From Forbes Business blogs:
Amazon, the great disintermediator that put a spanner — in fact, a set of 25 spanners in a handy case, yours for just $9.99 — in the businesses of many a retailer, is going to face exactly the same fate if it doesn’t start to address its weaknesses soon, particularly in the area of publishing.
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Amazon has created its dominant position by providing customers with what they want: (almost) any book, at a ridiculously low price, delivered rapidly. The deep discounting that Amazon is able to support attracts buyers who sense a bargain and is often quoted as the reason, along with the Kindle, that it dominates the book e-tailing market. However Amazon has problems and they are not trivial.
Amazon’s reviews system is fundamentally broken and whilst that might seem like an issue that troubles only those of us in the industry who pay attention to these things, it isn’t. As book reviews become more and more unreliable, so more and more buyers will start to get frustrated that they aren’t getting what they were expected and will start looking for reviews elsewhere. That will habituate them to looking outside Amazon for information on books and bring Amazon’s position as the canonical reference for books under threat.
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Amazon may still be at the top of the tree in terms of market share, but it’s there because people are in the habit of linking to and going to Amazon, not because of any inherent advantage in doing so. That habit is being eroded, slowly but surely.
JK Rowling’s Pottermore, for example, is chipping away at Amazon’s position, not because it directly competes but because it proves to people that Amazon is not the only game in town. Want to buy a JK Rowling book? Pottermore is the place to go. What happens when more big name authors decide that they want what JK Rowling’s got? Especially as what she’s got isn’t just her own site and infrastructure, it’s her customers’ data.
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Anyone who understands the importance of data understands how badly Amazon fails publishers. Want to know how someone found your book on Amazon? Not a hope. Want to know if your Twitter promo campaign is working? No chance. Want to know where your buyers are? You’ll never find out. Data is gold. Amazon provides iron pyrites. How long are publishers going to carry on sacrificing data on the alter of Amazon’s reach?
Indeed, Amazon actually prevents self- and traditional publishers from innovating. If they want to bundle an ebook with the paperback, they can’t do that through Amazon. If they want to provide extras, cross-sell, up-sell, or invite buyers onto their mailing list, they can’t do that through Amazon. If they want to forge a direct relationship with their customers or create a community theyhave to move away from their reliance on Amazon. It is simply impossible to innovate at the point of sale if you do not control it.
Link to the rest at Forbes and thanks to Anthony for the tip.