Amazon maybe coming to Australia in the Most Underhanded Way

On Friday evening I as lucky enough to be invited to attend a celebration of Richard Flanagan’s Man Booker Prize win. This happened to coincide with the day it was revealed that Amazon, through a complicated tax avoidance structure, claimed that they only made $1.5 million of revenue in Australia for the past year. This is despite them having almost 70% market share for eBooks in Australia.

The Richard Flanagan event was attended by publishers, booksellers, reviewers and writers. As Richard pointed out in the speech he made this wasn’t just a celebration of what his book The Narrow Road to the Deep North had achieved but of the work of everyone at his publisher, Random House Australia, and the support his book had received from booksellers, reviewers and readers.

I was lucky enough to have a brief conversation with Richard at the event. We talked about the whirlwind winning the Booker Prize has brought upon him and how sales of his book have been overseas. Interestingly prior to winning the Booker Prize his book had done much better in the US than the UK (traditionally Australian authors do better in the UK than the US). Richard put this directly down to the fact there are very few bookshops left in the UK which is now dominated by either the Supermarkets or Amazon (who own both and The Book Depository).

At the same time as this celebratory event (and with Amazon publicly called out for their tax avoidance) a rumour was swirling around the room. The Book Depository was apparently in talks with Australian publishers and distributors to establish direct supply into the Australian market.

The Book Depository was started by an ex-Amazon executive in 2004. They embarked upon an aggressive discounting campaign coupled with free worldwide postage. Many in the industry speculated that their aim was to disrupt Amazon’s business enough that they would force Amazon to buy them out, which is what Amazon did in 2011. The Book Depository business model is based on not holding any stock at all (the opposite of Amazon’s numerous warehouse model in multiple cities to speed delivery). The Book Depository instead utilizes distributors and publishers who direct ship orders to customers (in single copy parcels to minimize postage costs).

The Book Depository gained great traction in the Australian market following the open market debate of 2009 but it is unclear what market share they have due to the way they supply books from various sources. While they have made inroads in the Australian marketplace, Australian content like Richard Flanagan’s novel have remained almost exclusive to the local market until publication overseas. This is the same with Amazon and other overseas retailers. Some Australian publishers, like Affirm Press, have even gone as far as to block their books from sale to The Book Depository and Amazon.

Major publishers in Australia (which include the 4 major distributors who supply the Top 12 publishers in Australia) set up a Customer Direct Fulfillment service for local booksellers in 2013. The system has been barely used by local booksellers as the terms of trade offered to booksellers have not been very attractive. I have also heard from bookshops who have used the service that it is unreliable with orders that are supposed to be supplied in 48 hours taking anywhere up to 7 days to be processed.

Despite outcry over The Book Depository’s deep incursions into the industry 5 years ago it now seems some Australian publishers may now make a deal with the devil. Not only is this incredibly short-sighted and a massive shot in the foot of local bookshops (both physical bookshops and online) but any publisher who decides to supply books for The Book Depository will help enable Amazon (the owner of The Book Depository) to sell physical books in Australia without a physical presence. This means Amazon will not collect GST, they will not pay company tax, they won’t create any jobs and they will continue to use their complex tax avoidance structure. All supported by some Australian publishers.

I would warmly welcome Amazon or The Book Depository setting up a warehouse in Australia because it would a fair fight. This is not a fair fight. This is an example of pure greed, cowardice and business without responsibility.

It does not appear that any publishers or distributors have agreed to terms with The Book Depository but they are in talks. In light of not only their blatant tax evasion but also the terrible conditions Amazon workers have around the world and the conditions Amazon already dictate to publishers over terms of trade I find it truly unfathomable that any publisher would wish to get into bed with them. Especially in light of the treatment of Hachette books in terms of trade negotiations in the US where Amazon have effectively blacklisted Hachette print books and won’t take pre-orders on their eBooks.

Amazon is the biggest threat to not only the book industry in Australia but all territories in which they do business. Amazon wants to have a monopoly of not just book sales but the entire supply chain. And in Australia it seems some are prepared to hand this to them on a platter.

I say, not without a big fight.

Readers, Authors, Publishers. If you truly care about an Australian Book Industry we cannot allow Amazon to do business in this country in this manner. This will gut the industry from the inside out and we will become like the UK market where books must either appease the giant supermarket chains or one retailer’s internet algorithm. And what a boring, stale literary culture that would be. Show your support by lobbying publishers not to do business with Amazon in this manner. It is just not bookshops at stake but our authors, our stories, our culture.

3 thoughts on “Amazon maybe coming to Australia in the Most Underhanded Way

  1. In total agreement with you , Jon. Perhaps this could be more widely known if it was presented by you on the ABC 702 on Tuesdays and also in “The Book Club” with Jennifer Byrne, Spectrum in the Saturday Herald. I am sure you are aware of these ways of getting the information out. although most people I know are not aware. I am now a long term member of Pages and Pages Bookclub.

    1. Thanks for supporting our bookshop Marie. We love our shop and helping our customers find the books they are looking for (and the books they weren’t looking for!). Spread the word!

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