The “A Word”: Part 1-The Discount Dilemma

These days, most booksellers for small independent bookstores wince when they hear a customer utter the “A word”– Amazon.  Much to the chagrin of brick-and-mortar bookstores everywhere, the “A word” has invaded book-buying vernacular. Not only that, but the “K word” (Kindle) is also tossed around more than booksellers would like to hear. “I stopped by your bookstore because I forgot my Kindle at home,” a customer traveling through town will tell us. “Let’s go, honey. We can find it cheaper on Amazon,” a thrifty woman will whisper to her husband after eyeing the retail price of a book in our store. “If bookstores would just match Amazon’s prices, I’d be happy to stop buying books online,” confides another customer.

Named after the world’s largest river, Amazon.com is the largest online retailer in the world. Of course, this has sizeable implications for the smaller stores struggling to compete with this big, fast and bold company. Unfortunately, brick-and-mortar stores cannot provide the discounts comparable to those offered by Amazon. Since Amazon sells higher mark-up items like electronics to help defray costs–and enjoys the financial security provided by its stockholders–it has the flexibility to mark down retail prices of books and sell them at a loss. This means Amazon essentially has the power to sell the books at (or often even below) cost, which translates to big discounts that bookstores can’t match.

In contrast to Amazon, bookstores pay for knowledgable staff to help customers one-on-one, and other business necessities like bags, shelves, signage, electricity, heating/air conditioning, and display materials. To pay for these extra costs, bookstores must usually rely on sales from sideline items like toys, candles and souvenirs. In addition, many bookstores (including Spellbinder) donate thousands of dollars to the community every year in the form of donations and discounts for schools, organizations, and book clubs. Small business donate about twice as much to charitable organizations as large businesses, according to a 1991 study by Patricia Frishkoff for the Small Business Administration. Sure, Amazon must pay for offices, warehouses and shipping fees, but it’s not reasonable for brick-and-mortar stores–with more overhead costs– to be expected to compete with the discounts Amazon can afford to give away.

Here at Spellbinder, we try to offer as many discounts as possible to our customers. All hardcover and paperback bestsellers are always 20 percent off. We mark down our remaindered “last chance” books to 25 percent off. We also just started carrying used science fiction and westerns that range from $1.98 (for paperback) to $9.98 (for hardcovers!). The prices of the books in our “sale” section range from .98 cents (for paperbacks) to $6.98 (for hardcovers!). Schools teachers, and local organizations that promote literacy receive 20 percent off their purchases. Book clubs benefit from 15 percent off their books. We also reward honor students with 20 percent off their book-buying indulgences.  In any given year, the donations and discounts we give add up to $35,000.00 – $40,000.00!

Finally, we offer eBooks through our web site for prices comparable to those posted by Amazon. However, they are only downloadable through the iPad, the Nook and the Sony eReader. Once a customer buys a Kindle, he has resigned himself to only buying eBooks through Amazon.

As much as we can, we’re trying to give our customers the best prices we can afford to offer. We hope our customers appreciate this–in addition to everything we contribute to our community– as much as we appreciate their continued business with us. It’s only through the continued support of you–the readers of this community–that we will remain in existence here in Bishop!

-Devon

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3 responses to “The “A Word”: Part 1-The Discount Dilemma

  1. I’m dismayed that your discussion of Amazon’s business model doesn’t include the element of California Sales Tax. This has been much in the news in the last couple of months, and I’m surprised that it seems to have passed you by. Amazon’s low pricing is helped by the fact that it does not add sales tax to purchasers in California, a requirement recently mandated by law for large online retailers. The state loses huge amounts of revenue because of this, and Amazon is currently earmarking millions of dollars to fight it. This both cheats California and provides another pricing advantage that brick-and-mortar stores can’t use

    • Thanks for your comment, Maggie! If you’ll notice, this post was only Part 1 of an Amazon series. Amazon is such a huge topic to cover, we’d thought we’d cover one thing at a time. Stay tuned, because California Sales Tax is next!

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