Amazon Situation Overview Distribution Channels Can Often

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 has created a situation in which there is some tension now between these parties. 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, I would not want to upset any of the traditional distribution channels. For example, if I had customers that traditionally purchased my books at Barnes and Noble then it is possible that I would lose a significant portion of my sales. The only way that I would consider using Amazon as a publisher is if they "offered me a deal I couldn't refuse." Amazon might actually want to pay a client to publish with them so that they gain new customers. For example, if a customer historically purchased an author's book at Barnes and Noble, but had to now go to Amazon to get their favorite author's new book, then this would be a situation that would have tremendous value to Amazon that could help them create new customers.

Would it matter if you were working on your first book and had no previous relationship with an editor or publisher? If "yes." why would this make a difference?

Yes, I think it would matter quite significantly. An author who is publishing their first book might find that Amazon's more comprehensive services suit them quite well. For example, as opposed to having to shop for an agent and a publisher, a client could just go to Amazon to handle all their requirements. There would be a convenience factor that might play out for many clients. Furthermore, Amazon's experience and comprehensive product mix could help jump start an author's career.