10 December 2011


Progress isn't always pretty. It's got victims. Even when it tries to accommodate the past, sooner or later it's just going to steamroll over it in many instances. Today might be one of those days.

Today Amazon is running a promotion. Take your smartphone to a shop, any shop that sells something Amazon also sells, let the Amazon app on your phone know what product you're considering buying and up will spring the - almost certainly cheaper - Amazon price. And to further encourage you to do this, today you get a five percent discount (up to $5) when you buy the product from Amazon rather than from the store where you're doing your browsing.

Retail stores are furious. And rightly so. Amazon is forcing them to become its storefront and not compensating them for that. It is taking sales directly away from them in the most crass possible way. Already, bookstore owners frequently see shoppers writing down titles, that they are certain - with good reason - those people will go home and order from Amazon instead.

Is this the future? Is this a case of technology being used to the benefit of consumers, even though it is hurting traditional, small businesses? Or is it just another typical instance of a huge corporation ruthlessly trying to stomp on its competition?

It's both, I suppose. Therein lies the dilemma.

As a consumer, I like to buy things as inexpensively as possible. If one place is selling a book I want for $24.95 and the other is selling it for $15.95, I'm not rich enough to ignore the difference.

As an author, wanting to sell books to readers, if I can sell more books at a lower price, while still getting the same - or even higher in the case of my ebooks - royalty as at the higher price, I'm also not successful enough to turn away those additional sales. As a matter of fact, it's in my interest to encourage them.

But I also like shopping in real, brick and mortar stores. I like browsing through books on tables and shelves. I like sifting through clothes on racks and trying them on before buying them. I like feeling the heft of cookware before making up my mind what pot, pan, knife or gizmo I want to bring home. I like the social aspect of it - chatting with fellow shoppers, with the people who work in the store. In a good store, the knowledge and opinions of the shopkeepers is an important and valuable part of the experience of shopping. I end up buying less stuff that I want to return in brick and mortar stores than I do online.

And Amazon is threatening all those things that I enjoy as a shopper. Too many bookstores are closing down. Record stores are mostly all gone. What sort of shops are next on the hit list?

Am I, as a consumer, as much to blame for this as Amazon? I'm certainly an enabler. Hell, there are even specialty food items I buy online rather than from shops, even some fresh ones, yet I love going to food markets. Is my economic self-interest worth giving up much of what I do enjoy about shopping?

The sad fact is that other than for the currently infamous "one percent," economic self-interest will always trump the niceties of the marketplace or the "joys" of shopping. And it is always going to be cheaper for an online retailer to sell its products than for a brick and mortar store to sell the same products, even if the online stores are forced to charge sales tax - which I think they should be.

Does this mean the end of shops as we know them? For stores that try to compete with companies like Amazon on Amazon's own terms, yep, they're going to get crushed.

In the future, the brick and mortar shops that will survive are those that play up and enhance the type of shopping experience that they can provide and an online retailer can't. They need to find ways to make the higher prices they have no choice but to charge, worth the premium. It's not unlike how TV commercials need to become more and more entertaining and/or informative in order to encourage viewers to not simply bypass them on their DVRs.

Here's a few things that shops can do that Amazon can't, that might help them keep my/your business:
Foster a community. Turn your shop into a gathering place for people with like-minded interests. You can do that through events, promotions, contests, classes, film screenings, whatever. It's easier if you run a specialty shop - a mystery or cookbook or history store, rather than a general book store, for example. This is applicable to all kinds of stores, not just bookstores. (Though some of your shoppers are still going to browse in your place then buy elsewhere. There's no avoiding that.)
Provide a variety of things to lure customers in and keep them there. The most obvious are hybrids - cafe, bar or laundromat and bookstore, salad and sandwich shop and clothing store, etc. Use the revenue from one to help support the other.
Personal service from knowledgeable salespeople. Every successful brick and mortar shop may well need its equivalent of the Apple "Genius Bar."
Sell products that buyers need, or greatly want to feel and/or see in three dimensions, taste, smell or otherwise experience in person before buying. These are often specialty and high-end items or most fresh products.
I'm not a huge shopaholic, but I also don't want small, local stores to disappear. One of the things I love about the neighborhood I live in is the abundance of small, locally-owned shops selling a variety of products and the sense of community I get when I spend time in them. I don't get that from Amazon. But like anyone without an unlimited well of money to draw from, I just can't afford to pay too much of a premium for the things I need and want.

Like most people, I want it all. I want the deep discounts that I get from Amazon and other online retailers, and I want my local small businesses to thrive. In some cases those desires are proving to be mutually exclusive. But they don't have to be, at least not for all small businesses, especially those that manage to adapt to this ugly/beautiful, brave new world.


Mike Dennis said...

Thoughtful post, Eric.

One excellent example of someone who has stood up in the face of the Amazon juggernaut is Books & Books, an indie bookstore in Miami. Through inventive marketing and business acumen, they've not only not closed, they've prospered and have actually opened more branches. They, as you have mentioned, found new ways to get people into their stores and they're reaping the benefits.

I did a reading up there a few months ago and was amazed to see a coffee shop, a full bar overlooking a nice courtyard, and a sensible layout of their books. And most importantly, people in the store. I had over 25 at my reading on a midweek evening, and I'm virtually unknown there. Fewer than half were friends of mine.

That said, I can't quite come down too hard on Amazon. They're not the corporate Satan some people claim. They provide a product that people want, a service by which to deliver that product, they operate efficiently, and they do it all at a good price. Hey, that's the American way.

I guess what I'm saying is that if more stores started thinking like Books & Books, they will almost certainly insure their own survival, even as Amazon grows larger.

Eric said...

Excellent points, Mike. Glad to hear that your reading went so well. I do think that there are ways that stores can find to take advantage of the holes in the marketplace that Amazon can't fill, and the stores that achieve that will thrive. I hope so, at least.

ErinK said...

Sorry, Eric. You can't have it both ways. We have book stores who've done a great job "engaging" with the community, and they still charge more, and it still makes me a little crazy. We have to create a culture of "sustainable buying" just like we're starting to create one for "sustainable eating." What's the cost of all that "free shipping"? The taxes your state can't invest in education or public safety? The records and toys and socks and everything else you can't touch before you buy any more because the locals are all gone? Or let all the locals die (and then see what happens to Amazon pricing). Remember all that great stuff from China we bought a few years ago "because it was so cheap"? How did that work out for you?

Eric said...

Actually, the great cheap stuff from China is still pretty cheap and the quality is getting better. There are some things that a developed economy cannot do as cheaply or efficiently as a developing economy. Developed economies and companies being challenged by cheaper, faster, more efficient competition need to find ways to add value to their products so as to make the premium prices worthwhile and to keep their customers.