It seems like every month another retail outlet closes down. The big one recently has been Toys R Us, but there have been so many over the past few years. Initially, people blamed out-of-town shopping centres for the demise of the high street, but now even those places are no longer secure.
Things change. It is more convenient to buy over the internet, in the comfort of our own homes. With mobile devices, we can now shop wherever we are, and get things delivered to our doors, or even elsewhere. If we want to buy a gift for someone, we can have it sent directly to them. And on-line stores have limitless shelf-space, so there’s far less chance of hearing ‘sorry, we don’t have that at the moment’.
The major player in this is, of course, Amazon. Love them or loathe them, they have changed our shopping behavious, and in doing so have changed both high streets and out-of-town shopping areas.
And yet, back in 2015, Amazon opened a physical bookstore, with more following over the next couple of years. On the face of it, this makes no sense—the bricks-and-mortar stores of their competitors have been struggling (Barnes & Noble), or have gone under (Borders).
Yet Amazon doesn’t do anything unless the company is likely to gain. And I believe their intention with these physical bookstores is different to their competitors. I don’t believe they see the primary goal of these stores to be selling physical books.
A book store that doesn’t want to shift its stock? That appears to make even less sense—until you take a step back and look at things in a different light.
Consider, to start with, how the books are displayed in these Amazon stores.
Your average bookstore will have tables filled with displays of books on promotion, or new titles. These are to tempt potential customers in. There will probably be a chart rack somewhere, clearly displaying which books are popular—because people like to read what others are reading. And then there are the other shelves, the ones further back that are only browsed by the die-hard readers, or those seeking something particular. Here, most of the books are presented spine-out, with only the occasional book face-out. Why? Because more different titles can be shown that way. The only problem is, covers catch the eye far better than book spines.
Amazon stores have the display tables, and popular titles are clearly displayed. There are also racks of other books, only no book is spine-out. Every single book shows its cover.
This means that an Amazon store will probably have less stock on the shop floor than a traditional bookstore of the same size. And from Amazon’s perspective, there is a very good reason for this.
The main purpose of an Amazon bookstore is to display books.
It wants to draw in browsers. The Amazon bookstores are less interested in someone seeking a particular book, and more interested in pulling in new potential customers. In effect, the whole of an Amazon bookstore is a store-front.
So does this mean that Amazon are losing those bookworms who scour the shelves for something different, or those who have already read the popular titles, and are looking for more by the same authors?
In the physical world, yes. But think again about people’s shopping habits.
You’ve probably heard about this behaviour, even if you don’t do it yourself. A reader goes into a book stores and browses the displays and the shelves. A title catches their eye, and they look further—read the back cover, maybe flick through a few pages. They check out the price. Then they pull out their phone and see if it’s cheaper elsewhere. Maybe, even while they’re in one store, they order the book from somewhere else, to be delivered.
It’s not good for the store they’re in, but it’s understandable. They get the book they want, for the best price they can find, and they don’t have to carry it home.
Of course, if they want the book there and then, they would have to buy it. Or get a digital copy, and start reading on their phone.
Chances are, these behaviours will involve Amazon, at least in the UK and USA.
Buying books on-line, both physical and digital copies, has become the norm for a lot of people. So Amazon’s bookstores don’t need to cater to people who read a lot. Instead, these stores are advertising, a marketing strategy to tempt more customers to join Amazon. Even if their physical stores don’t make any profit, the company overall makes enough sales to cover this loss.
If the whole store is advertising, the staff have to play a part in this, and everything has to work together. And, from what I understand (living in the UK, I have not been inside an Amazon store yet), Amazon have this cracked. The store staff all have tablets, and can call up information on any book in Amazon’s catalogue (which is close to any book available). They can assist customers in making choices, and if the title is not in the store itself, the staff can order it, even set it up to be delivered to the customer, and all without the customer having to wait at a till. So the customer gets great service, which tempts them back to Amazon the next time they want a book. They might go to the store, or they might go on-line, but Amazon wins either way.
There’s one more thing that needs noting about Amazon’s book stores, and that’s to do with Amazon Prime.
For those of you who are not familiar with Prime, it’s a subscription service that gives loads of benefits to the customer—video and music streaming, unlimited access to various books through Prime Reading, free two-day delivery on items ordered, and more. Amazon are constantly expanding the benefits, and one benefit is cheaper prices in their physical bookstores.
Maybe that seems unfair to non-Prime members, but look at it from Amazon’s perspective. Prime members generally spend more on Amazon than non-Prime members. They’re Amazon’s super-customers. They make more money for the company, and so Amazon want to encourage more people to join the scheme — through better deals. If a reader learns about cheaper prices through Amazon Prime, maybe they will sign up in the store.
It also encourages loyalty. Imagine you’re a Prime member, and you want a particular book. You could get it at any other book store, but you know you can get a discount at the Amazon store. Where are you going to shop? The answer’s obvious.
This is why Amazon’s move into physical bookstores is not a straight competition with existing stores. Their stores are giant displays, with helpful staff, and are designed to make money for the business as a whole rather than as a single store. And they are designed to increase customers’ loyalty and reliance on Amazon.
So where does this leave existing stores? We’ve seen Borders disappear, and Barnes & Noble are struggling. Supermarkets in the UK now stock chart titles at low prices in an attempt to have a slice of the pie for themselves, but Amazon are the largest book-seller in the world. How can others compete with that? Is there any space for the independent high-street bookstore?
I’ve got a few thoughts on this, but I’ll save them for next time.