book bazaar

Will Amazon take the dotcom out with physical bookstores in India too?

With online prices and an offline presence, the giant could spell the end of all other bookstores.

“We are not profitable. We could be. It would be the easiest thing in the world to be profitable. It would also be the dumbest. We are taking what might be profits and reinvesting them in the future of the business. It would literally be the stupidest decision any management team could make to make Amazon.com profitable right now.” Jeff Bezos in the New York Times, 1997

If a businessman for whom profit is secondary starts something new, it’s probably time for both competitors and customers to take note. The online retail giant Amazon announced its plans for a brick-and-mortar store over three years ago – so the formal opening of its first physical bookshop in Seattle in the US wasn’t exactly a surprise.

Still, the actual launch has brought key questions into focus. Why is an online retailer opening a physical store? Are online sales about to peak? And is this good news or bad for chain and independent bookstores?

To that, add another question in the Indian context: will we see Amazon bookstores in India too? After all, the company did displace Full Circle bookshop to run the physical bookshop at the Jaipur Literature Festival 2015, where its strategy was evident in the prominent display of bestsellers that had no relationship with the works of the participants in the festival.

So far, Amazon.com’s scale and deep discounts have resulted in slowly dismantling  the concept of selling books from a physical bookshop.  Hundreds of  indie bookshops  around the world – and in India – have been victims and closed down.

Since Amazon is big on India, where Bezos has pledged $2 billion by way of investment, it is possible that Amazon stores may open here too, particularly since online book sales, despite being the dominant segment, are not as large as the company would like them to be.

As is the case now with online sales, Indian bookshops will not be able to compete with the Amazon price. So most bookshops which are on the brink will shut down in a hurry if Amazon open shop. This is because you go to a Amazon physical shop and get books at online prices. Many Indian booksellers say they get the footfalls since customers come to look up books. Then they  go home and order online.

How it works

The prices at the Washington bookstore are the same as online ones. The price is not pasted on a label on the back cover . Customers will have to scan the code using the Amazon app on their phones. Or a store assistant will do it for them.

Interestingly, all books are displayed face up in the store, exactly the way they can be seen online. A card below each book carries a short review and its sales ranking on the Amazon website. It is a totally different book-buying experience according to initial reviews.

As the press release put it, “…Amazon Books is a store without walls – there are thousands of books available in store and millions more available at Amazon.com. Walk out of the store with a book; lighten your load and buy it online (Prime customers, of course, won’t pay for shipping); buy an eBook for your Kindle; or add a product to your Amazon Wish List, so someone else can buy it.”

The world of books has again been baffled by Bezos.

What would this model mean in India? If the spine-out model dies, bookstores will need to be much, much bigger than they are now, which will help drive them out of business. And that’s true anywhere in the world, actually.

Is this the strategy?

“The secret is to have such power and buy in such quantity that you can dictate your own discounts to publishers. Buy books by the pallet and then, why not, send six of those to your outlets at the mall under the overpass. That surely helps keep the cost of goods down,” says Dustin Kurtz in New Republic. But this does not explain a physical book shop strategy. Amazon has enough clout with publishers to beat down the price of any book anyway.

Could the answer lie in the fact that a physical bookshop is still the best – and cheapest – way to  deliver a book into the customer’s hands? Instead of battling with logistics – which can be very messy in India – why not just outsource the delivery process to the customer by having them pick up the book themselves?

Of course, it’s a guessing game. After all, why can’t Amazon just open the books section of its mammoth fulfillment centres to customers? It might actually be a great experience to have a robot deliver the book to your hands. Or even a drone which picks up the book from the cavernous stocking area and flies back to place it  at your feet.

Amazon has a great advantage over other popular independent bookshops. It knows book-buying habits, knows favourite authors, knows the preferences of people in and around the location of the bookshop, knows the price range that customers like, and so on.

This will align their inventory to purchases, and prevent them from storing books which may not sell, which is the bane of any bookshop  Such Amazon shops may also someday turn into remaindering shops where all books (from unsold inventory) are sold at huge discounts. “Our goal is to do a great job selling lots of books,” Jennifer Cast, vice president of Amazon Books told Seattle Times, sounding quite like a new bookshop owner.

But what of digital book sales for Amazon, which accounts for three out of every four e-books? Well, e-book sales have peaked out in the US, despite Amazon’s massive push on the Kindle and on schemes like the Kindle library. This could offer a reason for replicating the physical bookstore with the benefits and insights of intelligence shopping thrown in.

Amazon has changed the game several times. Maybe another change is upon the world of bookselling.

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