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Rocket Bomber - retail

Rocket Bomber - retail

Amazon and Taxing My Patience

filed under , 1 June 2011, 16:34 by

[Please also read the preceding post, Cheaters Prosper]

I’m a bookseller—not a lawyer—and I don’t pretend to know all the ins and outs of tax law, but a couple of Google searches can pull up most of the information you need to know why Amazon should be collecting the tax. I’ll leave you to your own conclusions on why they fight so hard against it.

First up:

http://www.newrules.org/retail/rules/internet-sales-tax-fairness

“In a 1992 decision, Quill v. North Dakota, the U.S. Supreme Court ruled that retailers are exempt from collecting sales taxes in states where they have no physical presence, such as a store, office, or warehouse. (The legal term for this physical presence is ‘nexus.’) Although the case dealt with a catalog mail-order company, the ruling has subsequently been applied to all remote sellers, including online retailers. The Court said that requiring these companies to comply with the varied sales tax rules and regulations of 45 states and some 7,500 different local taxing jurisdictions would burden interstate commerce.

“In its ruling, the Court specifically noted that Congress has the authority to change this policy and could enact legislation requiring all retailers to collect sales taxes without running afoul of the Constitution. ‘Congress,’ the Court declared, ‘is … free to decide whether, when, and to what extent the States may burden interstate mail-order concerns with a duty to collect use taxes.’

“Today, software has largely eliminated the difficulty of calculating and remitting sales taxes for the country’s many state and local jurisdictions. Indeed, Amazon.com, which opposes extending sales tax to online retailers on the grounds that it would be ‘horrendously complicated,’ collects sales taxes nationwide for Target as part of its management of the chain’s online business.”

So, first: the argument presented by mail-order and online retailers against their obligation to collect the tax [19 years ago!] has been made irrelevant by technology.

Second, the Supreme Court took the time to point out Congress could reverse their decision at any time with simple legislation.

Most importantly, though,

“[W]hile remote sellers are not required to collect sales taxes, the tax is still owed by the individual who made the purchase. Individuals are suppose to keep track of these purchases and pay an amount equivalent to the sales tax as a ‘use’ tax on their state tax returns. Few people do, however, and the use tax is almost impossible to enforce, which effectively exempts these purchases.” [emphasis mine]

Hear it again from another source: http://www.nolo.com/legal-encyclopedia/sales-tax-internet-29919.html

“Consumers who live in a state that collects sales tax are technically required to pay the tax to the state even when an Internet retailer doesn’t collect it. When consumers are required to pay tax directly to the state, it is referred to as ‘use’ tax rather than sales tax.

“The only difference between sales and use tax is which person — the seller or the buyer — pays the state. Theoretically, use taxes are just a backup plan to make sure that the state collects revenue on every taxable item that is purchased within its borders.”

And from Wikipedia: http://en.wikipedia.org/wiki/Use_tax

“A use tax is a type of excise tax levied in the United States. It is assessed upon otherwise ‘tax free’ tangible personal property purchased by a resident of the assessing state for use, storage or consumption of goods in that state (not for resale), regardless of where the purchase took place. The use tax is typically assessed at the same rate as the sales tax that would have been owed (if any) had the same goods been purchased in the state of residence. Use tax applies when sales tax has not been charged. Purchases made over the Internet and out-of-state are the most common type of transactions subject to a use tax.” [emphasis in original]

also: http://en.wikipedia.org/wiki/Sales_tax#Enforcement_of_tax_on_remote_sales

“In the United States, every state with a sales tax law has a use tax component in that law applying to purchases from out-of-state mail order, catalog and e-commerce vendors, a category also known as ‘remote sales’. As e-commerce sales have grown in recent years, noncompliance with use tax has had a growing impact on state revenues. The Congressional Budget Office estimated that uncollected use taxes on remote sales in 2003 could be as high as $20.4 billion. Uncollected use tax on remote sales was projected to run as high as $54.8 billion for 2011.” [emphasis mine]

It is not that internet purchases are “tax free” — they’re not. It’s a matter of who collects the tax. If you want to argue that internet purchases shouldn’t be taxed, well, take that up with your elected representatives — but as noted above, this went all the way to the Supreme Court and the ruling came back that tax is still owed even if it is not collected at time of purchase — in both the 1992 case, Quill Corp. v. North Dakota and the earlier 1967 case cited as precedent, National Bellas Hess v. Illinois Department of Revenue, no one was arguing that the tax was not due, only that making out-of-state companies collect the tax constituted an unfair burden. The tax due is not a matter of where the company headquarters is located, or which warehouse it ships from: it’s a matter of where you, the purchaser, live.

When you buy a book from a bookstore, we collect the tax at the register (It’s listed on your receipt). We send a check to local and state governments monthly, and the sales tax revenue is an important part of what keeps your local municipalities running: it would be very hard to make payroll (for say, firefighters and police officers, and to be fair, also the really awful people at the DMV – but they deserve a paycheck too) without this stream of income. If these sales tax revenues weren’t available year-round, your city or county would have to borrow the money, and then wait until April (or later) to pay the loans back, incurring interest and fees that eat into already small budgets.

Amazon’s continued resistance to collecting taxes has nothing to do with the internet being tax free. [in case you missed it: the internet is not tax free]

Amazon doesn’t have to advertise the tax when they list prices — just like they do not currently list shipping costs. They can still sell a 500 page hardcover book for $11.37. They can still beat us on price, and force bookstores into bankruptcy by doing portions of our job better than we ever could. These fundamentals would not be changed if Amazon added one more little line item, between the price they charge and the shipping fees. Amazon would make no less money.

Well, Amazon might make marginally less money. Like, one-millionth less. But it’s still cheaper to pay for lawyers than it would be to actually collect the tax and forever burst the myth that Amazon is tax free.

When I pointed out that Amazon cheats, I was referring to the near-universal [incorrect] perception among shoppers that Amazon “will always be cheaper” by whatever percentage equal to that tax. It is such a widespread belief that I encounter it at the bookstore every day, and I even get “corrected” by well-meaning people on the internet.

When retailers cry foul and ask for equal treatment under the law, we’re not asking that a ‘handicap’ be imposed upon Amazon because we just can’t compete. Almost the exact opposite is true: We’re asking Amazon to stop cheating and play by the same rules. We’re asking Amazon to stop abetting widespread tax fraud. We’re asking Amazon to disclose to their customers the actual costs of purchases, including the tax, and customers’ obligations under the law.

I’m just trying to sell you a book. *I* didn’t come up with the sales tax, I don’t “charge” tax [retailers collect it on your behalf], and Amazon will beat me in most (but not all) cases purely on price whether they also collect the tax or not.

But let’s stop perpetuating the myth that internet purchases are free of tax.
Also, allow me to correct the perception that asking Amazon to do the right thing [morally if not legally — and also the right thing for their customers] is ‘sour grapes’ from grumpy retailers over losing sales to the internet.

I can provide intangibles at the bookstore that Amazon can’t. I’ll compete on that. But I’d appreciate a level playing field without the de facto tax-subsidy that allows Amazon to advertise an additional discount that doesn’t really exist.

##

Full disclosure:

I work full time as a bookseller at Barnes & Noble. I’m a manager at one of their many, many stores.

I’m also an Amazon affiliate, and earn a small sum from linking from my book reviews to the Amazon site. [I’m also signed up for 3 other affilate programs I use on a regular basis, so my relationship with Amazon is not unique.]



Cheaters Prosper

filed under , 27 May 2011, 11:37 by

It’s not that I hate Amazon; I shop with Amazon too, on occasion. But I do hate cheaters and it seems like AMZN has gotten a pass for far too long —

Take local sales tax, for example: as a retailer, I have to collect it. As an internet retailer, Amazon should have to collect it too — but they don’t. Please note, your local business do not charge sales tax, they collect it on your behalf to pay for local services, and the salaries of the government employees [your neighbors] who provide those services.

Amazon claims it shouldn’t have to collect these taxes [note: no one is asking Amazon to pay tax, they merely need to collect on your behalf] because it’s not a local company — Why, we’re up here in Washington State, what do you mean local sales tax? — but that’s not the issue:

Amazon’s customers are local — UPS trucks use local roads to deliver Amazon packages [roads maintained by taxes], Amazon’s customers’ kids go to local schools, Amazon’s customers’ civil disturbances are broken up by local police — heck, readers make use of local sewers when they read Amazon’s books [on certain occasions], sewer lines built using local taxes.

Local sales tax isn’t paid by the retailer, it’s paid by you, and your neighbors. Sure, you can opt not to pay tax if you order through Amazon — and Amazon is more than willing to be complicit in the act, as that translates into a 4-11% “discount” [depending on your particular locality] and that is a massive competitive advantage. The states of Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming don’t charge income tax so a majority of the state budget has to come from other sources, like sales tax. (Alaska and New Hampshire also don’t charge a state sales tax, but I’m sure local jurisdictions within those states do.)

Maybe we could move to an honor system, where no retailer has to collect the tax, and you just report your purchases for the year past every April, and you’re on your own coming up with the total tax bill. Then Amazon wouldn’t have to collect sales tax and neither would I and your yearly tax headache [and burden] would be tripled — instead of straight-forward automatic collection at point of sale you’d have to save all receipts, figure out what was bought where [as each muncipality, county, and state have different rates] and reconcile your tax burden on an individual basis for each jurisdiction. Sound like fun?

Here’s the plain, honest truth: Amazon will have to collect sales tax. Even if it takes an Act of Congress and a Supreme Court decision, it’s coming. It’s to Amazon’s advantage to prevaricate and dodge and lie and cheat for as long as they possibly can, though — and negotiate back room deals besides, because the alternative is competing fairly with other retailers on a level playing field — without additional discounts enabled by lies and tax evasion.

Amazon Knows This: and they have already built the website infrastructure necessary to comply with the law — so don’t listen to them if they say it would be “prohibitively expensive” to “radically change” the way they operate. Truth is, they already collect sales tax in 5 states.

A handy explanation is on their web site – and oh, yeah, you don’t want to know what they had to go through to accomodate the agency model for ebooks:

“ Kindle books, subscriptions and active content titles sold by various publishers are subject to sales tax based on the publisher’s state tax reporting obligations and the taxability of digital books in those states. As a result, sales tax for Kindle books sold by the publisher may differ from the sales tax to which you’ve been accustomed for Kindle products.”

And figuring out local sales tax based on the purchaser’s home address would be too hard to figure out. Right…

Amazon doesn’t want to get stuck paying sales tax twice — once at point of sale, and once at point of delivery. And that’s fine; it may in fact take an act of congress to work out how digital delivery of files count in terms of “point of sale” and taxable sales, and to clarify where internet sales of physical goods actually takes place (for tax purposes).

For Amazon, is the point of sale where their web server is located, or the warehouse? — or is the computer screen right in front of you? I think we all know who the customer is, and where they live, and where the sales tax should be going.

See also:
http://www.thestreet.com/story/11052898/1/amazon-sales-tax-the-battle-state-by-state.html
http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States#By_jurisdiction



Bookstores and Bookselling in Graphs, 1992 to 2010, with some other stuff

filed under , 25 May 2011, 19:46 by

The US Census Bureau has been reporting retail sales numbers on a monthly basis since January of 1992.
http://www.census.gov/retail/

It’s not just about having the numbers. It’s not even the way the USCB breaks retail down into convenient categories, like books. But if you have the numbers, and a little time (and in my case, sufficient beer to keep the brain lubricated while churning data)
…well, the nice thing is being able to visualize almost 20 years of dynamic change in an industry in a single graph

Please note: while I go back to 1992 because those are the earliest numbers available, 1992 is handy because that’s just before the major chains (B&N and Borders) exploded across the suburbs, with new big box bookstores springing up like mushrooms every week. [Barnes & Noble went from 203 “superstores” in 1993 to a peak of 726 big boxes in 2008; Borders went from just 44 superstores to 515 over the same period.]

Of course book stores were also closing, particularly smaller independents and mall locations. Barnes & Noble was closing B.Daltons by the hundreds annually, closing the last of them in 2009. Borders also closed their smaller outlets, but has been much more confident in the Waldenbooks chain; the recent store closings have all been Borders Superstores (more than 200 of them) — but the surviving Waldenbooks have been left largely intact. (I might be tempted to guess they don’t want to shrink Waldenbooks any further as that would make it more difficult to sell them as a unit)

The first chart tells a story of an industry undergrowing massive growth, doubling from 8.3 Billion to 16.8 Billion in just 12 years; hitting a peak of 17.2 Billion in 2007, before the current recession. The past 5 years seem like a minor blip, or maybe a bit of a plateau before future continued growth.

Maybe you can sense there’s a ‘but’ coming…

Let me adjust for inflation — just an quick calculation using the numbers pulled from http://www.westegg.com/inflation/

After adjusting for inflation, 2005 was a definite peak and book stores are struggling — struggling every month, getting worse year after year.

##

Someone is going to come back with e-books, right? “Well this obviously proves e-books are killing bookstores”

Except that ebooks sales were miniscule until Dec. 2009 – and the much-vaunted Kindle wasn’t even introduced until 2007. The graph shows the decline started the year before.

Was it Amazon? Amazon is a problem, and Amazon sales are certainly growing by billions year after year

but their growth in “Media” is much slower than the growth in overall revenue — and is shrinking as a percentage of total sales over time

I would say those that conflate “Amazon” with “books” and “ebooks” might need to make some mental realignments and redefine their terms: Amazon only makes half their money off of sales of “Media” and only 20% from media sales in the US. Amazon, as a website and as a company, is more than a bookstore.

Oh, Amazon is still eating my lunch: Amazon Media Sales exceeded Trade Book Store sales for the first time in Q3 2010; a feat they matched in Q4.

to produce this one, I had to really work the data – Amazon only reports sales results quarterly, and only breaks down sales by category in their annual reports. Media includes digital downloads (not just e-books, but all that music and even the occasional video) and also includes sales of music, movies, and video games on physical media — you know: discs. I’ve done my level best to tease out Just the Book Sales by comparing Amazon to the overall market and ended up frustrated. My best guess is above.

On the book side, I used the publisher’s reported revenue [http://www.publishers.org] to adjust the monthly Census Bureau retail number — taking the Billions of dollars’ worth of college text books out of the equation. The results are much more striking on a monthly basis [with dramatic reductions in January and August, with a smaller but still noticeable effect on September and December] — matching the Census numbers to Amazon’s quarterly reporting averages out the effect over the whole year.

So, even considering that trade book sales are only half of overall bookstore retail and that Amazon’s sales continue to grow year on year — well,

Amazon is not your local bookstore yet. Their market share of physical books is growing slowly, not explosively, and I might even be able to argue that Amazon’s sales of old-school-paper-books has been mostly flat, growing only modestly, and their market share since 2005 is growing only because book store sales shrank. —oh, a gain is still a gain, and a book sold by Amazon is a lost customer for me, but Amazon is doing nothing special and nothing different from what they did—for books—in 1997.

There is no way for anyone to really know until the economy improves and consumer confidence (and spending) finally gets back to 2007 levels. Ask me again in 5 years.

It also remains to be seen how much ebooks will continue to cannabalize physical book sales, both in stores and online. It is Amazon’s own admission that they sell more e-books than books.

##

The recession didn’t hit until 2008; book store sales began sliding 2 years earlier. Why?

I don’t know, but I have two theories.

First: consumer spending took a hit in 2006 because credit card regulations changed, and suddenly everyone (well, everyone still using credit cards) had to rethink all of their spending. Discretionary purchases (like books) took a hit first.

http://www.dailykos.com/story/2005/08/20/139986/-Your-Credits-The-October-Surprise-2005
http://mooreslore.corante.com/archives/2005/08/21/dating_the_next_recession.php
http://useconomy.about.com/b/2010/05/12/how-2005-bankruptcy-bill-led-to-recession.htm

The other explanation is much harder to swallow, and has implications for the long term health of my industry:

Kids aren’t reading. Well, of course they’re reading but they look at a screen, not a page.

The Consumer Expenditure Survey program [http://www.bls.gov/cex/] consists of two surveys, the Quarterly Interview Survey and the Diary Survey, that provide information on the buying habits of American consumers, including data on their expenditures, income, and consumer unit (families and single consumers) characteristics. The survey data are collected for the Bureau of Labor Statistics by the U.S. Census Bureau.

That top line is total spending on reading, in Billions. Note the downward trend, and note the loss of about $3 Billion over the last 10 years. That’s all you need to know. No need to blame Amazon, or E-books — this is a much larger trend, visible across all age demographics.

It isn’t just that the kids aren’t reading—though they aren’t—much more disturbing is the slope on the next two brackets, the Under 45 and Under 35 sets.

The Bad News: Even ebooks are competing for a shrinking market.

The Good News: Even if all current trends continue: reading is still going to be a $10 Billion Market 10 years from now — and ebooks and the internet are inventing new forms of ‘reading’ and building new markets even as you read this.

It’s not only about competing for readers, but also just competing for eyeballs. Games, movies, online video, blogs, aggregators, and social media — the much bigger market is the Attention Economy: How do we get people to spend time with us, and with our product?

Here is where bookstores have an advantage over Amazon:

people are here in the store using our wifi for hours every day — they come back day after day — some folks only come once a week but they stay all afternoon. Folks coming in for “just a book” only leave hours later. Bookstores are ‘sticky’ in a way that many websites wish they could be. Of course, we provide the chairs and tables, the browsing and atmosphere for free.

How do we monetize this? Can we monetize this? Is there a value for bookstores that has nothing to do with books? Is there value in providing a public space? Can we do more than just sell coffee?

##

I don’t have an answer for this. Or at least, I don’t have a single, definitive answer; I just have a lot of ideas and a lot of questions.

Pessimists will look at the charts posted above and say, obviously the book business is dying. I think it’s more a matter of coming off of an awesome high in the 90s, and rediscovering a business model that is more reasonable or sustainable — or finding a new use for this massive bookstore platform moving forward.

There are about 1500 or so Big Box Bookstores all across the country; more than half are already making the rent, even if we can’t quite please investors with massive profits.

Say only 500 locations are truly worthwhile, and worth keeping open on a self-sustaining basis for the next decade: that’s a hell of a lot of prime real estate that hundreds of thousands of people visit regularly — the longer they’ve been open, the more valuable they are. Bookstores also have a bit of a ‘halo effect’, as we are already associated with learning, knowledge, literacy, culture, and entertainment. Bluntly: We’re known for books, and even if you don’t read them, you know about books.

Apple [The Almighty, can-do-no-wrong APPL] only has 312 stores. Apple has it’s own thing going on; apparently their products key into the same neurons as religious cultists or obsessive hobbyists and hoarders.

But if you were trying to compete with Apple, wouldn’t it be handy to have a retail platform like a bookstore, with free wifi already in place and millions of square feet nationwide and an established brand, and locations your customers already know about, and have already visited in the past?



Amazonification

filed under , 13 May 2011, 18:06 by

I could spend a lot of time doing research and providing links and spelling out for you just what Amazon is and what they do. Halfway through my research, though, I was scooped — thankfully, as the grinding process was killing me and stalling other writing. Please enjoy the following slideshow presentation made available by faberNovel under a Creative Commons license http://creativecommons.org/licenses/by-nc-sa/3.0/

Stéphane Distinguin, Amazon.com: the Hidden Empire, faberNovel, May 2011.

Amazon.com: the Hidden Empire
View more presentations from faberNovel

also available from scribd

##

Are you back? Great.

I could make all sorts of points about how Amazon.com has made fundamental changes to retail. I can’t say Amazon is bad; I use Amazon myself [mostly for computer stuff. I understandably prefer another source for books, and typically buy my anime DVDs from RightStuf, who rock]. I can’t say Amazon is wrong; obviously in a free market customers can choose whichever retailer or provider of goods & services they like — I might argue that Amazon shouldn’t have been given $3 Billion Dollars and a 7 year grace period without showing a profit, as that seems hardly fair, but in the world of corporate finance and stock market machinations there is no fair – and the ability to sell the concept to investors was at least as important as the ability to sell books through a website.

But Amazon didn’t really make any fundamental changes; it’s just an old business sped up by the internet.



1. The Catalogue

Some have said Amazon has revolutionized bookselling.

Sure. Whatevs. (But I’m a bookseller, you know I’m biased.) Let me cast it this way:

What Amazon did is revive and revolutionize selling books by catalogue, a practice that dates back to at least 1888 — and was lamented by booksellers even at that early date as a practice that was “taking advantage of the confusion between [the] two methods of selling books” and additionally of concern because: “the discount system developed until the nominal or advertised price of books did not correspond to the practical selling price. The result of this has been to decrease not only the number of bookstores in proportion to the community, but probably the actual number of book-stores throughout the country”

Publishers Weekly, January 7, 1888. Matter of public record & in the public domain, available on Google Books and also found [text only, with some typos due to scan interpretation] at Archive.org

Well worth a read, and a good think besides.

##

Amazon is a giant book catalogue.

Actually, that’s kind of a great thing: every book ever, right! Neato!

Yeah, fine, but Amazon is not unique. Every bookstore—and several websites—have bought or built a book catalogue — and Amazon isn’t even unique in putting their catalogue online, as every sales site is basically an online catalogue — and for books, there is even an official arbiter & authority on the matter

In fact, Amazon wasn’t even founded to sell books. “Bezos perused roughly 20 different products, including magazines, CDs, and computer software, that he deemed appropriate for sale on the Internet. Eventually, Bezos decided to pursue books, believing that the electronic searching and organizing capabilities of an online site could help to organize the industry’s sizeable and varied offerings. At the same time, the small size of most books would simplify distribution efforts. Bezos also believed that customers would be more likely to make their first online purchase if the risk was minimal; an inexpensive object like a book might prove less intimidating than something more costly, like computer equipment.” [source]

When Bezos was casting about, looking for a business model, I’m sure he also noted that books each already came with a unique identifier — even going so far as to ID a paperback as different from the hardcover, or the US edition as distinct from the UK one, even for books with the same title, author, contents, and all that jazz: It’s called an ISBN, the international standard book number, and it’s an ISO standard, been around since the 60s, and was used by everyone for decades long before Bezos drove to Seattle to cash in on the Dot Com boom.

So even in building the massive book catalogue upon which the initial success of Amazon was based… well… turns out everyone has/had the same database. Pretty simple, in fact. Even with 6 or 8 or 12 million or so titles to worry about [opinions vary as to how many books are still in print] the basic database — Title, Author, Publisher, city and year of publication, and ISBN, will fit on a single disc. (Used to fit on a CD, Bowker sold one in 1986; I think you’d probably need a DVD-R at this point though of course the internet makes that redundant.)

“Ah yes,” I hear you [or at least, an Amazon fan] say, “but Amazon added pictures of the cover, and item descriptions, and user reviews, and the ‘customers who bought this also bought’ feature, and they’re cheaper” etc etc etc.

Amazon compiled all that, yes: but the cover images and item descriptions are provided by the publisher, who wants to sell books through Amazon — it’s not like some intern in the warehouse was scanning covers for 10 straight years (and even the publishers’ interns didn’t have to do it as most covers existed digitally already) (or maybe some poor schlub did have to do this, but it wasn’t on Amazon’s dime)

The “item description” is usually the same as the jacket copy: already written and also, likely already digital.

‘Customers who bought this also bought’ … man, I think even I might figure out how to code this.

And of course the customer reviews.

Written by customers.

Uncompensated customers. And asking for an opinion from the internet is like asking for nitrogen from the atmosphere: Free for whomever figures out how to fix it — even bacteria can do it.

##

SO.

Amazon bought their initial database, plugged in some free publisher info, dressed it up with free content from their own customers [& actually, full props to Amazon for implementing social media years before anyone thought of Myspace or Friendster — let alone Facebook, or “social media” as a term] and ran it for years at a loss.

1995-2002. Seven years. Massive outside investment. No profits.

[…hand me a sweet deal like that and I could probably churn out a multi-billion dollar corporation, too.]

Amazon did have to spend money. Even with free databases and free descriptions and free reviews, someone still had to correlate and compile that mess [and write the software, databases, and user interfaces to make it automatic].

And of course, you can’t sell anything if you don’t buy inventory. Inventory means warehouses, warehouses means logistics, and shipping software, and inventory tracking software, and at least a few people to work in the warehouse, box the book, slap a label on it…

Ah, yes, but before I give Amazon too much credit:

Amazon had the advantage of selling a book before they bought the inventory. They had a massive catalogue, fancy user interface, all important credit-card processing, and a customer who wants to buy a book — This customer wants the book bad. Positively jonesing for it. Searched for it on the 1995-era-internet — maybe even willing to wait two weeks to get it, in fact.

Amazon doesn’t need to know which book this is. They just wait until one is ordered. They charge the guy’s card, tell him it’s on it’s way! — and then they order the book from the publisher. Or from Ingram, an established book distributor & one of the largest, whose Roseburg, OR facility is a short six-hour drive from Seattle, and Amazon. —This was a massive competitive advantage & significant cost savings in the early years.

The publishers — and book distributors like Ingram — were used to this. Small bookstores order just 1 copy of a book all the time. It’s all bookstores need. This system has been in place for decades, and Amazon shows up one afternoon in 1995 and so far as the system is concerned they’re just another bookseller.

No need for massive warehouses yet — the publishers do that already. No need to stock a store or guess at the bestsellers or pick worthy books or even read the damn things — just wait for the orders, and the computer heuristics figure out the rest.

A motivated customer, with money, who is willing to wait weeks for delivery, just bought a book. Get her that book, and order a spare [to speed up delivery to the next customer] and slowly build your own stock of warehoused books. Enough of these transactions, and you’ve built yourself quite the “bookstore”, even though it’s just a warehouse. Enough of these transactions, and you know your backlist: what sells and in how many numbers [nationally! annually!] and can order up to suit.

Build a history and you can guess how many books to order next year, how sales fall off after a book is a couple of years old, how the hardcover suffers once the paperback is out — which books are your perennials, your evergreens, your annuals. Build a history for seven years (without profits) and suddenly, OMG, you not only start to make money — it seems like you’re the only bookstore that knows and that you’ve been at this forever! How did we ever live without you, Amazon?

And if you guess wrong? Hell, that’s not a problem: just take advantage of the massive distribution systems already established to feed bookstores: it’s not like selling out of your stock of a book is a bad thing: you can order just one more copy of a book, if that’s all you need. And since you’re Amazon, and buy in bulk, you get the best discount available.

Sure Amazon has distribution centers coast-to-coast now and they’re building even more — but how many of you have been Amazon customers since the very beginning? It didn’t start out this way. The Massive Multi-Billion Dollar Edifice seems like it’s always been there — but Amazon didn’t post a quarterly profit until 2001, and needed the Q4 holiday shopping binge to finally go from red-to-black for that one quarter. It was another two years before they were able to claim annual profits.

An analyst at the time was quoted by CNN: “It’s high time they learned the ropes… It’s like you’re giving a student credit for not getting an F.”

like I said: allow me to build a business for 6-going-on-7-years with a seemingly unstoppable influx of capital and no expectations to make a return on investment and I could build a trillion-dollar-company too.

It’s not that I hate Amazon; I shop with Amazon too, on occasion. But as noted, I do hate cheaters and it seems like AMZN has gotten a free pass for far too long — can I mention the de-facto-gov’t-subsidy they get by dodging Sales Tax, too?

##

Amazon is smart: they deal in information, and information is produced by every customer transaction. That’s why they send you the reminder email after you buy something, “Please review your recent purchase” — because your review is a block-o-text they can add to their item listing page (all the better for search engines) and your rating, 1 to 5 stars, is a data point they add to their crystal-ball-methods: “hey, a lot of people seem to really like this sparkly-teenage-vampire stuff, maybe we should keep an eye on it.”

But Amazon is not a book store.

Amazon doesn’t need to guess at worthy titles, and order 6 copies (each per store, times hundreds of stores) to stock tables — A table that can hold 50 books — one of a dozen or so tables in each store — and which changes out once a month.

Amazon can wait for customers to order from their catalogue, and then commit to a book.

[fine, for Amazon. Not so good for début authors]

Amazon doesn’t need to stock a hundred thousand titles, categorize, ship, receive, sort, and shelve them [by category] [thousands daily] because the computers do all that. Since there are no bookcases, only database entries, Amazon doesn’t have to do much of anything except accept your money and then figure out how to get the book. Of course, with all that data, they can write up a quick algorithm to guess at sales, order up [to say, 80% of expected sales – at least to start, for the first week] and now can have the books waiting in warehouses — $3 Billion in logistic infrastructure investments goes a long, long way, and it’s only gotten better in the 7 years since 2003.


2. The Next Bridge Too Far.

Amazon built a [*cough*] bookstore, but doesn’t have a monopoly yet. In fact, the actual bookstores seem to be running a successful “Pepsi vs Coke” campaign where number two is still a great place to be, has its own adherents and partisans, and will manage to be a thorn in Amazon’s side for decades yet.

— At least until all of us who were raised in libraries and spent our college years in bookstores are dead. *I* might not last more than 17 more years, given my lifestyle and massive beer consumption, but many members of my cohort will live on into their 60s (70s, 80s, 90s & beyond) and we’re preceded by curmudgeons of the first order, and a secondary wave of the Baby Boomer “me first” generation, who still must be appeased and catered to in ways Amazon has yet to realize.

[Please, Amazon, figure out how to take these needy bastards off my hands.]

Amazon [or Apple, or Google: pick your winner] could be the last sole provider of content that downloads direct to my nerve-stapled cortex — ‘content’ meaning professionally produced video & music & novels — but ‘content’ in this context is not the internet. Amazon is just one part of the internet, or perhaps I should say, Amazon conducts business using just one small chunk of internet. (Of course they hope to expand; everyone does)

— but you know, actually, this ‘print’ thing is available for direct ocular input and seems to do quite well for the transmission & propagation of information: almost singularly so. The paper page may die but ‘print’ lives on. The World Wide Web was “born” in 1993 and so for 18 years, we as a species have been converting everything we know into internet-capable resources, and in the end it is the web the succeeds books — not Amazon or Google. “Print” is dead; long live print — words are a wonderful thing, on screen or on paper — so long as we use words, letters, pinyin, kanji, abjad, and other black-on-white written systems, words will always be available on the net, and some will see value in hard-copy, dead tree editions, even if the primary copy is digital, even if books go digital-native.

And the Web is “free press” in a way ebooks never will be.

You’re still reading, chief — pixels or pages: we’re stuck with ‘print’.

What we are considering is delivery of print: Do you read the screen, or page, and on which device? [“device” can be considered synonymous with “format” now.]

I’ll give it 500 years. Gutenburg introduced mechanised (& eventually industrialised) print 500 years ago, and yet we still write things down, pen to paper — I doubt I’ll be here 500 years hence [would absolutely *love* to write *that* blog post] but honestly, we have to give digital at least a century to displace books.

[Music is different; unless you are a singer yourself, and sing daily, you can’t propagate copies of your music — but anyone with a stick of charcoal and a flat surface, or the modern equivalent—the graffiti spray can, can commit “print” as an act faster than authorities can clean it up or paint over it.]

##


3. “I Need This Book”

Dateline, 30 years ago: 1981. Your ‘chain’ bookstore was a Waldenbooks or B. Dalton at the local mall, most folks found new books via a book-of-the-month club, rare indeed was the local independent bookseller outside of major metropolitan areas, and if you wanted to read the latest hardcover book, you put your name on a waiting list at the library.

Someone from New York or San Francisco is about to chime in, “That’s just wrong. There was a vibrant book scene in 1981…” and yes, and kindly STFU. Like many of my readers (at least, those alive at the time), I spent the 80s in a suburban hell with no local indy, no coffee shops, the nearest mall 20 miles away, a local library that squeezed into a small space next to city hall, and a bike. Give me a break, I was like, 12. I didn’t get a car until 1990.

I was not a ‘typical’ customer but neither was my personal experience unique. In junior high and well into high school, I would ride my bike the 6 miles to the local library, load up as many books as I could carry, and ride back — twice a week. Once a month or so the family made the trek out to the mall [it was the 80s, you likely did the same] and I’d hit the bookstore with relish, spending my allowance and all but begging my parents for another dollar or three to get just one more paperback.

I never went into the library or bookstore in need of ‘just this one book’ — I went in to browse and discover. I had no idea what was out there; I was a thirsty sponge willing to soak up it all, especially science fiction & fantasy.

Now, you might attribute that to my youth: in the 80s I was that special age, 7 to 17. What the hell did I know, what the hell would I be expected to know?

…well:

Oprah didn’t have a book club until 1996, the vaunted New York Times and their book reviews reached less than a million readers outside of New York even into the 90s [& today, though more used to read it online; no telling what their new web policy actually means; the print edition has been in decline for years] — in 1980, radio hosts and TV personalities didn’t push books like Oprah once did, or Glen Beck and Fox News currently does.

Also, there was no C-SPAN2’s BookTV [which only started in 1998 – and how many of you watch C-SPAN2?]

Granted, I was not an avid consumer of radio and TV in the 80s – but prior to 1996 folks did not come into a bookstore, walk immediately up to the information desk, and demand a book, by title, only this one title will do, what do you mean you don’t have it!?

The mall bookstore didn’t have an information desk. They had a short counter with a couple of bookmarks and a register. And a bored cashier [not a bookseller] who was making less than $5 an hour.

Obviously bookstores could order it for you; they order books all the time – but prior to computerized inventory systems it wasn’t something bookstores did every day – prior to the internet web sites, it wasn’t something customers even thought to ask. Indeed, prior to 1986, it was a big, fat catalogue known as “Books in Print” — and good luck! — and even after ’86 it’d be a few years yet before you’d find a bookseller with a computer and a copy of Books in Print on CD-Rom and the wherewithal and savvy to search it for you.

Only once (back in 1990) did I need a book — but only because it was assigned to me. It wasn’t out of print, it wasn’t from a small press; I was assigned Edmund Spenser’s Faerie Queene for high school AP English. There was a Penguin Classics edition, in paperback — but no one had it. Neither the high school library nor the local municipal library had a copy, but that didn’t phase my English teacher, who was a royal bastard with a PhD [in education, not English, btw] and who did not care. I couldn’t even get an extension on my due date. Mom & Dad had to drive me into Atlanta to Oxford Books, the only place we could find in the phone book that had a copy.

I’d like to point out that Spenser is available for free from Project Gutenberg and as a Penguin Classic, the physical book [isbn 9780140422078] is available just about everywhere these days; the bookstore I currently work in stocks a copy [with another half-dozen copies available through our other outlets around town – not every store, only about half] though to my knowledge we’ve never actually sold one – but that just demonstrates how far even brick-and-mortar book retail has advanced in the last 20 years. As much as some hate the Big Box, it still means more books available to more folks in more places — if you can drive to the cineplex, you can drive to a bookstore, which is something we couldn’t say in 1985, or even 1992.

Parallel to the development of Big Box Books, is the explosion of the internet. And in the last 15 years, a sea change in the way book lovers shop for books.

As a young man, I was practically starving for books; I would prowl shelves at the library or bookstore and pounce on new and likely-looking titles. I shopped the bookstore, the whole bookstore — I bought books, but it wasn’t like I was shopping for a particular book. Not that just any book would do, but to an extent, yes, any book would do. [I still shop this way; though of course my current preferred method these days is to work the back room & receive books as they come in and shop right out of the box, before customers even see them — highly recommended if you can manage it] As a lover of books and avid reader of books, this whole business of “I just saw this book on TV: Gimme.” is not only annoying, but counter-productive: an author can be on TV before his book even gets back from the printer, let alone is in warehouses, or available in stores, or is available to order, from us or Amazon.

Buzz about a title is one thing, but this game is stupid, and reinforces negative public perceptions about the bookstore; I get blamed for not having books that do not physically exist yet while also bearing the full burden of stocking “all books” — a claim even Amazon can’t make — and the TV celebs and networks don’t get blamed even if the customer [when they eventually get a copy] doesn’t like the books they plug [assuming they even read it].

No. Really. Folks are buying Atlas Shrugged like the books are shipped with $50 bills inside, or maybe next week’s lottery numbers, and despite fervent protestations that Of Course they’ve read it: I very sincerely doubt folks who are hard pressed to read even one book a year are all reading *1088 pages* about trains and steel production.

##

The bookstore is set up to sell books – like a butcher sells meat, or a grocer sells vegetables, or the internet sells porn: sure, we try to have your favourite, but since we can’t sell everything we don’t try – please look at what we do have.

You can have it now, you can have it cheap, or you can have exactly what you want: but at most you get to choose two. And even if I don’t have organic free-range ostrich — fresh fillets, not pre-packaged ground meat — well, I might still have something you’d enjoy for dinner.

##


4. Amazonification

I could make all sorts of points about how Amazon.com has made fundamental changes to retail [and likely will, in some later post] but at a store-front, physical bookstore level what is more annoying is the changes Amazon has affected upon my customers. The customer base is not what it once was.

Primarily,

“Oh, you don’t have it? I’ll just order from Amazon.”

Yes. [*gritted teeth*] Thank You So Much, since I was able to find that for you after 35 solid minutes on the internet when you walked in not only with incomplete information but incorrect information, and we pulled in 3 other booksellers, and eventually found for you exactly what you wanted, something that is also available from my warehouse.

I’m [*gritted teeth and a barely constrained snarl*] so… Glad… we were able to help. Thank You for not paying my rent or payroll today.

So that’s one case. Fairly rare, if I had to admit it. Much more common are the folks who call on the telephone.

“Yeah, I’m looking at this online and wondered if you had it available for pickup today”

The short answer is no. The long answer is yes, maybe we have it, but I can’t match the online price — among other things, I have to pay rent, and pay for stock on shelves (for you to pick up today), and pay someone to answer the phone (which you just called) to answer your question. Additionally, I’m not going to have 20 copies no matter how badly you need them later today (indeed, 20 copies may not physically exist in any distribution chain anywhere) and a lack of planning on your part does not constitute an emergency on my part.

Just sayin’. And if you’re looking at it online, just order the damn thing online. No need to waste my booksellers’ time for your copy of A Gentleman’s Guide to Organic Ostrich Farming.

The web provides instant gratification: Oooh, I read a review, then follow the link, then click-click-click-BOUGHT. Go me!

And if it takes 3 days from click-click-click until you actually see your book, well, at that point you’re mad at UPS or FedEx or DHL or the old standby, the US Postal Service — but not Amazon. Amazon [or whichever web site] sold you the book, it can’t be their fault.

Unless of course you ordered the exact same book using very similar systems at a bookstore. (I can tell you, it’s the exact same system as our website if you do it from my bookstore.) If you provide us with an email address [a requirement, not an option, at Amazon] you’ll get the same updates: we’ll email you the tracking number, we’ll let you know exactly when it ships. Via EMAIL. But about twice a week I get a call at the bookstore, “But I ordered it two days ago, why isn’t it here yet?”

[*sigh*] …and there goes more of my limited payroll.

Yes, I complain. Yes, these are the interactions that stick in my memory, as they’ve taken up too much of my time. We are also able to order common books, and even a few uncommon ones, and have them delivered without problems — several hundred every week. Happy customers, happy booksellers, profits to both my corporate overlords and my store front.

& We’re all happy! Yay! Books! — but on top of that I get these really awful-book-sales experiences that amazon doesn’t, because they don’t have to (and choose not to) support every customer.

##

Folks come up to the desk multiple times every day [multiple times an hour even] [or call on the phone, an option Amazon doesn’t offer] and aver/demand, “I’m looking for a book…”

They are not asking. It’s sort-of phrased like a question, “I’m looking for book or magazine or whatever on…” but in fact it’s a demand, “I’m looking for this and you will help me, no matter how stupid or unreasonable I am, because you work here and have no choice but to capitulate, you poor bastard.” — not that they even put that much thought into it — It’s a matter of them being a ‘customer’ [sic] [note: real customers spend money] and us being retail wage slaves.

I didn’t pull this out of thin air, I’m not making it up. I can quote comments made to this very blog

“I never go to bookstores or hardly any retail stores any more. Salespeople with a superior or condescending attitude are the worst. It’s totally inappropriate given their place in the food chain.”

[that’s a really fun thread, btw, for both pro & con bookseller views.]

Even if “customers” don’t think of it that way, they’re asking for a lot: they’re asking me or my booksellers for expert help, often help in shaping the search, or help in clarifying partial and misremembered details, or help identifying an author, or basic things like which subject, which topics, which keywords, and for the really tough ones: how to spell Latin, Greek, French, Russian, Italian, or Spanish keywords and author names. Help they don’t get from Amazon, by the way. Just sayin’.

… or the type of help not even trained psychiatric professionals would be able to provide

…but this is my ‘customer base’. Love you guys.

Note: Not the tech-savvy computer people. They can use Google, they can figure out what they want – many if not all of them then order online.

Not the the smart people: these folks know what they want, too, and can remember the two pertinent data points (title, author) even if it took an hour to drive into the store, or five whole minutes to walk from the car to our info desk.

No, I get everyone else

what’s the title? “I don’t know”
or the author? “I don’t remember”
ah. Is it fiction or non-fiction? “Definitely fiction. It’s a true story.”
Ah. …so it’s a biography? “No, not a biography, I said it was a true story. It’s a memoir.”
Ah. …so a new memoir about…? “I don’t remember. But it was just on Oprah, or 20/20. Or 60 minutes. Or maybe CNN or Fox — you know, on TV. Can’t you find it from that? I just told you it’s a new fiction memoir that was on TV or maybe the radio sometime in the past month and while I can’t remember the author or title I’m sure you’ve heard of it.”

##

Some days — I’ll be honest with you — some days I *can't wait* to go out of business if that is to be my eventual fate, if only to see the look on the face of this particular type of customer.

Amazon does not play 20 questions. There is no app for this. Amazon can’t deal with incorrect and conflicting input, as Amazon is a computer. Amazon has no idea what it’s like to have a demanding customer come in and treat you like a personal shopper [please note, personal shoppers get paid much more per hour than retail clerks] only to have said customer return it all in two days because a ‘better’ gift idea occurred to them.

Web sites like Amazon took the easy customers from me; the ones who could help themselves, the ones who bought the most books, the ones who love books and recommend them to friends (some still do so in person, but many more just email the link).

I have many reasons to hate Amazon, not least of which is they just might manage to put me out of a job. But primarily I hate them because they’ve squeezed a lot of the profits and fun out of my job, and I’m left doing the drudge work — often doing their drudge work because I’ll still spend a half hour with a customer who then says, “Oh? You don’t have it in stock, today, and at a discount? I’ll just buy it from Amazon”

##

I don’t even have time in this essay to complain about the college students who call every semester looking for text books. [OK, I’ll make a little time:] If only we as a society could, I don’t know, maybe open up a set of specialist ‘college’ bookstores on or near campus to help these customers. These ‘college’ bookstores could even get syllabi from the instructors so they’d have the books in stock before classes start, so students wouldn’t have to call all the local general bookstores looking for $200 texts the day after.

But of course I’m just speaking out my ass: there’s no way anyone or any campus would open such a bookstore — obviously no one has based on the number of calls I have to take almost every week – speaking of which, I thought classes were taught on a regular schedule? either you kids are waiting way past the last minute or you’re just messing with me.

##

Final point: see also “The Future of Reading”, Newsweek, 17 November 2007.
http://www.newsweek.com/2007/11/17/the-future-of-reading.html

“Books are the last bastion of analog,” [Bezos] says, in a conference room overlooking the Seattle skyline. We’re in the former VA hospital that is the physical headquarters for the world’s largest virtual store. “Music and video have been digital for a long time, and short-form reading has been digitized, beginning with the early Web. But long-form reading really hasn’t.” Yet. This week Bezos is releasing the Amazon Kindle, an electronic device that he hopes will leapfrog over previous attempts at e-readers and become the turning point in a transformation toward Book 2.0. That’s shorthand for a revolution (already in progress) that will change the way readers read, writers write and publishers publish. The Kindle represents a milestone in a time of transition, when a challenged publishing industry is competing with television, Guitar Hero and time burned on the BlackBerry; literary critics are bemoaning a possible demise of print culture, and Norman Mailer’s recent death underlined the dearth of novelists who cast giant shadows. On the other hand, there are vibrant pockets of book lovers on the Internet who are waiting for a chance to refurbish the dusty halls of literacy.

The fight isn’t for publishers or mass-market acceptance, or readers per se. The fight is for “vibrant pockets of book lovers” and we’re already on the net. [I say “we”, I’m one of them.] Some partisans fight for libraries, some for bookstores, some for genres, some for capital-L-Literature and some just to be read themselves. Indeed, some readers on the internet will argue until they’re blue in the face that ebooks are better and I’m an anachronism, fighting for carriages and steeplechase in an age of jet travel and fibre-optic cable.

This is not a war between Amazon & Bookstores — it’s not a war at all — it is a much larger conversation about books, and how books are packaged and propagated, & to a lesser extent on how books are bought & sold. Before we decide on a single answer and close off other paths, we need years yet [decades, if we can manage] to figure out just what books are — surprisingly, we haven’t even answered that question yet, even after centuries

I will hang on for as long as I can, the noble opposition fighting the good fight, even if I know or might guess I’m on the losing side.

Books have value. Libraries have a value that goes beyond books, if only we can convince governments of that. [we might need a 21st century Carnegie, a billionaire who loves books and loves to give away money to support them]

and Bookstores also have value; I have made this a basis of my own personal career.

and Bookselling has value that goes beyond, and will survive bookstores.



Bank On It

filed under , 9 May 2011, 10:25 by

The first automated teller machine was installed in New York City 50 years ago.

Today, we all know ATMs, use them on at least a weekly basis (maybe more, maybe less) and digital banking has advanced to the point that between direct deposit and debit cards and online bill payments, it is possible to conduct all of one’s personal financial transactions without touching a single piece of paper, let alone paper money. [my water & sewer bill is the last one still mailed to me on paper; thanks to my new landlord, I’ve even been able to transition to paying my rent online]

There are other technologies involved, and a number of connected networks and digital adaptations of old technologies (e-checks, anyone?) and of course, the internet — all of which enable various forms of digital and automated banking.

And yet: there are still banks. In my neighborhood, two new branches opened in just the past year – banks I’d certainly never heard of before so they’re either brand new or represent expansions of out-of-town banks.

You can walk into any bank and guess what: you’ll still see a bank teller. (Fewer than there used to be, sure, but still a person.) Past the main counter, folks still work in bank offices, and if you want to open an account, or get a loan, or purchase CDs (certificates of deposit) you’ll end up talking to one of these bankers: specialists in their field, still ready to help for all the things that can’t yet be done online. Some services and interactions just can’t be online, and likely never will be.

##

In 1961, patrons at the City Bank of New York had the option to use an ATM, but apparently so few trusted the machine to make their deposit (cash withdrawals weren’t available) the device was removed 6 months later.

Digital banking in all of its glory took time.

Digital publishing will also take time, and I think the analogy to banking is apt: even when most things are digital, some will completely forgo digital by choice while most of us will still revert to paper for some options, and will still own at least a few things on paper because of convenience or personal preference, and that paper as a whole will be impossible to get rid of.

After all, you still have cash in your wallet, right? (Or if you don’t: you see a lack of cash as a problem to be addressed, and not a goal to be working toward.)

##

Project Gutenberg was founded 40 years ago— no, seriously, and we have sources besides wikipedia to back that up. See also: www.gutenberg.org/wiki/Gutenberg:About

So: 40 years. And digital books had a false start 11 years ago, as well, with a major push by Stephen King and his digital-only short story, “Riding the Bullet”, which was downloaded a half a million times soon after release — over dial-up! this was 2000 — and which made a splash even in the print media: I love this reaction in the New York Times [25 March, 2000] which also includes this choice bit quoting Microsoft:

“In lavish ads heralding its new ‘book-like’ device, Microsoft Reader, it touts ‘the best estimates of Microsoft researchers and developers’ about the post-print future: E-books will start outselling printed books in 2009; newspapers will abandon paper editions in 2018; Webster’s will alter its first definition of ‘book’ to refer to writing read on a screen by 2020.”

Stephen King made the cover of Time that same week [dated 27 March, 2000] though to their credit, the cover story in that issue predicted how “amateur” and user-generated content would “win”, and make the internet what it is today.

Sony introduced their first ereader in 2004 — not THE first ereader, but a milestone. In 2005, Amazon bought their way into the market, with their own device to follow in 2007. [as near as I can determine, the first dedicated e-reader devices were the SoftBook and Rocket eBook — the device was known as an eBook, not the files — both of which came out in 1998. Back in ’98, an ereader weighed 3 pounds, had a battery life of about 5 hours and used a black-and-white LCD screen.] So the devices are between 7 and 14 years old, depending on how one would care to count it — one could even make the argument that “ereaders” in the collective consciousness and as a “mass market” device are only a year old, as prior to 21 June, 2010 no device (that anyone had heard of, anyway) sold for less than $250.

[We’re still waiting for the sub-$100 unit. There’s your e-book revolution, right there, and when a decent sub-$100 dedicated ereader comes out—if it does—then I’ll start worrying about the future of bookstores]

##

Publishers are among the most conservative and change-averse companies out there, quite similar to banks in that regard. But publishers are also among the most responsive to their customers—their readers—and relatively quick to respond to trends.

The shift to ebooks came as a result of customer acceptance, not because of some inherent superiority of the digital format — if digital books really were better, they would have taken off in 2000, not 2010.

The two business are not directly comparable, but even after decades of moving toward automation and taking both the paper and the people out of banking, one can still be employed as a bank teller (indeed, the banks are still hiring) and the bank branches are still open. Now, one could argue that the physical branches are only part of the overall business, and that banks make their money elsewhere, and in fact the “store front” is subsidized by all this other business & the profits made with and by computers in digital markets and transactions.

Sure. Fair enough.

And this differs from, say, a Barnes & Noble, Inc. in, say, 2021 how exactly? There may be fewer branches, and fewer booksellers in 10 years time, and the store front may be subsidized by the digital business, and most folks would rather use the website or buy direct off of a device or whatever.

In 2021 we may have all traded in our debit cards for smart phones using NFC, and maybe folks under 30 won’t know what a check or a check book is, let alone still use them, and maybe, finally, after six decades the banks will finally begin to close branches because we all use the website & ATMs.

Could happen. I doubt it, but could happen. I personally think that as long as cash is an option, I’ll still have a corner bank with a bored teller behind the counter, thankful to see an actual customer and willing to spend extra time with me because *I* took the extra time to do things in person, and helping me is their job: a role the bank is willing to subsidize because 15 minutes of actual human contact can buy years-worth of loyalty and justifies (in the customers’ minds) all the other transactions that take place online and through devices.

Similarly, a smart company will still have booksellers [fewer of us, but…] and will still run a storefront with actual books [likely fewer of these, too, sadly, but…] and if a customer chooses, they can still come into a bookstore and chat with a bookseller and get recommendations and browse and discover books in a way that is impossible to do online.

…because 15 minutes of actual human contact can buy years-worth of loyalty and justifies (in the customers’ minds) all the other transactions that take place online and through devices. and see also: Fill the Showroom, Sales Will Follow at PublishersWeekly.com

In ten years time, I will still be a bookseller. Hell, I’ll likely still be working in the same damn branch of the same damn store, the one I started at more than 10 years ago.

Bank on it.



Teens with Cash.

filed under , 1 March 2011, 18:30 by

Prior discussion, partial prior discussion, presented more or less in order:

http://comicsworthreading.com/2011/02/21/diamond-gem-awards-show-comic-market-view-of-manga/
http://geek-news.mtv.com/2011/02/22/we-chat-with-dark-horses-michael-gombos-about-their-manga-publishing-program/
http://www.mangablog.net/?p=10088
http://www.comicsbeat.com/2011/02/23/is-dark-horse-really-in-the-manga-game/

Still running a week or so behind.

Anyway, the Dark Horse manga discussion [don’t think it even rises to the level of ‘debate’] incorporated parts of the larger bookstore vs. comic shop debate, which reminded me of one of the long-simmering topics I always meant to work up into a full rethinking the box post.

Bookstores will always have a place so long as there are tweens and teens with cash.

We’ve not yet reached the point where 11 and 12 year olds qualify for credit cards, or where parents transfer allowances to debit cards instead of handing out cash. The jobs most of us work prior to age 16 are all cash-under-the-table, more often than not, and even venturing into the workforce most of us deposited paychecks while taking only a little cash — if we had goals to save up for — and would just cash the whole thing out if we didn’t. Until folks hit college (and after?) the primary tender is cash-in-hand, often supplementing a gift card, but not credit or debit.

This will change, as our society changes. But even when it becomes possible, will online sales sites sell to folks under 18 without some sort of parental approval? That’s a tougher question.

BruceMcF has commented on this at least once (vague memories point to him mentioning it at least once before) in the last Unique Experiences post.

No matter what happens online or with e-books, there is still no way to capture the cash-only customer.

And teens have cash. Teens like comics. They also like movies, and junk food, and energy drinks with industrial-grade-levels of caffeine, and illicitly procured alcohol (and other diversions) and awkward social interactions and awkward sex and awkward breakups and all that crap — I almost called it “Judy Blume crap” but I don’t want to insult Judy Blume fans, and I don’t recall that she wrote sex scenes.

Anyway, teens have cash, teens like comics, and teens without cars can con Mom or Dad into giving them a ride to the bookstore [or the mall] — or will be dragged along while Moms and/or Dads [in whatever combinations] stop by the bookstore for esspresso drinks and magazines and annoying booksellers with questions.

Books, as entertainment, have to compete with video games and DVDs and movies — and the internet — but we still manage to score some small but constant fraction of that teen cash business.

Comic shops — would need to have teens coming in, before they could say the same. In the 80s? Yes. In the 90s? Yes. In 2011? Well, I think our teens have grown into 30-year-old connoisseurs of comics-as-art [or loser fanboys] and while they might have more income, they don’t spend nearly as much of it on comics.

And comics, as entertainment, have to compete with video games and TV shows and DVDs and movies and hardware purchases — and the internet, and other booksespecially for the sort of customer who is still buying comics into her 30s.

[see what I did there? pronouns for the win.]

The success of manga in bookstores comes down to

  • anime on TV
  • the success of video games that use “Japanese-style” visuals…
  • …not including but related to the parallel success of Pokemon
  • the attractiveness of bookstores as ‘neutral’ destinations for teens, without parental objections

and

  • the ability of bookstores to accept cash, where the internet does not.

and

  • the inherent appeal of manga, over other types of comics.

[certain indy comics also have appeal — I’m thinking Scott Pilgrim here, but for it’s content, not it’s visual style]

##

One thing we’ve done at my bookstore is to start stocking actual comic books – part of this is due to local Borders in decline, part of it is due to broader customer interest with all these superhero movies recently —

but mostly it’s that 3 of 7 managers are comics fanboys [two DC, one of whom also reads a little Marvel, and of course one mangaholic] [guess who] — and also our lead bookseller in charge of the newsstand, who called someone at corporate in New York and asked: say, can we get some comics?

It is such small potatoes, about 30 titles out of a newsstand that stocks thousands (about 2500 different magazines, considering my display space) but hey: we have comics.

And they’re selling. I think Hastings also discovered the same thing.

Of Course some folks just grab a stack of comics, stake out one of our chairs and read them in store. We’re a bookstore, this is what people do. But: the comics are selling. And I think our trade paperback (and hardcover!) collections are starting to sell as well. Not as well as the manga, because, well, Naruto et al. – but they are selling.

Teens with cash. A retail space that is open, and inviting. A ‘neutral’ location that not only doesn’t turn-off parents, but is the sort of place the parents also want to visit. Offerings for all ages, from 3 to 6 to 11 to 13 to 16 to “Oh my god, would you look at what they’re doing in this comic”

Of course manga sells well out of bookstores. So does sparkly-vampire-fiction-with-barely-contained-sexual-metaphors-and-some-actual-sex. Teens love this stuff. It’s a matter of having stuff people want in a space they want to visit. I think a “comics bookstore” (focused: like a mystery bookstore or a travel bookstore) could do quite well where a “local comic shop” does not. I said as much, two years ago, though perhaps I didn’t articulate the point well.



Books Are Not Retail

filed under , 18 February 2011, 18:19 by


Retail pays the rent, but isn’t what draws people into the store. For every single diehard reader that still buys books, there are

  • 2 homeless people. I’ve been calling them ‘urban campers’
  • 3 assholes coming in to use their cell phone, *noisily*, because ironically the bookstore is a quiet place where they can hear their conversation. (and so can everyone else… turn down the volume a tad; what, are you deaf?)
  • 4 recent graduates reading GMAT/LSAT/GRE/MCAT study guides, and books on financial aid.
  • 5 job-seekers looking at the resume books and career guides
  • 6 students coming to read the graphic design, fashion, architecture, and art books, and magazines, and maybe a comic book or three — actually, well, this is particular to my store, since SCAD Atlanta is just down the street.
  • 7 folks meeting — for dates, for tutoring, for interviews, for business, for the book clubs (we host 3)
  • 8 people coming in just for coffee
  • 9 people just ‘killing time’
  • 10 folks whose first, last, and only question is, “Where is the restroom?”



##

In the wake of the latest Borders developments, this is as good a time as any to reconsider the bookstore.

[I do this all the time but this is just one lonely blog with scant dozens of readers]

Books aren’t retail. — oh sure, many different retailers sell books: Wal-mart, Target, Costco, supermarkets, drugstores, internet, sidewalk vendors and even the local library (once a year)

But Bookstores aren’t retail: bookstores are social spaces, places to meet, places to spend time with the kids or with friends.

It’s easy to point out the “errors” bookstores make, in regards to the “business” — but do *you* really want your bookstore run as a business? No, honestly.

How do you use (and abuse) your local bookstore?

Extended aside: No, not the local independent, as I’m sure you love your local and buy items from them on occasion [even though the internet is cheaper] because you love them and *heart* them and they genuinely deserve it. They really do. Indy booksellers are pillars of the community and saints and everything and anything we can do to support them isn’t charity — we’re just looking out for ourselves, really, because what would we do without them?

No, not the cute shop in the hard-to-find building in the quaint shopping district just off of downtown — you know, with trees along the sidewalks and open air cafés and boutiques with precious dresses (all 3 sizes too small) and the record store that still sells vinyl and the art theatre no one goes to and the biker bar on the corner that you take your friends to on a Tuesday [“this is so authentic”] but are afraid to go to after 8pm on a Saturday night. —no, not this book shop.

Be honest: how do you treat your bookstore? The big box by the mall. The major chain. You Love the local indy and visit at least six times a year — but every freakin’ Sunday you’re at my store and you read a foot-tall stack of magazines and the sunday papers (the local and the New York Times) and leave a mess and a coffee cup and the crumbs and maybe even a used tissue.

I mean, it’s just a chain bookstore, right? They expect it. No Big Thing. They’re a major chain, nation-wide — if I don’t buy more than a $2 cup of coffee and maybe, maybe a donut it’s not like they’re going to be hurt by that — if they didn’t want me to read the magazines for free, why do they have the tables and comfy chairs and the low-key music and the shelves full of magazines? It’s as much a lounge as a bookstore anyway; I mean, I do buy something every now and then, right? This is how the book business works.

##

Point 1: Can you name one, one, other retailer that would put up with this crap? You folks plop down in the aisle, take off your shoes, read items in full (meaning you have no need to actually buy them) while also physically damaging the merchandise to the point where I can’t sell it to anyone else.

Point 2: Borders declared bankruptcy. Investors, journalists, bloggers, and pundits are still debating whether this means Borders is going out of business. Or whether “book retail” is even viable in an age of internet sales sites and direct digital downloads.

##

Borders made mistakes. Obviously. But in any other retail field, Borders’ “mistakes” are not only not obviously wrong, they are standard operating procedures and might even be good ideas: Expand nationally, and internationally. Serve multiple markets, from malls to downtown to suburban retail centers to airports to small town squares.

No supermarket chain is getting flack for ceding online sales of groceries to Webvan — but the pre-2008 Amazon/Borders arrangement is Cause One on many lists [including mine] of Why Borders Failed.

The folks who ran Borders (and there were a lot of them; their org chart has been a revolving door for years) can not be faulted: they thought Borders was a retailer. Their long experience at other retailers should have been all they needed to walk in a run a major nationwide chain, so long as it’s all still retail.

I find it interesting that business journalists can simultaneously condemn Borders’ management for not knowing books, for not being ‘booksellers’ while never explaining to their readers — or admitting to themselves — just what it is that makes the book business different.

Books Are Not Retail.

Big Box Bookstores are social spaces, have been since 1992 or so, and it is at least as important — more important — to consider community, demographics, sociology, psychology, and the whole grand tradition of books and Civilization Itself, as to rely on old models of retail and business.

Borders’ bankruptcy is not a failure of the business. Borders was run as a business, quite professionally, and using standard retail models.

The eventual collapse of Borders came because those in control of Borders forgot (or failed to ever realize) that Borders sells books.

And bookselling *is not* retail.



Borders Death Watch

filed under , 11 February 2011, 13:05 by

If you have to announce bad news, you drop it in the Friday News Hole. For most business news, that’s the hour between 4PM and 5PM EST, after the NY markets close but before the end of the business day.

Of course the word is out there (and if it’s really bad news, it’ll stick around for a while) but for a relatively small segment (bookselling) of just one part of the overall economy (retail) and with other news casting long shadows — the events in Egypt, for example, or Lindsey Lohan for that matter — the media’s attention is divided and a small bit of business news just might fall through the cracks, or even seem like ‘old news’ by Monday.

If I were running a corporate PR department, this would be a great day to drop a Bomb. Even if they aren’t quite ready to file yet, Borders could do a lot worse than to announce their bankruptcy this afternoon anyway.

##

“Hedge fund financier acknowledges $125 million loss on Borders investment” – covered here http://www.annarbor.com/business-review/borders-investor-acknowledges-125-million-loss-on-investment/ by Borders’ local paper, referencing the Bloomberg BusinessWeek article:

Bill Ackman’s Soft Power — the main focus of that article, as I read it, is that Bill Ackman is a prick. —A lucky prick, who has made money, but who has also lost it. If I had $9 Billion and a staff of MBAs I could be expected to do at least as well. As cited in the article Ackman is seen by others as “a spoiled child unaccustomed to being told, ‘no.’” He’s not smart — at least, not any smarter than the folks he has working for him — he’s just rich, and with all the so called ‘luck’ that money buys you. Ackman at one point owned stakes in both Barnes & Noble and Borders — he was betting on (and actively campaigning for) a merger of the two booksellers. Only at the end of 2008 did he divest his B&N shares, and also doubled-down on the Borders Bet, providing additional loans when it looked like no one else cared.

Of course, even as recently as 2 months ago, Ackman was still fishing for his much beloved B&N&B merger — and with the expected payday that would engender, who wouldn’t? — but Ackman both undervalued B&N and has no concept of all of Len Riggio, a self-made man with pendulous balls of brass who actively defends his ‘turf’ and who genuinely understands his business and, dare I say it, loves books and bookselling. If the Borders/B&N combination actually made any kind of sense, Riggio would have been the first person to bring it up.

Borders has not really benefited from Ackman’s involvement, even with all his money. A restructuring 2 years ago wouldn’t have been any easier, or less messy, but the company wouldn’t have racked up those 2 years of losses, either. Borders has posted $800 Million in losses since 2006 — the writing has been both on the wall and in official SEC filings for quite some time.

##

So: I predict an announcement in a little over 2 hours, that Borders is in fact filing for bankruptcy, if not today than quite soon.

I’ll be at work at 4pm so I won’t know for sure until much later tonight.



Breaking: rumours on Borders bankruptcy

filed under , 1 February 2011, 18:27 by

source of the rumours: a report on Bloomberg.com citing “three people familiar with the matter”

http://www.bloomberg.com/news/2011-02-01/borders-said-to-prepare-bankruptcy-filing-as-early-as-next-week.html

Borders has declined to comment. No surprise there.

It has been a little over two weeks since Borders secured the services of law firm Kasowitz, Benson, Torres & Friedman, “restructuring” experts who according to the Wall Street Journal were tasked with keeping Borders out of bankruptcy court, once again according to unnamed sources.

It was just last week that Borders announced they secured new funding from GE Capital, though likely not on the best terms, and even the announcement [details reported at Forbes.com] contained some caveats,

“GE Capital’s commitment is dependent upon the completion of supporting financial arrangements with the company’s vendors and landlords, as well as its finalization of a store closure program, among other conditions.”

As we heard on Sunday, Borders Delays Payments To ‘Vendors, Landlords and Others’ – of note first because it was announced on a Sunday and also because it looks really, really bad. Not paying the rent, no matter what the reason, is not a way to inspire confidence.

When the Bloomberg report hit, at 3:54pm (just six minutes before the close of markets) Borders stock tanked – losing 35% in a flurry of last minute trades, closing at a mere 47 cents a share. It’ll be interesting to see what the stock does tomorrow, and whether there will be any official announcement from Borders now that the news has leaked.

A follow-up on Bloomberg Businessweek provides the handy details,

“Borders has posted almost $800 million in losses since 2006 as it lost market share to competitors such as Amazon.com Inc. The retailer has also been slow to embrace digital reading, which continues to gain popularity with consumers.”

So, while I’m calling this a rumour for now, it definitely feels like a very real, very bad thing.



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Yes, all the links are broken.

On June 1, 2015 (after 6 years and 11 months) I needed to relaunch/restart this blog, or at least rekindle my interest in maintaining and updating it.

Rather than delete and discard the whole thing, I instead moved the blog -- database, cms, files, archives, and all -- to this subdomain. When you encounter broken links (and you will encounter broken links) just change the URL in the address bar from www.rocketbomber.com to archive.rocketbomber.com.

I know this is inconvenient, and for that I apologise. In addition to breaking tens of thousands of links, this also adversely affects the blog visibility on search engines -- but that, I'm willing to live with. Between the Wayback Machine at Archive.org and my own half-hearted preservation efforts (which you are currently reading) I feel nothing has been lost, though you may have to dig a bit harder for it.

As always, thank you for reading. Writing version 1.0 of Rocket Bomber was a blast. For those that would like to follow me on the 2.0 - I'll see you back on the main site.

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