The Perils of Selling eBooks

It is extremely difficult for any retailer to crack into the eBook market. Even Apple and Google have struggled. Amazon got off to a massive head start and the likes of Barnes & Noble, Kobo and others are slowly clawing them back. But for other bookshops it is even more of a challenge. The costs and scale required have meant that existing bookshops have had to partner with eBook vendors rather than going it alone in order to sell eBooks. Both Kobo and Google have done this with varying degrees of success mainly with existing bookshop chains rather than independents. Independents in Australia have partnered with ReadCloud and and started out together from scratch where as Independents in the US were able to partner with Google.

However Google announced over the weekend that they would be ending all reseller partnerships with bookshops for eBooks globally. Google partnered with nearly 400 independent bookshops in the US and here with Dymocks (Australia’s largest chain of bookshops), Booktopia (Australia’s largest online bookseller) and The Co-Op Bookshop (Australia’s largest campus bookseller).

There were always going to be risks and concerns in partnering with Google to sell eBooks. The main concern being that a Google eBook reseller had to compete against their own supplier. Competing against your own supplier is perilous at best particularly one with deep pockets who controls (and can manipulate) the most used internet search engine in the world. Through their ad revenues Google can also afford to price match against another competitor already engaged in predator pricing. In ending the reseller program Google said that it “has not gained the traction that we hoped it would.” This is true when returning customers went direct to Google instead of back to the reseller partner.

The other main concern was customer’s data and where it lay in the Google eBook environment and its consequences. Google said that “the reseller program has not met the needs of many readers or booksellers” but it certainly met the needs of Google. The reseller program allowed Google to leverage the goodwill, service, loyalty, expertise and most importantly the customer base of existing bookshops. And now they are moving on demonstrating no goodwill or loyalty on their part.

This is the risk for existing bookshops wanting to sell eBooks. They have to pick the right company to partner with and be wary that their strengths won’t be leveraged for somebody else’s gain.

Content is king when it comes to eBooks but a bookshop’s content is more than just the books on its shelves. A bookshop’s content is its customers and its staff, its knowledge and expertise and its trust and loyalty with readers. These things should be fiercely protected not traded away. A partnership must be equal otherwise one side will exploit the other.

I would much rather partner with a company who has complementary goals to my business. A global company is not going to have any interest other than their own self-interest about the Australian eBook market or, as it turns out, a long term commitment to their partners. Where as a partnership that is mutually beneficial to both parties will only grow in unison.

Bookshops have a vital and important role to play in the future of eBooks. Books are bought, sold, produced and consumed very differently to other products that have made the transition to digital and the eBook market is still developing and evolving, both commercially and as an industry as a whole. There will be some fundamental changes but the basics will remain the same and we will need big and small fish to make the ecosystem work otherwise it will end up swallowing itself.

10 thoughts on “The Perils of Selling eBooks

  1. I want to support independent booksellers, but when the price of an e-book is virtually the same as a paperback, then I can’t make myself. I know there are overheads, but there are savings too. No paper, no printer, no transport, no storage… to name but the obvious savings. And as for the specious argument that: “A bookshop’s content is its customers and its staff, its knowledge and expertise and its trust and loyalty with readers”… none of those are available when buying an e-book. So why an ebook is $19.50 and the paperback is around $25.00 is a mystery I can’t be bothered to unravel, so I get the same thing from Amazon.
    The choice is between high profit margins or high turnover. Supermarkets proved the second was the way to make money, and wiped out small traders apart from the independents who formed an independent alliance Booksellers should follow suit and form an I.G.A type umbrella organisation.

    1. Independent booksellers do not set the the prices of eBooks. They are set by the publisher. Some publishers allow discounting while others do not depending on whether the wholesale or agency pricing model is used. Where a bookseller can discount they are up against Amazon and Google who are prepared to make sometimes massive losses to capture market share.

      My comments on a bookshop’s content refer to all the services you receive from a physical shop rather than an online one that depends on an algorothims and ads. You will find and discover many new and different books that you weren’t looking for in a good bookshop that you will on Amazon and you will get a personal recommendation not a paid for one.

      Independent Booksellers do have an umbrella type organisation, Leading Edge Books, which is why Independent bookshops have almost 30% market share now in Australia compared to the US where they have 9% and the UK 4% nut that alone isn’t enough in the eBook world where you need a third part company to partner with who takes a cut of your already reduced margins.

      1. Interesting post.

        I don’t know about “You will find and discover many new and different books that you weren’t looking for in a good bookshop that you will on Amazon and you will get a personal recommendation not a paid for one”.

        Personally, and I may be weird here, I prefer an algorithm then a personal recommendation. In my experience, an algorithm, especially on one-step removed sites like goodreads, knows me and my tastes a lot better then even my friends, let alone a shop assistant at a bookshop. I do admit I try to find people on goodreads with similar libraries and ratings so I can get a real person’s , I can compare tastes with real people a lot quicker then with a shop assistant. I would also contest I have found and discovered many new and different books electronically then I would have hoped to in a physical bookshop.

        I think hard copy books were the product that made online shopping a reality. Amazon started with books, which people don’t have to try on, touch, taste, to know what the book will be like when it arrives. Now people are used to buying books, almost any other product can be ordered online, and a lot of things directly through Amazon.

      2. I think a true algorithm can be helpful but Amazon’s is compromised by the co-op money they take which favours books from publishers who pay the most money so is not really a true indication of what other readers are buying.

  2. So does a bookseller retain the customer completely with the ReadCloud soution? Or could the Google way (building their database from the booksellers only to then remove the bookseller out of the equation) happen using ReadCloud, Book.ish, Copia or anyone else that wants to enter this market?

    1. ReadCloud and do not (and will not) sell direct. They keep the data but booksellers have full access to it. I’m not sure about Copia. They appear to sell direct in the US. They have said they won’t here but that could change

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