brazilian publishers that controls around 35% of the bestsellers in the country. They always negotiate as a block and are doing so with Amazon. And they are, by far, the largest challenge for the Seattle executives, since they are aggressively demanding favorable commercial conditions and want to maintain control over prices.

Indeed pressure from the DLD publishers (Objetiva, Record, Sextante, Planeta, Moderna, Rocco, and L&PM), Saraiva, and others seems to have delayed Amazon’s entry into the market for quite some time—the Istoé Dinheiro article indicates that Amazon had originally hoped to debut their site in April of last year, but they had so much trouble signing agreements with publishers that the launch was delayed. My guess is that we’ll see an Amazon site in Brazil this November, but that the Saraiva rumors are just that. There’s too much at stake for them, and they’re doing too well on their own, to need Seattle.



Sal Robinson is a former Melville House editor. She's also the co-founder of the Bridge Series, a reading series focused on translation.