During a 60 Minutes interview last December, Jeff Bezos, the CEO of Amazon, was asked by Charlie Rose about Amazon's ruthless pursuit of market share. Bezos responded: "You've got to earn your keep in this world" adding the Internet was disruptive by nature and Amazon was acting no differently than other Internet companies.
Bezos then went on to say: "Most companies want to see return on investment in one, two or three years, but I'm willing to see it in five, six, seven years... so just that change in timeline can be a very big competitive advantage." A strategy his investors had supported until Amazon's stock price began to falter, dropping nearly 20 percent over the past six months.
After years of heavy spending on building new distribution centers and covering loses from aggressive discounting, Bezo's dream of empire building had hit a speed bump with stockholders demanding greater profits from the company. Some even speculated that this was driving Amazon's aggressive negotiations with book publishers and other vendors.
Although, this isn't the first time Amazon has been called out for what's been characterized as heavy-handed negotiation tactics, it is the first time that the the press has run with it. And while both Amazon and the publisher, Hachette Book Group, have signed a confidentiality agreement, one need look no further than Amazon's website to see the repercussions.
In response to Hachette's reluctance to sign a new deal, presumably regarding e-book sales, shipments of Hachette's hardcover books have been delayed, pre-orders of their new releases have been cancelled and customers looking for Hachette's titles are sometimes directed to books from other publishers.
And this is not the first time Amazon has tried to intimidate publishers. Earlier this year, the publishing arm of the Bonnier Media Group of Germany saw delivery times for their titles delayed by nearly two weeks as negotiations came to an impasse over revenue sharing for e-book sales.
As the largest online retailer in the world, with 225 million customers, Amazon has managed to be a stealth company, praised for their incredible selection, deep discounting and seamless delivery, without revealing much insight into their internal process. But now, that is changing as details of their dealings with Hachette and other vendors are surfacing in the press.
Some critics are even calling for a boycott of Amazon. Seizing the opportunity, the literary community is moving fast to promote the benefits of shopping at local book stores, in an effort to keep them open in a country focused on price and home delivery.
Even before all this was happening, best selling author James Patterson put up a million dollars of his own money last year to establish a fund in support of local bookstores. Patterson, a lover of books and book stores, who also promotes reading in our schools, saw book stores disappearing right before his very eyes. He wanted to bring this to the public's attention, before it was too late. Last month he even posted an impassioned entry on his FaceBook Page. Here's an excerpt:
"...Small bookstores are being shuttered, book chains are going out of business, libraries are suffering enormous budget cuts, and every publisher -- and the people who work at these publishing houses -- is feeling a great deal of pain and stress. Ultimately, inevitably, the quality of American literature will suffer."
To put Patterson's concern in perspective, Germany with a population of only 80 million people, has nearly 4,000 book stores, while in the United States, with over three-hundred million people, there are fewer than two-thousand. Half as many book stores as there were twenty years ago in this country.
Unlike the U.S., some European Governments, including France, Italy, Germany and Austria, have taken steps to protect their book stores by allowing publishers to set prices for new titles sold by their retailers. The same pricing guidelines apply to Internet sales.
These Countries perceive corporate giants like Google and Amazon as a threat to their local retailers and are creating laws to protect them. France has what they refer to as the "Anti-Amazon Law" which limits discounts and prohibits free-shipping in conjunction with other discounts. Apparently, these countries understand the value of local retail, while our country seems to cheer on our corporate giants.
If nothing else, this situation is a wake up call for the American public. No question, the Internet and online sales are growing rapidly; to propose that we stop shopping online would be foolish. What isn't foolish is to look into the future and imagine what our towns will look like if we don't support our local businesses, at least with some of our purchases.
Who knows, your neighbor may even own one of those businesses that has been serving your community for years. Things are hard in this country and to survive we need to think about how we can support those who live right next door.
Even the secretive Amazon will admit, they want to sell everything to everyone.
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