What good are ebook “daily deals” & other deep discounts?
September 19, 2011 | 10:11 am
By Joe Wikert
I admit it. I check Amazon’s Kindle Daily Deal every day. Every single day. Why? As a publisher I’m curious to see what they’re offering and as a consumer I don’t want to miss out on a great deal. (In the spirit of full disclosure, at O’Reilly Media we offer an ebook or video deal-of-the-day too. In fact, our program was in place long before Amazon started theirs. Everything I’m about to say below pertains not only to Amazon’s program but O’Reilly’s and everyone else’s as well.)
As a publisher I worry about the mindset we’re reinforcing that content needs to be deeply discounted to garner customer attention. Amazon started this thinking by pricing so many Kindle edtions at $9.99 even when they took a loss on each sale. And now the Kindle Daily Deals are often priced at $1.99-2.99 or less, so the effective discounts off digital list price are 80-90% or higher.
You might ask, “what’s the harm?”. After all, brick-and-mortar retailers of all shapes and sizes have offered deep discounts as a way of getting the customer into the store. That’s why a grocery store sells a gallon of milk at a loss and hopes that you’ll pick up several other profitable items between the dairy section and the checkout counter. And that’s the problem.
When I go to the grocery store I always wind up buying something more than what I went in for but that never happens when I buy online. I find I’m willing to let more items catch my eye in a physical store than an online store, so impulse buys are the norm for me in a physical store. When I’m online I’m much more of a destination shopper. I have something in mind. If I find it at the right price I buy it and nothing else.
So I’ve now bought 3 or 4 of the Kindle Daily Deal titles but they were all bought alone as single-title transactions. Each day when I check the Daily Deal I’m greeted by plenty of other products and offers on amazon.com but I don’t bother with any of them.
You might still say the deal is good for both Amazon and that day’s publisher/author. I’m not so sure. One way of measuring that would be monitoring how long the discounted title continues to sell through at higher levels after the discount ends. I don’t have any statistics to prove this (since Amazon doesn’t share the data) but just watching Amazon’s Kindle bestseller list tells me the daily deal titles typically stick around the top 5 or so for another day or two and then pretty much disappear from the top 25-50. Maybe they’re still selling at a higher rate than they did pre-promo but if that’s the case you’d think Amazon would be playing that up with publishers and authors. I haven’t heard a word from them about it.
Meanwhile, the Amazon program is causing me to change my behavior, but not in a good way. I used to take a closer look at the Amazon home page for other campaigns but now I pretty much check the Daily Deal and head out. To make matters worse, one of the recent Daily Deal titles was one I paid full price for several months ago. That one left a bad taste in my mouth all day.
I should point out that I’m a fan of discounts and promotional campaigns…as long as they lead to something more meaningful than a one-and-done transaction. So why not make these deals part of some membership program? There are a lot of directions that could head in. For example, if I buy five books at regular price I get the sixth one of my choice for only 99 cents. Or what if the Amazon Daily Deal was always priced at $2.99 to $4.99 but if I’m a Prime member I get it for 99 cents? In that model the general public still gets a deal (albeit not as deep a discount as today) but customers are encouraged to join a membership program which should lead to even more purchases down the road.
That’s all I’m asking for. Let’s get away from these one-product deep discount campaigns and start thinking about how to build a much more extensive relationship with our customers.
P.S. — Again, since O’Reilly offers an ebook deal-of-the-day program I’m going to see if I can grab our head of online, Allen Noren, to join me in a TOC podcast where we can talk further about our results, what works, what doesn’t, and how we might want to think about tailoring it for the future. Stay tuned for more details on that podcast interview.