Amazon Retail Stops Racing to the Bottom
After years of reducing prices and undercutting the competition, Amazon Retail, an industry term for the group behind items sold on Amazon by Amazon, has finally begun raising prices, at least for some books.
And not everyone is happy about it. This recent article from the New York Times tells the story of several independent and academic publishers and authors who have seen book sales flag as Amazon raises their prices.
The discount on this title has dropped from nearly 33% to less than 8% in just 4 years.
In addition to shrinking discounts, some authors and publishers lament that Amazon has simply stopped ordering and stocking their titles, especially for older and slower selling books.
Why the Change?
For over 16 years, Amazon’s stock price has been climbing steadily, even as profits and margins continue to shrink. Investors have been patient and have encouraged Amazon to reinvest in their business and fulfillment network.
Does Amazon believe that investors are tiring of this strategy and want to see a return on their investment?
Or is it a case of Amazon driving out their competitors and now controlling more of the marketplace than ever before? With fewer other options, why not raise prices?
What isn’t Being Said?
This article doesn’t mention 3rd-party sellers at all. Nearly 40% of Amazon’s sales are made by someone other than Amazon themselves. And when someone sells as a 3rd-party seller, they make the choices about their prices and discounts.
This quote stood out to me, “Authors like Mr. Hollock say they feel helpless about Amazon’s control over their fate.“
Why aren’t they taking their fate in their own hands and selling as 3rd-party merchants? If as a publisher or author, you have complete control over the supply chain, why not simply stop selling to Amazon and sell on Amazon yourself? Set your own price, react to changes in the market yourself and not worry that Amazon Retail’s pricing algorithms will ruin your sales. Plus you’ll have control over the supply of books that actually make it to the market!
And if you happen to be a bookseller this can be good news for you. As Amazon raises prices on new books, you’ll be able to compete more efficiently with the used titles that you sell. And if you do have new editions, you may be able to undercut Amazon Retail, something that in the past would’ve been nearly impossible.
Remaindered books are new books that are being sold at rock bottom prices due to reduced demand. Sellers who source these books can now sell them more profitably as they can be more competitive than ever before.
I would even recommend reaching out to local publishing companies, offering to sell on consignment on Amazon. Explain to them how they’ll have control over their pricing and won’t have to worry about Amazon changing things up and leaving them high and dry. In addition to controlling their prices, they’ll be able to control the supply that reaches the marketplace.
As a 3rd-party merchant, I’d be intrigued and encouraged by this trend of Amazon Retail’s rising prices, even if publishers and authors aren’t.