Tag Archives: amazon

The Inefficiencies of Local Bookstores

We should not hold Amazon in contempt for pressuring local independent bookstores to the brink of closure and instead should embrace the company for taking advantage of inefficiencies, furthering a reading culture, and–believe it or not–helping us ‘buy local’ more effectively.

In response to Richard Russo‘s recent New York Times article berating a recent not-so-well-considered Amazon promotion, Farhad Manjoo takes a different perspective on the Amazon vs. independent bookstores debate, this time coming down firmly in the Amazon camp.

I get that some people like bookstores, and they’re willing to pay extra to shop there. They find browsing through physical books to be a meditative experience, and they enjoy some of the ancillary benefits of physicality (authors’ readings, unlimited magazine browsing, in-store coffee shops, the warm couches that you can curl into on a cold day). And that’s fine: In the same way that I sometimes wander into Whole Foods for the luxurious experience of buying fancy food, I don’t begrudge bookstore devotees spending extra to get an experience they fancy.What rankles me, though, is the hectoring attitude of bookstore cultists […] when they argue that readers who spurn indies are abandoning some kind of “local” literary culture. There is little that’s “local” about most local bookstores. Unlike a farmers’ market, which connects you with the people who are seasonally and sustainably tending crops within driving distance of your house, an independent bookstore’s shelves don’t have much to do with your community. Sure, every local bookstore promotes local authors, but its bread and butter is the same stuff that Amazon sells—mass-manufactured goods whose intellectual property was produced by one of the major publishing houses in Manhattan. […]

Wait, but what about the bookstores’ owners and employees—aren’t they benefitting from your decision to buy local? Sure, but insofar as they’re doing it inefficiently (and their prices suggest they are), you could argue that they’re benefiting at the expense of someone else in the economy. After all, if you’re spending extra on books at your local indie, you’ve got less money to spend on everything else—including on authentically local cultural experiences. With the money you saved by buying books at Amazon, you could have gone to see a few productions at your local theater company, visited your city’s museum, purchased some locally crafted furniture, or spent more money at your farmers’ market. Each of these is a cultural experience that’s created in your community.

That said, occasionally I like to pay a ‘premium’ and buy books from local stores, but not for any of the reasons mentioned above. Rather, I hope for that bit of literary serendipity and haphazard discovery that only seems to happen in local independents.

Anatomy of a Price War

With the recent Amazon–Walmart price war on books and the 1992 airline industry price war as the backdrop, James Surowiecki takes a look at how price wars start, how they can be avoided, and how to (possibly) win at them.

The best way to win a price war, then, is not to play in the first place. Instead, you can compete in other areas: customer service or quality. Or you can collude with your putative competitors: that’s why cartels like OPEC exist. Or—since overt collusion is usually illegal—you can employ subtler tactics (which economists call “signalling”), like making public statements about the importance of “stable pricing.” The idea is to let your competitors know that you’re not eager to slash prices—but that, if a price war does start, you’ll fight to the bitter end. One way to establish that peace-preserving threat of mutual assured destruction is to commit yourself beforehand, which helps explain why so many retailers promise to match any competitor’s advertised price. Consumers view these guarantees as conducive to lower prices. But in fact offering a price-matching guarantee should make it less likely that competitors will slash prices, since they know that any cuts they make will immediately be matched. It’s the retail version of the doomsday machine.

These tactics and deterrents don’t always work, though, which is why price wars keep breaking out.

Surowiecki mentions that there’s apparently a big banana price war going on in the U.K. at the moment! News to me.

How Reviews Influence Sales (Positive and Negative)

Unsurprisingly, this brief analysis of how reviews influence sales on Amazon equates quite well with my purchasing behaviour; I wouldn’t feel comfortable buying a product with 100% positive reviews unless I knew personally that it was awesome. And a product with less than 15 reviews or so? Forget about it.

[A] handful of bad reviews, it seems, are worth having. “No one trusts all positive reviews,” [John McAteer, Google’s retail industry director,] says. So a small proportion of negative comments—”just enough to acknowledge that the product couldn’t be perfect”—can actually make an item more attractive to prospective buyers.

The sheer volume of reviews makes far more difference, according to Google’s analysis of clicks and sales referrals. “Single digits didn’t seem to move the needle at all,” says Mr McAteer. “It wasn’t enough to get people comfortable with making that purchase decision.” But after about 20 reviews of a product are posted, “We start to see more reviews—it starts to accelerate.”