141 Amazon Books and the Future of Brick and Mortar Retail
Jim: Amazon was the online bookstore for so many years, and a lot of people have forgotten that’s how they started. Now they’re opening brick-and-mortar stores, which is fairly ironic. Thomas, give us some background.
Thomas: Before we talk about the Amazon bookstore, I want to talk about Apple Stores versus Best Buy. I think it illustrates the old way of doing things versus the new way.
Best Buy makes $104 per square foot of store space, which is a standard industry metric. Apple Stores make over $5,000 per square foot. An Apple Store is way smaller than a Best Buy but makes three times more money. After visiting the Amazon bookstore in Austin, I’m convinced that Amazon bookstores are to Barnes and Noble what Apple Stores are to Best Buy.
For comparison, Apple Stores make $5,000 per square foot, Best Buy makes $800, and Barnes and Noble makes $180, a number that falls every year. Barnes and Noble is hurting because they’re using a dated approach to selling books.
The Amazon bookstore at the Domain in Austin is a little bigger than an airport bookstore, and it was packed. There were probably as many people as you’d find in a Barnes and Noble, but in a much smaller space, so it just felt full of energy. There was always a staff member in sight, which is almost impossible at a Barnes and Noble.
The store is not trying to be a third place. There’s no coffee shop, no chairs. It is 100% focused on book discovery. Every single book on the shelf faces out. At Barnes and Noble, popular books face out and most are spine-out to fit more inventory. At an Amazon bookstore, they’re not trying to solve the variety problem; they have infinite variety on their website. They’re trying to solve discoverability, which can be overwhelming online. All covers facing out means the store feels like a physical version of Amazon’s website.
That also shifts what matters on your book. At Barnes and Noble, your title has to work hard because the spine is often all a browser sees. At an Amazon bookstore, it’s all about the cover. But it’s not only the cover, because underneath every book is a card pulled from Amazon.com showing the star rating, the number of reviews, and the most helpful customer review. If you’re standing there trying to decide, you can see that a book has 4,000 reviews averaging 3.7 stars and read a review that helps you decide.
Jim: It makes me feel like I’m having an in-person version of the website experience, which I’m already comfortable with.
Thomas: The store also has “If you like X, you’ll love Y” shelves: a well-known book anchors one end, and the books to its right are algorithmic recommendations based on what people who bought that book also bought. It’s a physical version of the “customers also bought” section.
How does Amazon use data to stock the right books?
Thomas: There are no prices anywhere in the store. You scan the barcode under each book with your Amazon app to see the price. Prime members pay whatever the current Amazon.com price is; non-members pay full retail. The store is designed to be experienced through the app and through the free Wi-Fi they provide, and I suspect they use Wi-Fi-blocking paint, because we lost our T-Mobile signal the moment we walked in.
The reason for the app focus is data. Amazon knows which books you’ve bought, which Kindle books you finished and which you abandoned. It knows what movies you watch, what products you buy, where you live, and if you use an Amazon browser extension, what websites you visit. All of that activity creates a fingerprint. When you scan the first barcode in the store, the algorithm knows you’re there and starts adapting.
The children’s book section at the Austin store was notably progressive, which makes sense for a progressive city. An Amazon store in a more conservative town would stock different children’s books, because the algorithm knows what people in that area are buying. More granularly, East Austin has very few children per household, while Northwest Austin is full of kids. The store adapts to that. Your zip code predicts your income, your tastes, and your purchasing habits more accurately than most people want to admit.
This is why there’s no bargain bin. Amazon doesn’t bring in books that won’t sell, because they already know what will sell. Barnes and Noble might default to the New York Times bestseller list, but those are the most popular books in America, not necessarily in Austin. Amazon knows the difference.
Jim: Amazon’s author accounts already let you see where your books are selling around the country. But the ability to drill down to a specific neighborhood is something else entirely.
What does all this mean for authors?
Thomas: For indie authors, getting into an Amazon bookstore is going to be extremely difficult. The selection is small and purely algorithm-driven. You can’t pay a shelving fee the way you can at airport bookstores. You have to perform well in the algorithm, specifically with print books, which is already a tough space for indies. The good news is that most indie authors aren’t making their money with print anyway; they’re making it with Kindle. And the store does have a full electronics section selling Kindles and Echo Dots, so more people buying Kindles means a larger potential audience for Kindle books.
For midlist traditionally published authors, this is rougher news. Authors who were shelved at Barnes and Noble but aren’t bestsellers probably won’t make the cut at an Amazon store. If Barnes and Noble is your primary physical retail presence, it’s worth thinking seriously about the indie path, because Barnes and Noble stores are closing, and the ones that remain are selling fewer books each year and pivoting toward board games and gifts because they don’t have the data to know what books to stock for their specific neighborhood.
Amazon bookstores also aren’t hosting book signings. The algorithm doesn’t favor them, because signings help you connect with existing readers rather than introduce you to new ones, and most authors don’t have enough local readers to justify the event anyway. What drives your presence in an Amazon store is your performance on Amazon.com, full stop. It doesn’t matter how you’re selling on Barnes and Noble’s website or on Kobo. If you want to crack an Amazon store, focus hard on building strong sales in a specific region so the algorithm can see that your book is genuinely popular there.
Jim: Most authors do their best in the area where they live or where they grew up. The bulk of my sales come from the Pacific Northwest because that’s where I’ve spent my life, and it’s where my books are set.
Is this actually good news for independent bookstores?
Thomas: I haven’t said any of this is bad news for independent bookstores, and I don’t think it is. Independent bookstores were squeezed by Barnes and Noble because Barnes and Noble had bigger selection and lower prices. Now, if you want selection and price, you go to Amazon.com. So how does a physical store compete with a highly algorithmic, data-driven operation? By doing the exact opposite: being completely human. The best indie bookstores are hand-curated, personal, and welcoming in a way an algorithm can’t replicate.
My wife and I also visited a great indie bookstore in Victoria, Canada. Huge store, everything spine-out, totally different experience. We actually bought a book there. We didn’t buy anything at the Amazon store, though we did add a children’s book to our registry.
My prediction for retail is that Barnes and Noble slowly dies off, and what grows in its place is a combination of highly algorithmic Amazon bookstores and genuinely distinctive indie stores that reflect the character of their neighborhoods. That’s actually good for indie authors, because indie bookstores tend to be far friendlier to self-published authors than Barnes and Noble ever was. Barnes and Noble was ambivalent at best. Indie bookstores actively champion local voices.
Jim: We’ve seen this pattern before. Circuit City, CompUSA, all the big-box electronics stores collapsed, leaving Best Buy as the lone survivor. The same thing happened to Borders, and it’s happening now to Barnes and Noble. But the demand for a bookstore experience hasn’t gone away. That pressure has to come out somewhere, and I agree it’s going to feed a new wave of indie stores where authors can build real relationships and get their books on shelves.
Thomas: I recently watched You’ve Got Mail for the first time. It’s about the early internet, AOL, email as an exotic novelty. But the other storyline is that she runs an indie bookstore and he runs a thinly veiled Barnes and Noble that puts her out of business. Her store never recovers by the end of the film. What’s fascinating in hindsight is that the internet, which in the movie is this exciting new thing, is ultimately what destroyed Barnes and Noble. The seeds of its destruction were right there on screen. Great empires tend to work that way.
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