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Amazon Offers Indie Booksellers a Piece of Kindle Pie

Amazon Offers Indie Booksellers a Piece of Kindle Pie

By relying on device sales, booksellers "risk losing the long-term-relationship sale they're so good at providing," suggested Chris Silva, principal analyst at High Rock Strategy. "There seems to be a high potential for the bookseller's long-term fortunes to be limited to the two-year agreement during which they receive a small portion of book sales."

By Peter Suciu E-Commerce Times ECT News Network
11/06/13 1:09 PM PT

Amazon on Wednesday announced a new program that will enable independent bookshops and other small retailers to earn extra money by selling Kindle devices and accessories.

Dubbed "Amazon Source," the program gives retailers a discount on Kindles and accessories for resale as well as 10 percent of the revenue from every Kindle book purchased on the device for the first two years.

Retailers will get a 6 percent discount on Kindle devices and a 35 percent discount on accessories. A second option is being offered that provides a 9 percent discount on the devices but does not offer the 10 percent revenue share.

Several booksellers have already been using Amazon Source via a pilot program.

"We believe that retailers, online or offline, small or large, should be striving to offer customers what they want -- and many customers want to read both digital and print books," said Russ Grandinetti, vice president for the Amazon Kindle. "For many years, bookstores have successfully sold print books on Amazon -- now Amazon Source extends this opportunity to digital.

"With Amazon Source, customers don't have to choose between e-books and their favorite neighborhood bookstore -- they can have both," Grandinetti added.

'Inevitable Demise'

It's no secret that Amazon has posed a considerable threat to small and independent booksellers, spurring several efforts -- such as in France -- to protect the smaller retailers.

"It certainly is audacious given that Amazon has been partly if not substantially responsible for the decline of local booksellers," Greg Sterling, principal analyst at Sterling Market Intelligence, told the E-Commerce Times.

Now, Amazon is turning to those same retailers for help, but whether that's in the best interest of both parties remains to be seen.

"Amazon will definitely build allies, but at what cost to the indie book store industry?" noted Charles Haggas, CEO of Space Chimp Media. "All traditional brick-and-mortar book stores are struggling to stay alive -- indie shops and large brands alike. Thus, indie shops are being forced to find additional forms of revenue in order to grasp for life during what seems like their inevitable demise."

'Preying on Their Desperation'

Amazon clearly understands this and is betting that the stores will jump at the chance to partner with it, Haggas told the E-Commerce Times.

The question, of course, is whether Amazon is "really trying to build relationships with these shops to help them, like they say, or are they simply preying on their desperation?" he added.

"Unfortunately, the desperate adoption of the Kindle from indie shops will most likely speed up the rate at which online markets like Amazon and iTunes are taking market share in the long run in exchange for short-term profits," Haggas noted.

By relying on the device sales, booksellers also "risk losing the long-term-relationship sale they're so good at providing," Chris Silva, principal analyst at High Rock Strategy, told the E-Commerce Times. "With every Kindle title providing an opportunity for ratings and suggestions at the end of the book, not to mention the special offers on many Kindles tailored to users' tastes, there seems to be a high potential for the bookseller's long-term fortunes to be limited to the two-year agreement during which they receive a small portion of book sales."

It's a "tenuous argument that the bookseller would become the long-term hardware go-to for users as replacing outdated devices is done more easily directly through Amazon, Silva added.

Physical Stores

For Amazon, meanwhile, the new program could fill the void left by Walmart and Target, both of which stopped selling Kindle devices last year.

"Amazon definitely needs physical stores to increase sale of Kindle devices, which are seeking to compete against the iPad and Google Nexus tablets," Sterling noted. "It does have a presence in Best Buy, of course. Some of these stores will go for it and many won't."

Either way, "I don't think the distribution will be significant enough to substantially move the needle for Amazon," he concluded. "Frankly -- and ironically, given the decline of local bookstores -- there aren't all that many independent bookshops around anymore. Amazon.com provides Kindle devices with much more visibility."


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