The End Of The Amazon Era

This week, Amazon debuted its new toys and electronics departments. Jeff Bezos newly-revealed vision for the allegedly hip, once-revolutionary website has been revealed: a tacky online K-Mart. You're as likely to see a Pokemon critter or digital camera as a book there these days. Is this what all those investors were counting on? Get on over to Fatbrain.com immediately and sign up because the new Amazon sucks profoundly.

What do all these diverse products have in common? If you guessed nothing, you win a free Pokemon Pileup, Amazon.Toys.com's "cunning critter" of the day on Tuesday, a day on which Amazon gave a perfunctory nod to Alice Hoffman's new novel "Local Girls" but was much more excited about (and gave more space to) what it called "Aural Fixation: Superb audio performance and fine-quality construction put the Harman Kardon FL8550 five-disc CD changer on the shortlist of stellar CD players under $1,000!"

Doesn't the hipper-than-life-itself Jeff Bezos know that books, toasters and Disney marketing tie-ins don't really work together? That they are distinctly different businesses, with different identities catering to different audiences? Bezos has tossed away his biggest advantage, the sense right or wrong that he was creating a different kind of company with something resembling an ethical sensibility.

He was only kidding. (Don't forget to link to drugstore.com on Amazon's home page for some aspirin, in case this column or those CDs give you a headache, in which case your geek buddies can send you a "Friendship" or "Love" E-card from Amazon's "E-Card" section).

Amazon was always as much mythical as real, as much hype as numbers. It always said more about the inadequate way we perceive and report on technologies like the Net than about books. Few companies have ever attracted more interest and publicity and made less money. Amazon's whiz-bang software - with its recommendation programs and one-click shopping - made Net book-buying a pleasure to thousands of people for the first time. And Bezos's public relations skills were as good as anyone's on the Web. He persuaded investors, business journalists and users that Amazon was a quasi-hip, rebellious alternative to the big bad chain stores.

Guess what? Amazon is now a lot worse than they are.

But that's over. Its distinct identity squandered, Amazon is truly a millenial corporation now. It does at least five things other companies and sites - eBay, MP3, Toys R Us, Fatbrain.com, BN.com - have done first or do better, and it's doing all of them at a loss. What a formula. And a cautionary tale. When it comes to doing digital business, hype is not only obnoxious, but nobody can really afford it anymore.

Comments

Comments on Amazon

[Enry]

I wrote three books that wound up on Amazon. For each of the three, I cliked on the "I'm the author" button and wrote in a summary with a pointer to my web site and a way to contact me. Amazon never published this. So I tried again a few weeks later (this was about last summer), again, no comments from me were posted. However, a lot of the critical comments from readers somehow made it to the comments section.

I did submit comments to other online booksellers and they were posted within 24 hours. I'll take my business to fatbrain from now on.

But Jon's improving

[ch-chuck]

the good news: A Katz article with only 442 words!

Chuck

I have a very short attenti....

This really shouldn't be a surprise

[Aramis]

I have been an investor in Amazon.com since mid '98. To investors, and to those journalists that would listen, Jeff Bezos has firmly stated that he NEVER wanted Amazon.com to be "just an Internet book store". Bezos always wanted to have the best Internet shopping experience. He believes that an e-commerce business is vastly more efficient than a "brick and mortar" business. This means that inventory can be sold at lower prices, and lower profit margins, while still turning over fast enough to be profitable. In order for this to work you need to have a LOT sales. This means building a strong brand FAST. Books just turned out to be the fastest way to start a very large e-commerce operation for amazon.com. Now that have many customers and many return buyers (67%), they are in a perfect position to expand into more difficult markets. Also notice that the same infrastructure makes their book sales so efficient works equally well for their other endeavors. Their customers do not have to re-learn a new interface, enter in their personal information for the 10000th time, or figure out how to contact the company. It's all the same.

Many stock analysts insulted Amazon investors for running up the price of an "internet bookstore" that wasn't making any money, and in fact publicly stated that they were going to spend MORE. Now it should be clear why.

My humble opinion..
Aramis

Never that cool... but now they really suck...

[Vulpine]

I'm sure I'll only be the first of many to say this, but while Amazon was a neat idea at first, they quickly became a juggernaut that began helping to kill off the independant bookstore, as much as Barnes Ignoble & Borders. Poke around and you can usually find a specialty bookstore that not only is friendly, easier to browse, but sometimes even *gasp* cheaper. An example is my source for O'reilly books here in Austin, Desert Books -- they give huge discounts and throw much better parties. No, I'm not associated with them, I just like 'em.

Amazon was handy for relatives sending gifts and the like, but they may now suffer for what is killing Yahoo -- too much added junk, not enough attention on what made them worth visiting in the first place.

Oh, and nice article Jon. :)

And what planet are you from today?

[sobiloff]

Sorry, Jon, but your article misses the mark with me. I never idolized Amazon as anything other than a more convenient bookstore, but apparently you did. Stores can't make money with books anymore; Amazon is selling the NYT Best Sellers list at a loss, and as a whole their book business hasn't turned a profit yet, either. They have to branch out to other markets where there is still profit to be made. And, because the Amazon name has great market recognition, they're leveraging it. Simple business, not moral decay and a fall from grace.

Re:And what planet are you from today?

[J. Pierpont]

Right you are. It seems to me that Jon's perception of the internet is clouded by the gee-whiz, super-dooper-revolutionary, change-the-world, wear-shiny-clothes attitude that was popularized by Wired (when it was worth reading). It's the same attitude that makes the people who actually use the thing for pretty humdrum and mundane daily work annoyed at the very concept of a JonKatz. It's also the same thing that makes Nick. Negroponte so damned annoying. I read "Being Digital" and was just plain bothered. It's fine and dandy that all of this stuff is revolutionary and new, but who gives a rat's tush if it isn't useful for some reason. Amazon.com, though it might have lost its 'new media purity' is, still, a business. And it is, still, a useful tool for consumers. And that's all that matters. When I want to get hardware, I go to Sears. I don't go to a trendy, new-age hardware shop. I go to the best place for the product. It doesn't matter if they've sold out or not.

Now, if Amazon did start sucking significantly (sucking is purposefully vague, there), I would go somewhere else. That's capitalism. I don't like it very much, but it typically gets the job done.

-awc

In Defense of Amazon and Barnes and Noble

[Lynnaea]

OK, I'll say these things up front:
- I used to work for Barnes and Noble (not in over a year, though)
- I also used to work for Waldenbooks (incidentally, owned by the same company that owns Borders and K-Mart)

Publishing has never been an industry that it is easy to make money in. Books, because of the intelligence generally required to read them, reek of elitism, boredom, and effort to too many people. Publishing houses often struggle just to keep out of the red every year. Ever wonder why it's so hard for new writers to break in to the market? Well, if you were a publishing house thinking about investing scads of money in book design/production/marketing, wouldn't you want a sure bet too?

Amazon is no different. And neither is Barnes and Noble. The Waldenbooks I used to work for was small, shabby, neglected by the corporation because of its comparatively rural location. Barnes and Noble, on the other hand, was spacious, had the most comfortable chairs I have ever sat in (I used to spend my breaks in them), and has tons of variety.

I saw an article while working at B&N that summed up the reasons why I support B&N (unfortunately, I don't have it anymore): It allows for diversity. The one I worked in had entire subsections on linguistics, anthropology. That would have been undreamed of at Waldens. The point is, while Barnes and Noble may not support diversity of vendor (i.e., other bookstores), it does support diversity of supplier (i.e., publishers). It carries thousands of publishers, from small university or religious presses to your well-known East Coast publishers like Random House, etc. That's really not such a bad thing.

The other thing I like about Barnes and Noble is that it at least curries an air of intelligence and literacy. The decor is classical, the musical selections don't tend to be your typical top40, the offerings, once you get out of the bestsellers section, are eclectic and tolerant of many ideologies. In short: It doesn't dumb itself down to the customer. It makes the customer feel all that more literate and intelligent for being there.

Barnes and Noble is not the evil empire. It's trying to make money, just like Amazon. Quite frankly, if people go to Amazon to buy a pikachu, happen to wander in to the books section, and buy a paperback while they're at it, then Amazon's "sellout" has been justified. Of all the industries trying to make money in America today, the publishing and book industries are among the most severely handicapped by modernday illiteracy, apathy, and lack of interest in anything remotely intellectual. Don't begrudge Amazon or B&N of the steps they have to take to keep people supplied with what they need to keep their minds alive.

In the end, Barnes and Noble is a reading mecca for me. If my old Waldenbooks location closes down (which it is threatened with annually), then the only bookstore in that area will be the Christian bookstore. Don't knock it if you have a bookstore near you, regardless of what you think of its commercialism. Amazon and other online book retailers have the unique ability of being anywhere there is an Internet connection. And that, for the people that shop my old Waldenbooks store, may someday be the only place they can go for a diversity of books that are selected free of religious concerns.