Is this the end of the line for independent book stores?
By: David Skul | Posted: 20th December 2005
How much is too much when it comes to cost-cutting, and how low will book sellers mark down cost? These are just s few questions and concerns that the bookselling industry faces in a very competitive market. When the number of online retailers increases, so do the price wars. These wars will eventually lead to diminished revenues for many retailers and ultimately force the smaller competitors to drop-out. This has and will cause disruption in the bookselling industry.
When Barnes & Noble entered online retail, Amazon.com reacted by reducing prices drastically and adding 1.5 million titles, in addition to the 1 million that it already listed. Later, Amazon.com also increased the commissions it paid to Associates and negotiated deals with other dotcoms. Amazon.com and Barnes & Noble were definitely the heavy players and were willing to battle.
With technology and the Internet continuously expanding, many traditional booksellers took notice of the opportunity and success that can be made. These booksellers, in order to stay alive, had to follow in the footsteps of Amazon.com and Barnes & Noble. The hard part was trying to compete.
With Barnes & Noble and Amazon competing and offering highly reduced costs, smaller booksellers are going to struggle in the industry. How could they compete not only with the prices, but with the convenience of going online and finding the title they need? First of all the price wars alone have caused a major disruption. The big players can keep on competing, but there is no way that the smaller players can join the game. With the high volume that the big players have, they can afford to reduce prices and have price wars. The smaller players however cannot compete and expect to gain profit, especially for those "brick & mortar" booksellers that aren't participating in online retail.
Publishers and wholesalers will be forced to turn to selling directly. As prices drop and online retailers continue to compete, the big players will end up dominating the market and eventually "wiping-out" the smaller retailers. Competition will continue and eventually the shipping and handling fees will be eliminated (free), making online retail, the easiest and cheapest way for ordering books. This only hurts the bookselling industry overall.
Who knows, maybe one day there won't be any need for anyone selling "physical" books as together with the widespread use of the internet e-books just might become the new "bookshop" of the 21st century.
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Tags: 5 million, game, amazon, commissions, publishers, convenience, competitive market, footsteps, high volume, online retailers, book sellers, wholesalers, 1 million, brick mortar, barnes noble, disruption