Amazon Facts Recap the Rivalry Between Amazon

Amazon

Facts Recap

The rivalry between Amazon and Barnes & Noble has taken another turn. Barnes & Noble announced that it would not sell books from Amazon's print publisher in its stores. Amazon has taken away significant business from brick-and-mortar book stores, something that Barnes & Noble has countered with a number of different approaches. The move into print publishing for Amazon represents that company's continued vertical integration efforts, which includes digital publishing and the Kindle. Amazon's move into the offline sphere represents a shift in the dynamics of the bookselling industry. Amazon has dominated, causing problems for bricks and mortar retailers. However, some like Barnes and Noble and a number of independent book stores are continuing to survive and even thrive in this competitive environment.

Assessment

It was a good idea for Amazon to extend into print publishing. The business is not dead, and Amazon still sells a lot of physical books in addition to its online business. Independent stores are also doing well, which means that there is still a market for print books. Amazon has utilized vertical integration as a strong growth strategy in the book industry, including its digital publishing and Kindle businesses. Print publishing is simply an extension of the digital publishing business, as well as an opportunity to grow its online retail business by offering more titles, and exclusive titles. These forms of diversification create growth opportunities for the company, and play to its pre-existing strengths. It is not only reasonable that Amazon enter these businesses but recommended that it do so.

At times, entering new businesses will elicit competitive response. Amazon knows that an industry that is in a state of oligopoly is by its nature characterized by strong responses of the competitors to each other's moves. When Amazon introduced the Kindle, Barnes & Noble followed with the Nook, for example. Thus, Amazon would have known that Barnes and Noble would respond to Amazon's move into print publishing. This response, therefore, was likely factored into the company's decision making. Amazon has tremendous market power. It is the leading online retailer in the world, and it has the leading e-reader in the Kindle. The company's reach in the market is tremendous, and as a result Amazon can enter a business like print publishing simply on the basis of distributing through its own website -- it likely does not need the help of Barnes & Noble and probably assumed that channel would be closed. There are enough other channels, and Amazon can be reasonably certain of enjoying success if it pursues those other channels.

If I had a deal with a publisher already, I would not approach Amazon. Most publishers have access to all distribution channels, so going with Amazon would inherently cut me out of a major channel. The only advantage Amazon might have is the ability to distribute globally, something that might give a higher net sales figure than my existing deal if that deal is only domestic.

For a new author, Amazon might hold more promise. The company has the leading e-book platform and a tremendous amount of industry credibility. If it is easier to work with Amazon and get my foot in the door, I would definitely consider that an option. Amazon gives instant distribution around the world and is one of the most valuable channels in the business. In essence, the decision comes down to which option would give my work the most channels to market. If I am already published and selling through all channels, I would hesitate to cut some of them out in order to work with Amazon. If I do not have existing channels, I would definitely consider Amazon as a fast route to market with both digital and print channels.

I do not believe that either Amazon or Barnes & Noble are going to change their stance on this. Amazon has enjoyed success through its diversification program and vertical integration, so it is unlikely to change its strategy unless it is losing money on the print program. However, given the synergies the program has with digital, Amazon is unlikely to lose money on it.