Amazon Has an Ingenious Plan to Get Indie Bookstores to Kill Themselves

Business Insider
Analyzing the top news stories across the web
Nov. 6 2013 12:35 PM

Amazon Has a Plan to Get Indie Bookstores to Kill Themselves

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This program seems like a suicide mission for any bookstore that signs up.

Photo by RAVEENDRAN/AFP/Getty Images

This post originally appeared in Business Insider.

Amazon sent out an unusual press release this morning. "Independent Bookstores Can Now Sell Kindles and Earn 10% From Future Kindle Books Sold," says the release. The headline pretty much tells the story. Amazon is telling bookstores that they can now sell the Kindle in their stores. When a customer who buys the Kindle in the store buys a book on the Kindle, the store gets 10 percent of the sale for two years after the Kindle is sold. Since the average Kindle book is $12-$15, the bookstore will get a little over $1 per book sold on the Kindle.

If you're a bookseller, this seems like a risky idea. Once a customer is on the Kindle platform, odds are they're going to buy fewer physical books, thus contributing to the demise of the indie bookstore. In essence, Amazon is telling these companies to onboard customers to a digital platform that will destroy their business.

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We asked Amazon if this was really what was going on. Was the company really trying to get bookstores to sell Kindles and then give the bookstore $1 per book sale for two years? Amazon said that was correct. It also pointed out that the bookstore gets to make money on the sale of the Kindle and any Kindle accessories.

"Great retailers—large or small—strive to offer customers what they want—and many customers want to read both digital and print books," Amazon told us. "As a chunk of the reading population moves to digital, we’ve heard from booksellers that they were looking for a way to sell e-books from their store and make money while doing so. This enables them to earn 10 percent of the revenue."

We suppose 10 percent of revenue is better than nothing, but this seems like a suicide mission for any bookstore that signs up.

Here's the full release:

Independent Bookstores Can Now Sell Kindles and Earn 10% from Future Kindle Books Sold
Source makes it easy for independent bookstores and small retailers to earn additional revenue by selling Kindles
Booksellers can receive 10% of the price of Kindle books purchased from the devices they sell
The first order is worry-free for retailers—Amazon will buy back the inventory for up to six months after the first order, no questions and no penalties
SEATTLE—November 6, 2013—(NASDAQ:AMZN)—Amazon.com today introduced Amazon Source, a new program that enables independent bookstores and other retailers to sell Kindle devices and accessories, and earn money while doing so. In addition to a discount on purchasing Kindles and Kindle accessories for resale, retailers will have the option of receiving 10% of every Kindle book purchased on Kindle devices sold by the bookstore for the first two years after a customer buys a device. Learn more at http://source.amazon.com.
"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, 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."
Amazon Source builds on the technology and sales integration launched with Waterstones in 2012.
"We are committed to offering the best possible book buying experience. It is a truly exciting prospect to harness the respective strengths of Waterstones and Amazon to provide a dramatically better digital reading experience for our customers. Alongside Amazon, we have married the best digital readers, the Kindle family, to the singular pleasures of browsing a curated bookshop. With the combination of our talents we are on our way to offering the exceptional customer proposition to which we both aspire," said James Daunt, Managing Director of Waterstones.
Several bookstores have already been using Amazon Source in a pilot program.
"This is a natural fit. Amazon and University of Puget Sound both offer educational resources to students, and it’s always better to work together. Being a small store sometimes hinders our options to sell technology devices, but Amazon Source made it very easy to sign up and place our first order. We think our students will be really happy to be able to touch and try Kindle tablets and e-readers in their campus store. Having the products right in front of them makes buying decisions easier and more convenient," said Barbara Racine, Bookstore Manager at the University of Puget Sound Campus Bookstore, Tacoma, WA.
"JJ Books is excited to expand our selection to now include Kindle devices for our customers. We are selling Kindle e-readers, tablets, and accessories in our store to expand our customer base and build toward the future bookstore model. We feel that Amazon is the leader for e-readers. Teaming up with Amazon to bridge the move to electronic books will help us find a means of long-term viability for our independent bookstore. Kindle will help us bridge the evolution of the bookstore into the Internet age," said Jason Bailey, Co-Owner of JJ Books, Bothell, WA.
Retailers that are part of the program can use Amazon Source (http://source.amazon.com) to purchase Kindle devices and accessories for resale. Retailers can choose between two programs:
1) Bookseller Program: Earn 10% of the price of every Kindle book purchased by their customers from their Kindle devices for two years from device purchase. This is in addition to the discount the bookseller receives when purchasing the devices and accessories from Amazon
2) General Retail Program: Receive a larger discount when purchasing the devices from Amazon, but do not receive revenue from their customers’ Kindle book purchases.
The first order from Amazon Source is worry-free for retailers—if a retailer decides they no longer want to sell Kindle, Amazon will buy back the inventory for up to six months after their first order, with no questions asked.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

Jay Yarow is a reporter for Business Insider. Follow him on Twitter.

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