Amazon Books: Doors are Open.

Last month, Amazon opened its fourth brick-and-mortar bookstore called Amazon Books in Dedham, Massachusetts’ Legacy Place shopping center. The first three locations are on the West Coast in California, Washington and Oregon. There are plans to open at least four more locations on the East Coast, but rumor has it that the plan is to open hundreds of locations nationwide.

amazon books

Amazon Books’ first location in Seattle.

Amazon opening brick-and-mortar locations is actually rather ironic, given that it was the rise of the e-commerce giant that gave way to physical bookstores like Borders going out of business in 2011. The switch to online retail is what kept Barnes & Nobles afloat, along with the advent of their e-reader, the Nook. So with the trend of reading shifting to digital, why would Amazon make a decision that would seemingly go against the curve and open retail locations?

 

borders.jpg

Borders closed its doors to the public in 2011.

How is Amazon Books different from Barnes & Nobles?

According to USA Today, Amazon is using its store fronts for a few different purposes. Primarily, the point of Amazon Books locations is to be a showroom for Amazon products such as Echo, Kindle, the Fire tablet and Fire TV, which are all prominently on display in the stores. The target audience is those who already have Amazon Prime, as they receive a larger discount on the books than non-Prime members would receive, which is reportedly 10% to 30% off the cover price. Clearly, the showroom is also a catalyst for signing more people up for Prime memberships and continuing the hype that Prime is well-worth the cost of membership not just for the free expedited shipping it offers but also the discounts on books offered in storefronts. An article in Computer World points out, too, that by signing people up for Echo, it is like a “gateway drug,” opening up a consumer to a future of Amazon purchases. The same goes for selling a Kindle; once you sell it you open up a line for consumers to continuously purchase e-books from Amazon. Having potentially hundreds of brick-and-mortar locations will also reportedly help Amazon to sign with larger authors as well as increase speed of delivery, which is already a major strength of their business. In a sense, Amazon is going back to its roots with the storefront bookstores, as it first started out as a book e-tailer in 1995 before getting into other consumer goods.

amazon echo

Amazon Echo.

Will other companies follow suit with moving “backwards” from the digital age as Amazon did with its storefront?

A rather specific similarity that I recently saw was online wedding website, The Knot, coming out with a print publication. This is huge, given that the whole platform that companies such as WeddingWire and The Knot run off of is that word-of-mouth has moved to online reviews, and that the future of business is digital. However, The Knot publication is one that seems to whet the appetite for more wedding content that is solely available online. It is an appetizer, if you will, for what you can get on the actual wedding website. Wedding magazines are still popular amongst consumers as they are fun to thumb through and users enjoy the tactile interaction with articles, however every wedding magazine component has moved to additionally having an online presence. It is interesting to see companies such as Amazon and The Knot (although they are of very different sized customer bases) start out online and then move to physical presences as a storefront or print publication, when both seem to be dying industries. Interestingly enough, Amazon Books has set up their store so that their 5,000+ books on display all have a card tucked inside of them, showing the reviews of the books and how they were reviewed on Amazon’s 5-star rating system. Whether it is the wedding industry or publishing industry, the importance of reviews and relying on visuals of how something stacked up for a previous user or customer is now the forefront of technology; regardless of whether or not business is conducted online or via retail location.

the knot

The Knot Fall 2016 Publication

What does the future hold for printed books?

The future for print books is not as clear as it is for print newspaper. Print newspaper is dying at a rapid growth, but according to BBC, while e-reading is certainly on the rise, it is not taking out the printed book industry as fast as newspapers are dying out. They predict that it will still be another 50-100 years before print is gone. According to a Pew study, three in 10 Americans had read an e-book in 2013, and as of 2015, over half of American adults reported owning some form of e-reading tablet. From 2008 to 2010, there was a 1,260% increase in sales of e-books, after the Amazon Kindle was launched in 2007 (New York Times). In the past two years, however, the Association of American Publishers has cited that e-books constitute only 20% of book sales; thus plateauing in the past couple years. Clearly, Amazon is at the forefront of innovation and would not open brick-and-mortar stores if they did not see them as a way to profit – especially if statistically 80% of book sales are still hardcopies. But are they leveraging the stores for the purpose of showcasing their e-readers or to increase print sales? They have not revealed their thought process, however whatever they are doing is clearly working and their new brick-and-mortar bookstores are creating quite the buzz.

 

8 comments

  1. Nice post! I have heard of a few companies that are primarily online opening showrooms. Brick and mortar stores still serve a purpose, even if it is just to allow consumers to physical interact with the product before going online to buy. Also I browse very differently when I am in Barnes and Noble than I do when I am shopping for books on Amazon. Books that normally wouldn’t have caught my attention online I might pick up and check out in a store as I walk by a display. Also I am curious if Amazon plans to use the stores as part of a distribution tactic where consumers could pick up their online orders instead of having them delivered to the home.

  2. I find it interesting that they would open bookstores. I think it makes complete sense for them to offer some type of brick and mortar store as some consumers do prefer going into stores, it allows their name to get out there and the consumer’s basket in store can sometimes be worth more than online as they see more things they normally would not have. I would have thought they would open more of a techy store if anything. A place to display their Alexas, Kindles and Tablets. By opening a book store it almost seems that they would be eating their own client base as they could be taking away consumers from their digital books.

  3. I heard about this awhile back and was trying to hard to understand why they would open brick and mortar stores, as awareness of their website generally isn’t an issue Ultimately, I think what it comes down to is they want a showroom for their products in order to try and shift traditional shoppers to their platforms. Having an in-person experience to show their tech to traditional shoppers is a great way to make them more comfortable with shifting their consumption online. I’m guessing this is a loss-leader for them.

    With regard to The Knot, I’m assuming that their print publication is a good way of aggregating the best content from their website in order to reach people who still prefer planning weddings traditionally. That, and driving additional traffic to their website.

  4. Amazon opening brick and mortar stores has confused me since they first announced their plans to do so. I definitely see the benefits the physical locations provide in terms of advertising and allowing customers the opportunity to interact with their tech products prior to making a purchase, but the costs of owning and operating a retail store seem to potentially outweigh these benefits for a company that is already operating so successfully with their purely digital business model. It will be interesting to see how this plays out, whether they will continue to unveil numerous physical locations or end up reverting to their digital model.

  5. I suspect the retail locations will serve as some sort of distribution hub as well. They didn’t go the physical store route for a while because of tax implications, but those reasons are slowly disappearing. They may also be able to sell services through these hubs as well. Who knows? We’ll see!

  6. Something I’ve learned through blog posts in this class is that Amazon is always doing something buzzworthy and you definitely hit the nail on the head with this post. It’s definitely strange to see Amazon stores popping up places considering they’re the ones who made online shopping easy and started stealing sales for retailers, especially book retailers as you mentioned. I wonder if Amazon is going more for a brick & click type storefront here rather than your typical brick & mortar. I know that some retailers have started moving towards this brick and click type storefront where you can place orders online while in the store and then they’ll be shipped to your house. It also gives them an interactive feel with the products before actually purchasing which would be different than purchasing online. As crazy as it sounds, Amazon always has a plan and I’m sure they’ve figured some secret out about this too! Nice post!

  7. I remember when I first heard about Amazon opening some brick and mortar book stores and it made me laugh. Amazon seems to be the company that can do no wrong. As someone who has a kindle, I see its biggest benefit as being great for travel when you might want multiple books. However I still prefer reading physical books when Im at home. Im interested to see how people respond as more of the stores open nation wide.

  8. One of these Amazon brick and mortar stores is actually in my hometown and I’ve been in it a few times now. It’s really cool because it kind of has the feel of a bookstore mixed with the apple store because their electronic products are laid out in a pretty similar way. I think this actually could be successful for them because my dad ended up buying a Kindle when we were in there once he actually got to see and feel the product and he definitely would not have just boughten it online. This could ultimately help them generate amazon memberships from the older generation by drawing them into the physical stores like they are used to.

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