Amazon is largely credited with killing the physical bookstore.
Its biggest victim, Borders, once the second largest bookstore chain in the U.S., filed for bankruptcy and began closing all of its stores in 2011. Barnes & Noble, the nation’s largest bookstore chain, has been downsizing and is expected to continue to do so for the next decade.
Amazon’s victims over the years have also included countless local, independent bookstores. But a funny thing happened. With Borders gone, Barnes & Noble less powerful, and a growing number of consumers developing nostalgia for the bookstore experience, in recent years independent bookstores have seen a quiet revival.
Perhaps the biggest evidence that there is a not insignificant market for physical bookstores in our digital age: Amazon itself is building physical bookstores.
Dubbed simply Amazon Books, the first was opened in November 2015 in Seattle. Six more followed in cities that include Chicago, Portland, San Diego and, last month, the first in New York City. Amazon has announced that another six are coming soon.
According to Amazon:
As a physical extension of Amazon.com, Amazon Books integrates the benefits of offline and online shopping to help you find books and devices you’ll love. We select books based on Amazon.com customer ratings, pre-orders, sales, popularity on Goodreads, and our curators’ assessments. We place books face-out on the shelves, so each can communicate its own essence. Under each book is a review card with the Amazon.com customer rating and a review. Most have been rated 4 stars or above and many are award winners.
A different kind of experience
Calling it “a store without walls,” Amazon Books is definitely a different kind of bookstore.
Perhaps the most noticeable difference: there are no prices listed. To find out how much a book costs, would-be customers have to use the Amazon app or a store price scanner. Two prices are provided: one for Prime members and one for non-Prime members. As with Amazon’s online store, prices can change in real-time; the price for a book at 9:00 am might not be the same at 3:00 pm.
Another major difference between Amazon Books and traditional bookstores is that all books are displayed face-out. As New York Magazine explained, “the store’s decision to display titles face out means it only carries about 3,000 titles, far less than it could if it displayed books more like a traditional bookstore with the same amount of space.”
Finally, Amazon displays books with review cards containing an actual unmodified user review from Amazon’s site.
Data versus heart?
Not surprisingly, Amazon is employing all of the data it collects to help determine what books are featured in its new physical stores. The company says that most of the books are “rated 4 stars or above,” and it has created some interesting sections for books. For instance, the New York store has sections like “Books People Finished Within Three Days on Their Kindle” and “Books Rated 4.8 Stars or Above.”
While data is clearly a big part of the Amazon Books model, Amazon wants everyone to know that Amazon Bookstore isn’t a heartless data-driven enterprise. Jennifer Cast, the VP of Amazon Books, pointed out that each store has curators who apply “data with heart.”She says there’s an “art versus science” process that takes place that ensures Amazon Books locations aren’t exclusively stocking best-sellers customers already know about.
But not everyone is impressed.
Doug Garnett, CEO of Atomic Direct, a television ad agency, told Forbes, “While I respect Amazon’s search for smarter retail, I think Amazon is attempting to create a value story where one doesn’t really exist.”
Others were less kind.
In a piece entitled The Amazon Bookstore Isn’t Evil. It’s Just Dumb, New Republic’s Alex Shephard wrote, “Everything in the store feels just a little bit off, and you’re constantly reminded that you’re interacting with the physical manifestation of an internet phenomenon.”
As Shephard sees it, “at their best, bookstores are community hubs” and Amazon Books falls well short of becoming that. “If Amazon Books’s raison d’etre is ‘discoverability’ and the blending of online and offline commerce, than its utility breaks down—it doesn’t do either thing particularly well,” he concludes.
When he visited an Amazon Books location, Shephard says that after spending an hour browsing and reading reviews, he had no idea what book to buy. That changed after a brief conversation with a store employee who made a personal recommendation.
An ironic lesson for struggling retailers?
Despite Amazon’s online retail dominance, Amazon Books looks likely to be a limited threat to the independent bookstores because they’re offering different experiences to different target markets. There’s also the issue of economics; experts say it will be very difficult for Amazon to make much money from these stores given the limited inventory. Amazon obviously has enough money to subsidize losses, but if this is the case, don’t expect Amazon Books to become a chain the size of Barnes & Noble or the now-defunct Borders.
So what can struggling retailers in other markets learn from Amazon’s foray into physical bookstores? Ironically, the biggest lesson might be: don’t try to compete with Amazon.
That doesn’t mean that some of the things Amazon is doing, such as using data to inform decisions, are bad ideas. They’re not, and most retailers are already employing data more heavily and wisely. But retailers can also take a page from the independent bookstores that have been thriving despite Amazon’s continued rise. Two of the biggest areas worth exploring are:
Personal, expertise-driven experience
The foundation of the independent bookstore experience is expertise, expertise-driven curation and personal interaction. Consumers who patronize independent bookstores aren’t looking for the best prices, and they don’t need to go there to find out what everyone else is already buying. Instead, they patronize independent bookstores because they know that the operators are passionate and knowledgeable, and can help them find the books they want to read.
Retailers in all retail markets should consider experience to be the first axis on which they can establish a competitive differentiator.
As New Republic’s Shepard noted, independent bookstores can serve as community hubs. Many, for example, bring communities together around special events like author talks and book groups. These not only bring potential customers into stores, they help build loyalty in ways that incentive-focused loyalty programs often can’t.
While speciality retailers in certain markets will have more of an ability to build community than others, community is an overlooked and underutilized element of retail strategy today.
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