The juicy deal
The big internet retailer plans is to sell its Kindles to retailers at a modest 6 percent discount from the current manufacturer’s suggested retail price, and accessories at a 35 percent discount. Consequently, the booksellers will get their profit on the reading tablets and compliments, as well as a 10 percent commission on the price of e-books purchased via their customers’ Kindle for the following two years. However, the problem embedded in Amazon Source program is that if customers decide to witch their traditional literary consumption to e-books, they are likely to stop buying physical books. At the end of the 24 months, bookstores will have earned their “juicy” commission, but will probably be left out of the consumer’s radar, for they will be likely to purchase through internet.
On the other hand, physical books are still popular among committed readers. The most recent statistics show a minimal 1 percent drop in print book sales over the preceding years. In addition, there is a segment of consumers who enjoys keeping their read materials on their shelves, as trophies or memories. Also, other segments, like children’s illustrated books, currently don’t translate as well to digital screens and reading tablets.
The cold truth
There is no doubt that books are going through a transitional period and that physical editions are having a tough time. Between 2007 and 2011, bookstore sales fell 9.6 percent. And from January through September of this year, bookstore sales were down 2.6 percent from the same period last year. Costumers have not stopped buying physical books, but they are becoming progressively likely to purchase through internet retailers such as Amazon. This phenomenon is also observed in the shift from print newspaper to digital ones.
It could be argued that the big internet retailer is suggesting independent booksellers a path to accept a cut of sales as they look for another business model –maybe a coffee shop. All in all, it is quite obvious that their new Amazon Source program is prompting retailers to make themselves obsolete in the future.