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Is Amazon evil, or are they just really good at business?

Posted By Joanna Cabot On February 15, 2012 @ 12:19 pm In Paul Biba,publishing | 23 Comments

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Nico Vreeland’s earlier post, which Teleread reprinted earlier, was one of many articles I have lately seen which explore the issue of the publishers versus Amazon. Is Amazon evil? Are their business practices ‘predatory’ and should publishers be trying to disable them? More and more, I am thinking the answer to these questions is no. Amazon is not evil. They have just figured out what the customers want better than anybody else has so far, and they are giving it to them. Vreeland points out, correctly, that customers don’t buy ‘Random House books’ or ‘Penguin Books.’ They buy Stephen King books or James Patterson books or whomever. If Patterson moved publishers, his loyal readers would follow him and most of them probably wouldn’t even know the difference.
Most of us understand that. Most of us recognize that while publishers can and do gain share when they cross-promote a new author to the fans of another, similar one. But for the most part, the author is more of a brand than the publisher is. But here is the missing link—the author is more of a brand than the STORE is too! When Amazon first launched in Canada, I remember how our national chain, Indigo, pitched an epic fit and tried to use protectionist Canadian laws to block them from doing business. What they failed to realize was that people didn’t want Amazon because they liked American companies better. They liked it because it was just a better website! Even now, years later, it STILL is a better website. It has more reviews than the Indigo main site, it has a better experience for casual browsers, it has emails and promotions, it has a bigger catalogue and so on. People wanted those features. If Indigo had provided them, people would have been just as happy to shop there.
It’s the same with ebooks. Amazon is just creating a better experience right now. I am a veteran of three other ebook stores, and I shop nearly exclusively at Amazon because I had needs, and these other stores failed to meet them. For example:
- I bought a book from eBookwise once when I had their device. Their DRM scheme was unusually restrictive though and once I learned that any book I bought could never be read on another device again, even one I might buy from them, that one book became the only book I bought. Contrast that to Amazon, who has software that lets me read across my computer, my iPad, my Kindle and my iPod and synchronize my notes and bookmarks between them. It’s just a better experience. If eBookwise could offer that experience, I might have stayed there.
- Fictionwise was my next bookstore. I liked their website interface, I liked their coupons and sales, I liked that I could filter by format, pay using loyalty points and maintain a wishlist. But the eReader format is clunky and not easily compatible with my current devices, and after agency pricing kicked in, their catalogue shrunk unconscionably. They do have (and continue to have) a wide selection of indie books, but since they do not allow sampling, it makes weeding out the bad ones near impossible. I spent too much money on books which were only so-so. Now, I buy from Amazon instead so I can sample first—and once I make my decision, it is one click to buy at once easily synchronize across my devices without side-loading.
- I bought from Kobo after Fictionwise went to the dogs. I liked their prices, and I liked their focus on Canadian content. I think they have made a very smart play by partnering with local chains and promoting local authors, and their software does allow cross-platform synccing like Amazon does. But their continued reluctance to implement oft-requested wishlist and shopping cart features makes shopping their website a little pokey, their search function is terrible, and their sampling is often limited to just the copyright page and table of contents. They don’t have reviews or a recommendation engine, their customer service has been outsourced and now is terrible, and they just can’t compete with Amazon on sheer website usability.
So, Amazon for me is not the evil overlord out to ruin us all. It’s the store that has—for now—earned my business by providing me with features that other vendors failed to provide for me. In all cases, these other stores could have kept my business if they had. For me, the decision to jump ship was not about name brand of the store or about liking Canadian businesses better than American ones, or wanting the publishers or authors to be out of business. And in the examples I cite above, it wasn’t even about price and who is undercutting whom. It was about the features, the useability and the customer experience. The way to beat Amazon is not to complain about how evil they are. It’s to build a better website. If you want to compete, compete! Build a better website. Nobody is stopping you.

23 Comments (Open | Close)

23 Comments To "Is Amazon evil, or are they just really good at business?"

#1 Comment By Alexander Inglis On February 15, 2012 @ 12:57 pm

Small quibble. You wrote about Kobo: “They don’t have reviews or a recommendation engine … ” this is only partly true. Kobo now has personalised recommendations on the website and includes reviews of ebooks imported from Goodreads. Kobo customers and browsers can (and do) rate content.

It’s not perfect; it’s not the Amazon shopping experience, but it is improving.

And Kobo continues to offer discounts and pricing that aligns well with Amazon (which now charges Canadians sales taxes on ebooks from many publishers). The Canadian content is richer than Amazon and easier to find; the categories filters are helpful and the search engine, although a bit cludgy, does work. You can search authors, titles, publishers … using quotes can help delimit results … and then search within search or just filter by ratings, price etc … it’s reasonably efficient.

#2 Comment By Common Sense On February 15, 2012 @ 1:02 pm

“They have just figured out what the customers want better than anybody else has so far, and they are giving it to them.”

This is at the heart of a basic, free market transaction. Companies, for the most part, are not ‘evil’. They do what they can to make a profit for themselves and their shareholders, that’s what companies do. A free market transaction consists of a seller having something at a price a buyer is willing to pay. The easier the seller make it for the buyer to buy, the more customers the seller will retain. That’s really Amazon’s big advantage.

While publishers seem to do everything they can to make it harder for readers to get their books, Amazon paves the way with terrific customer service and a seemless, almost instantaneous purchase process. The publisher’s latest crazy antics regarding libraries is evidence of this. Amazon and Overdrive made it far more simple to checkout a book for a Kindle than the other format, where you needed extra software and a computer to do the same thing. That scared publishers who seem to think that because you don’t have to drive to the library and physically checkout a book, you will somehow treat that easier to get book differently, they will lose sales, you will pirate the book, etc. That’s just insane!

If publishers and bookstores want to compete with Amazon they will have to come up with services that provide a better shopping experience. Amazon thinks of the customer first, they others don’t.

#3 Comment By Felix Torres On February 15, 2012 @ 3:23 pm

Actually, Amazon thinks of themselves first–but only when it comes to cost-cutting. :)

Part of the reason you hear so much whining about Amazon “predatory” pricing is the unstated, unshakeable assumption, that Amazon’s *costs* are the same as everybody else’s. Despite all available evidence to the contrary, people in and around the publishing business just refuse to believe that Amazon’s costs are lower than those of traditional businesses.
Nobody can *possibly* be that efficient. They *have* to be cheating.
Riiiight.
It is comforting to think so, because if Amazon were truly *that* efficient, then using Amazon as a benchmark, *they* would be *that* inefficient and forced to change.
And change is something an industry clinging to a business model dating back to the century before last wants nothing to do with.
Unfortunately, they also want money and lots of it.
And the way things are headed they will finally be forced to choose between their business model and their survival.

Anyway, Amazon really and truly is *that* efficient, people.
More, they aren’t yet as efficient as is humanly (or robotically) possible.
(Scary thought, huh?)
They can be beaten.
But only by playing the game as well as they do.

Check this (dated, by now) example of the weapons Amazon and its peers bring to bear to online dry goods retailing:
[1]
We’re talking robotic warehouses, computerized moment-by-moment inventory tracking, reconfigurable/mobile shelving.
That is how extreme their systems are: In their warehouses, shelving holding items moving well repositions itself to be closer to the packing area and slow-selling stuff gets repositioned further away. In real time. This, in a place where robots run around picking stuff off the shelves so humans only have to do the packing and labeling.
Yes, Amazon squeezes suppliers for every cent they can–just like any modern business–but they also squeeze themselves. Which is also something modern businesses do. Because those that don’t are simply putting their long term survival at risk.
And, despite what some seem to think, there is no law of man or nature that says that *any* company is guaranteed its survival. Much less whiny and reactionary “old codger” businesses.
The idea of companies re-inventing themselves isn’t just consultant speech;ifying it is a reality many companies embrace and prosper by.

#4 Comment By MarkChan On February 15, 2012 @ 6:28 pm

Great points Joanna – I only want to add that Fictionwise has partially restored itself to my shopping habits. They continue to bring in indie titles and routinely have great sales. Last weekend, there was a coupon for 60% off all non-Samhain titles. If I find an indie book and it is over priced in my mind, I just wait for the sale at Fictionwise and pick it up. Their sales occur about every couple of weeks and vary between 30-60% off list prices.

#5 Comment By Tubby Smithson On February 15, 2012 @ 8:35 pm

Amazon built the better ‘mousetrap.’ Way ahead of the rest who wanted things to stay the way the they had it, but things move, change, and if you can’t make the change, you’ll fail. Stop bloody whining about Amazon being predatory, they just beat you at the game all business plays, whether they be groceries, big box stores, or publishers.

#6 Comment By Michael W. Perry On February 16, 2012 @ 1:08 am

“Is Amazon evil, or are they just really good at business?”

Both. Enter through the customer door and they treat you oh-so nicely. I’d seen that myself. Enter through other doors, such as author, publisher, third-party supplier etc. and you’re worse than dirt. I know that too. I live in Seattle, I’ve talked to one of their lawyers as she tried to justify the unjustifiable. I talk to people when they’re working for Amazon. I talk with people who work for them in other contexts. I don’t live in distant ga-ga land. I’m a ten-minute drive from their global headquarters. I talk with people who work there almost every week.

Writers who think otherwise, meaning those who say, “Gee, they published my book and look at the check I got last month,” are deceiving themselves.

Today, I don’t have the time or space to get into all the evils that flow from business that work off a Darwinian worldview. It’s nasty stuff. It wrecks markets. It hurts the public and in the end it destroys those who adopt those policies.

A case in point. In the mid-nineties, Boeing adapted a policy of squeezing their suppliers saying in essence, “We’ve been paying you $100 for this part. In the future, we will pay you $80.” I know because a friend of mine had to do the contacting and telling. Since Boeing is almost the entire commercial aviation market in the U.S., they had to play by its rules. Seeing in parallels with the Amazon of the not so distant future?

Fast forward a decade and Boeing is trying to gear up to push the new 787 onto the market. They face all sorts of delays with production and, in particular, problems with suppliers. Why? Because they’d squeezed every penny they could out of them in the last decade. Those companies had lost their best employees. They’d let their production facilities degrade. They hadn’t modernized because, thanks to Boeing, they couldn’t afford to do so. Pennywise, pound foolish.

Amazon’s doing something roughly similar to the industries it impacts, particularly book publishing and distribution. There’s an example I like to use. The original To Kill a Mockingbird wasn’t that good a book. It was a collection of unrelated short stories about a little girl growing up only about 40 miles from where I grew up. But an editor saw potential in the book and, backed by his publisher, he encouraged Harper Lee to write and rewrite the book. On one occasion, when she called him to tell him she’d gotten so frustrated she’d thrown the latest manuscript out her apartment window, he calmly told her to go down, collect up the pages and get back to rewriting. The result was a masterpiece.

Amazon in general and Steve Bezos in particular are clueless about that sort of thing. To the extent that they have any coherent view of publishing and books, its the sort of fashion and fad view you get from reading the NY Times. To Bezos and to Amazon a book is simply a commodity to be sold as cheaply as possible, always retaining Amazon’s profit margin but little else. They assume the rest of a complex system will continue to exist as long as they toss a little money in its direction.

In the immortal words of Oscar Wilde, Amazon knows “the price of everything and the value of nothing.” Listen to those who praise Amazon and you’ll hear that word “price” repeated over and over again. And that’s why Amazon is both “evil” and “good at business.”

#7 Comment By Joanna On February 16, 2012 @ 7:19 am

Michael, I didn’t mention price at all in my comments above. I was strictly addressing the features of the store/website. Why doesn’t Kobo have a shopping cart yet when customers demanded it from day 1? Why does Fictionwise continue to only sell secure books in the dead eReader format? Why haven’t one—or more—of the publishers gotten together and built any sort of website at all? Why is NOBODY matching Amazon on FEATURES?

Alexander, thanks for the info on Kobo. It’s been so long since I shopped there, I was not aware of these updates.

#8 Comment By -Andy- On February 16, 2012 @ 7:41 am

@Joann: “Why does Fictionwise continue to only sell secure books in the dead eReader format?”

The last time I checked, they sold ebooks in multiple formats, drm and not. When did this change?

#9 Comment By Peter On February 16, 2012 @ 8:04 am

This, pretty much. I buy a lot of books (several hundred a year). Probably 70% of those I buy from Amazon. Not because of format lock-in (first thing I do when I buy a new book is disinfect the DRM, if any). Not because of pricing (Agency price-fixing pretty much put a stop to that). Not because I’m loyal to the Amazon name. Not because of any early-mover advantage.

Because they provide a better service. Period. Nobody else – not Kobo, not B&N, not Google, not Waterstones, definitely not Apple – even comes close. I’d love to see some actual competition in the e-book space – it would be nice to have options, and a competitive market is generally healthier for everybody. But until somebody decides to actually compete with Amazon for my money rather than just fulminating about how evil they are, Amazon gets my business by default.

#10 Comment By Jotunbane On February 16, 2012 @ 8:14 am

Why haven’t one—or more—of the publishers gotten together and built any sort of website at all?

Because that would be a cartel.

Why is NOBODY matching Amazon on FEATURES?

Because Amazon patented most of their “features” (one-click shopping).

Im with Michael Perry on this one. Evil or good at buiness? They may well be both.

#11 Comment By Howard On February 16, 2012 @ 10:36 am

It is not a cartel. It is perfectly legal for a group of companies to get together to form a joint venture that will market their wares online, and each invest in it.

Amazon has no significant features that are a hurdle to a competitor. If that were the case then no one else would be successful at selling on line.

#12 Comment By Jotunbane On February 16, 2012 @ 10:54 am

It may be “perfectly legal” where you come from, but then explain this:
[2]

“Amazon has no significant features that are a hurdle to a competitor.”

Well, lets ask Barnes & Noble what they think about that one:
Amazon filed a patent infringement lawsuit in October 1999 in response to Barnes & Noble offering a 1-Click ordering option called “Express Lane.” After reviewing the evidence, a judge issued a preliminary injunction ordering Barnes & Noble to stop offering Express Lane until the case was settled. (from : [3])

And your last sentence… well who else IS succesful at selling online??

#13 Comment By MarkChan On February 16, 2012 @ 10:57 am

@Michael Perry said:

“There’s an example I like to use. The original To Kill a Mockingbird wasn’t that good a book. It was a collection of unrelated short stories about a little girl growing up only about 40 miles from where I grew up. But an editor saw potential in the book and, backed by his publisher, he encouraged Harper Lee to write and rewrite the book. On one occasion, when she called him to tell him she’d gotten so frustrated she’d thrown the latest manuscript out her apartment window, he calmly told her to go down, collect up the pages and get back to rewriting. The result was a masterpiece.”

This statement is extremely subjective. I don’t think it was a masterpiece. I am sure others love it, like it, never read it, dislike it, or hate it. Using this example to suggest Amazon is evil because the company doesn’t act like a publisher makes me think of irony since in my opinion, publishers are way more evil than anything Amazon has done.

Publishers hurt authors more than they help them.

Publishers are regularly evil towards readers.

#14 Comment By Felix Torres On February 16, 2012 @ 11:18 am

@Jotunbane: You’re mostly right but on the last one, “Who else is successful selling online” you may need to clarify.
‘Cause there are thousands of companies succesfully selling online, and a few dozen (at least) work at big scales. (In the US alone, there are Newegg, Tiger, WalMart, J&R, Buy.com, eBay; worldwide there is Rakuten and dozens of others in asia).
Amazon is big, yes.
Probably number one worldwide. But hardly unchallenged.
And nowhere near the threat their haters in publishing like to pretend they are.
Try this:
[4]

All the whining and angsting over Amazon publishing? They’re crying over a few dozen books that barely crack a few thousand sales in print. (Of course, they also sell hundreds of thousands of the matching ebooks.)

The thing is, times are tough and getting tougher and the BPHs need to blame *somebody* (instead of looking in the mirror) and Amazon is conveniently at hand…

#15 Comment By devini On February 16, 2012 @ 11:40 am

Amazon works and has worked well from the beginning. I can buy most books I want at a reasonable price. If I make a mistake I get a refund no questions asked. Their website is optimised for iPhones. I can send books to whatever device I own. Their search engine is better than the rest. I’ve bought books from all the other companies and have now given up on them. I usually buy from Amazon first and perhaps Apple next — they sell Italian books so I can forget bookrepublic.it. The other companies deserve to go under if they don’t step up and change. Pointe fini.

#16 Comment By bokes On February 16, 2012 @ 12:10 pm

Robots don’t read books! This business model results in the reduction or elimination of jobs, and therefore the consumer. Corporations are eroding their customer base in pursuit of profits. This cycle is not a sustainable path of growth. Inevitable, maybe. Avoidable, definitely.

#17 Comment By Howard On February 16, 2012 @ 12:15 pm

Jotunbane – you are not paying attention to the substance. The antitrust investigation into the price fixing by the big 6 publishers is because competing businesses cannot collude to fix prices in the market place.

That is a completely different situation from forming a joint venture, where the members of the venture would sell their product at prices they individually set. So a group of, say, 10 independent publishers/eBook sellers form a new Joint Venture called maybe books2you.com ok ? It is a separate company with 10 investor/shareholders. it has independent management. This business established an online site for selling eBooks. This business then sells the eBook of the 10 investors at prices chosen by those investors independently. This is not a Cartel.

#18 Comment By Howard On February 16, 2012 @ 12:19 pm

Jotunbane wrote:
“well who else IS succesful at selling online??”

Well for a start, online sales in the US in 2011 was 171 billion dollars. So now tell me that Amazon has something ‘special’ on their web site that prevents competitors competing.

#19 Comment By Peter On February 16, 2012 @ 12:55 pm

A simple example of Amazon out-performing a competitor: I read that Walter Jon Williams has a new book out (The Fourth Wall), and decided to buy a copy.

Going to Amazon and searching for “walter jon williams fourth wall” returned three hits – the Kindle version, the paperback, and an earlier novel by the same author set in the same world.

Doing exactly the same search on the Kobo store returned 161,699 results. The book I was looking for *may* have appeared in there somewhere, but it wasn’t in the top 10 results sorted by relevance.

Guess which store got my business?

#20 Comment By Howard On February 16, 2012 @ 2:01 pm

Peter – I doubt that that was a copyrighted or patented function either :-)

#21 Comment By Anonymous On February 16, 2012 @ 6:02 pm

Amazon is evil AND they are better at business. Trust me, I’ve worked with them. They had one of their partners TERRIFIED. They are like the online Walmart, only Walmart was also a client, and they were actually a lot nicer (maybe not to their suppliers).

#22 Comment By Tubby Smithson On February 16, 2012 @ 7:49 pm

Free enterprise.. Capitalism..That’s what it’s called. Nicey, nicey, all join hands? Not in business, and very few other places. You’d have trouble even finding that in a church.
You want to know how wonderful Publishers can be? Check the histories of some well known authors, and what took place when the best sellers petered out. Check the music industry, and what happened to some notable singers when the hits ran out. Duh!

#23 Comment By Rohman On March 10, 2012 @ 9:06 pm

Pretty sad. I just learned about this atcion in your blog.Evidently, I must have just placed what may be my last Amazon order three days ago. I love their service and their “no shipping and handling” fee policy. I actually started early enough on Amazon that I have four coffee travel mugs from the days when they were young and fresh and brilliant and a big hope for the future, and would send these things out yearly to their regular customers. I found books there that no one else could provide, including an obscure and out-of-print book written by one of my dad’s relatives everyone had lost track of, which Dad was dying to find and was not obtainable from any other source. I loved (still love, to be honest — parting from them will be hard, but there is indeed the matter of principle) Amazon. This was the ideal of what the Internet could develop into. And to be honest, all the other things they try to sell there now: I’ve never once looked at ANYTHING but their books, beyond an occasional CD of music. I don’t mind if a company is big. They just need to remember their origins, and the variety of customers who’ve made them who they are. — JehanaPS, Cat & Peter, I just love your blog, which I’ve just discovered.


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URL to article: http://www.teleread.com/paul-biba/is-amazon-evil-or-are-they-just-really-good-at-business/

URLs in this post:

[1] : http://www.msnbc.msn.com/id/39633906/ns/business-us_business/t/amazons-challenger-only-its-diapers/

[2] : http://techcrunch.com/2011/12/06/ec-opens-formal-antitrust-proceedings-to-investigate-e-book-sales-cartel/

[3] : https://en.wikipedia.org/wiki/1-Click

[4] : http://paidcontent.org/article/419-the-truth-about-amazon-publishing/

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