Quo Vadis, Amazon?

Reading Nicholson Baker’s long piece in the August 3rd New Yorker while on the beach last week, got me thinking about the role of Amazon in the future of print book publishing. Mr. Baker, a novelist, is coming to terms with his new Kindle – its benefits and as well as its drawbacks.  While I don’t get a few of his observations (especially his preference to read on the much smaller and much harder-on-the-eyes LCD screen of the iPhone), one comment made about the Kindle struck me as particularly eye opening.

“If I looked up a particular writer on Amazon—Mary Higgins Clark, say—and then reached the page for her knuckle-gnawer of a novel “Moonlight Becomes You,” the top line on the page said, “ ‘Moonlight Becomes You’ and over 270,000 other books are available for Amazon Kindle—Amazon’s new wireless reading device. Learn more.” Below the picture of Clark’s physical paperback ($7.99) was another teaser: “Start reading ‘Moonlight Becomes You’ on your Kindle in under a minute. Don’t have a Kindle? Get yours here.” If I went to the Kindle page for the digital download of “Moonlight Becomes You” ($6.39), it wouldn’t offer me a link back to the print version. I was being steered.”

Amazon seems so focused on keeping Digital customers digital, they are willing to break a cardinal rule of retailing by not giving customers what they are looking for.

The bold is mine, as it points out a truly head scratching and counter-intuitive aspect of Amazon’s positioning physical books vis-à-vis the Kindle.  Baker is quite right; when you click on the Kindle edition of Moonlight Becomes You there is no further mention of any other editions. This is a significant departure from all the print audio CD version pages on Amazon.com. Only the downloaded digital audio version page has a similar experience, which is on the Audible website, where only digital audio-book downloads are sold. The Kindle edition page, for every title I checked, excluded any mention of any other versions. This significant steer to Kindle consumers seems to say: go digital, stay digital.

The question is why would Amazon do this? Isn’t the success of the world’s greatest online retailer built on the notion they can offer nearly endless choice? Wouldn’t it make more sense to try and cross-market all versions of all products so as to keep customers trained to believe that all their needs are served by one retailer, Amazon.com?

I think Amazon is keenly aware of this departure from their tried and true formula, but see the digital content world as one that requires a completely different approach. Rather than viewing all potential customers as equal, as they do when selling print books, electronic, or cookware, Amazon sees the world of readers in two distinct categories: Physical customers and Digital customers. Amazon’s incredible, game changing investment into the Kindle seems to have driven them to a new strategy that focuses on the Digital consumer and works to keep that relationship as exclusive as possible.

Amazon is keenly aware it missed the music CD transition to digital downloading and can only watch from the sidelines as sales of music CD’s continue to decline year after year. Apple and the iPod/iTunes supremacy have been eating Amazon’s (and everyone else’s) lunch in this arena and it’s game over. However, in reading and book listening, the market is still wide open and Amazon is making every effort possible to own the Digital customer. Amazon seems so focused on keeping Digital customers digital, they are willing to break a cardinal rule of retailing by not giving customers what they are looking for.

One of the issues that Nicholson Baker points out is that much of the world’s works are not available in the Kindle store. There are only 300,000 works in the Kindle store; a fraction of what is available in print on Amazon.com.  When a Kindle user wants a work that has yet to make it into the Kindle store, Amazon commits a significant sin in retailing – they show the customer the following message:

Search Results:
No items Found

Granted, if one is shopping on Amazon.com for Kindle books, you are directed to the print and audio versions of a book if there is no Kindle version. For example, I looked for Thomas Pynchon’s first book about California, The Crying of Lot 49, on the Kindle and received the above message. However, I then switched to my laptop and searched on Amazon.com and found new and used paperbacks as well as audio book versions. This is fine for non-Kindle users, who would never shop in the Kindle store, but that leaves Kindle users with a truly poor retailing experience.  iPhone Kindle platform users face with the same limitation… if it is not yet on the Kindle, its not available. It’s as if Amazon doesn’t want digital users to buy anything but digital content.

If this is Amazon’s long-term strategy for Digital customers, they are gambling enormously. Kindle owners are an elite customer base for Amazon, as an attraction to the Kindle is based on a combination of heavy-reading habits and the income level to support a $300 device purchase. There are at least 1 million Kindles out there in circulation and easily that many iPhone Kindle app users, which means that Amazon seems to be cutting off a couple million elite customers from EASILY buying print works.

By not tying the Kindle shopping experience (be it on the Kindle device or the Kindle platform on other devices) to print versions of works that are not available as Kindle versions, Amazon is forgoing print sales to keep these customers buying digital content only.  The elite customers, rather than being fed all other versions of a work that isn’t yet available for the Kindle, are shown a message that no publisher, author, or retailer ever wants to see when there are books stacked up in warehouses; “no items found.”

This strategy of disconnecting digital readers from print options is surely an Achilles Heel.  If I cannot find a specific book on my Kindle, I get frustrated and put go online on my laptop to search for it on Google. And there is where the real problems will come for Amazon.

With Google Editions coming, there will be ample opportunity for Google and retailers such as Barnes & Noble, Waterstone’s, Borders, etc, to exploit the growing number of competitive e-reading devices and platforms that are springing up everywhere connecting the huge number of digital files that are available in Google Book Search as well as to print inventories. Not only will Amazon be competing with potentially far larger digital collections, they will be enabling competing devices and platforms to compete with their print business.

There are endless sets of competitive opportunities and threats that Amazon is enabling by trying to pigeonhole customers into a digital-only status. Amazon may think they are following the Apple playbook in cornering a market but they are forgetting that their core business success has been offering customers a seemingly endless array of choice.  If Amazon continues to forget this, opportunities to compete with them will continue to grow.

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6 Replies to “Quo Vadis, Amazon?”

  1. I suspect that long term Amazon is training a new customer base to want digital and buy digital. Selling ebooks is a way easier business than stocking and shipping paper books all over the place. Digital sales also have the potential for a better profit margin. This is likely Amazon’s dream and goal.

  2. I would have to agree with Evan’s assessment of Amazon. Now wouldn’t it be nice when you searched for a book on your Kindle and it said not available in Kindle format you could order the print edition right from you Kindle and have it delivered anywhere you want?

    Because of the small and slower access to the Kindle catalog on a Kindle, I would keep the catalog with Kindle books only. But, if the book was not in the Kindle format I would have just those books presented as print books and be able to purchase it from the Kindle.

  3. Great post. I too have noticed the absence of other versions on the Kindle side of the Amazon store. I wonder if it is an attempt to show publishers/authors that if a book is not in Kindle edition then it won’t be seen (and therefore won’t be purchased) by a growing set of consumers. While some consumers (those who know exactly what book they want) will then search and buy on the print side of Amazon or search for the book elsewhere, others may simply find an alternative book in the Kindle format.

  4. They are books, not dead tree editions.

    As to ebook pricing, I think you fail to understand the impact of low ebook pricing. Its the death of ebooks and the sooner publishers establish control over pricing and payment terms, the sooner they can rescue this fledgling industry.

    Finally, I don’t think Amazon is hiding anything nor do I think they are inching up prices. They are testing pricing and seeing what works. Don’t confuse price testing with price manipulation.

  5. I think you may be off-base here on your assessment of what Amazon is up to by not including results for dead tree versions of books when you search the KINDLE STORE either from a Kindle or the Kindle section of Amazon’s web site. Originally, Amazon did display print versions available on the Kindle pages for books. From the point of view of customers, there’s both a good and a bad reason explaining why Amazon changed the layout and neither is really about losing sales. Amazon is not in business to forgo any sales. They constantly change and tweak everything on their web site to maximize sales.

    First, the positive. Almost always when I’m on my Kindle and I want a new book, I want a Kindle ebook to start reading. I don’t want search results showing me non-Kindle books because I’m looking for something to read on my Kindle. It’s actually annoying to click through to a search result that isn’t available on the Kindle. When I’m on Amazon’s web site and I go to the trouble of limiting my searching to “Kindle books,” I REALLY only want a Kindle book. In a minority of cases, when I’m looking for a specific book, it’s trivial to broaden the search by clicking on the “any department” line.

    I think there is also a nefarious rationale for why they changed the policy. Amazon has been creeping up the prices of ebooks and frequently displaying a made-up “digital” list price. With some older books, they’ve actually priced the ebook edition above the price of available paperbacks. By “hiding” the prices of those competing, dead tree editions, Amazon is hiding information about relative pricing and doing a disservice to its customers. This is tilting a sale towards digital and away from print but only in cases where there’s a Kindle edition available. It’s not forgoing a sale completely, as you suggest.

    You final point about the coming wave of competitors is right on. I think the growing and, hopefully, heated competition will improve things for us customers.

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