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Amazon
Situation Overview
Distribution channels can often create interesting situations when there are vertical or horizontal consolidations. Amazon has recently integrates backwards with the intent of attracting suppliers and the expectation of utilizing other outlets for full distribution of its products. The company can now publish an author's book and push it through traditional distribution channels that are not under Amazon's control. For example, if Amazon publishes a book for a client, it can then push this through the distribution channels of its competitors, such as independent bookstores. This significantly expands Amazon's control over the industry and it already has incredible power as the industry leader.
However, such a move to vertically expand backwards has not come without controversy and resistance. Barnes and Noble, the largest traditional bookstore chain, which also has a significant online business, has decided not to stock Amazon's products in the hope of discouraging authors from signing publication contracts with Amazon. In this industry, there was once a level of vertical cooperation among authors, publishers, and retail outlets. However, Amazon's creeping into other channels...
This paper will attempt to answer some of the looming questions that have emerged as a result of this situation.
Was Amazon wise to get into publishing in addition to its very strong position in retailing new and used books? Explain your answer.
Barring any considerations of regulations on Amazon created through a monopolistic situation, Amazon was definitely clever to make this integration. Now, not only are they the world's largest book retailer, but they can also slowly creep their scope of industry control to new levels by hijacking more industry control. This works to further fragment the industry players, which will undoubtedly work to Amazon's favor.
If you were a popular author of children's fiction (with a successful past relationship with a traditional publisher) and your agent (another member of the book publishing channel) asked you whether to approach Amazon regarding the publication of your latest project, what would you say? Why?
As a popular author, I would be leery of teaming up with Amazon for publication services. Since I would have a loyal customer base already built,…
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