Amazon Partners with Alibaba for a Huge Kindle Promotion

24 September 2017

From Good Ereader:

There was a time when Amazon thought they could seriously compete against Alibaba in China, but it looks like this is not going to happen.  Amazon has just partnered with them for a large Kindle promotion across Alibaba’s shopping sites in China on Saturday.

Kindles have been on sale in the country since 2013, and e-books from Amazon since 2012, when the company launched an e-book store just for China, complete with international and domestic titles. Amazon has not disclosed the exact number of devices it has sold in China to date, but told Good e-Reader that sales hit the “millions” in 2016.

In August 2017 Amazon launched a new e-reader that specifically targeted the Chinese market; the Kindle Migu X. This is the first Kindle that not only has the Amazon bookstore bundled on it, but also the Migu bookstore. Amazon is trying to make this new Kindle compelling by offering readers a free one year subscription to Kindle Unlimited. Users will be able to buy ebooks directly from Amazon or Migu with their China Mobile Account or via a credit card.

Chinese are reading more than ever, and they will read even more,” according to David Limp, senior vice president of Amazon Devices. “Many customers in China want the flexibility to read as much as they want across a variety of genres and authors.”

Link to the rest at Good Ereader

If you’re competitor-focused

21 September 2017

If you’re competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering.

Jeff Bezos

Amazon and the future of physical retail

21 September 2017

From veteran publishing consultant Mike Shatzkin:

There are two parallel conversations about the future of retail that are quite active. One is within the book business and it centers around what the future will be — and will there be one? — for Barnes & Noble. The other one is about the future of retail competitors to Amazon in the broader sense, particularly the big retailers that anchor the malls and shopping centers and are depended upon to draw the traffic to all the other stores that share the same parking lots.

Whenever B&N announces financial results, the whole book business pays attention. When a chain with the ubiquity and brand of Toys R Us goes under, as it did last week, everybody pays attention.

Barnes & Noble has been feverishly changing executive management and delivering pretty vague and unconvincing strategic pronouncements in a context of declining revenues and a sliding stock price. Since B&N is both the single stop capable of putting a new title in front of the most bookstore customers and the single biggest retail customer for publishers’ backlists, it occupies a position of singular importance to almost every publisher.

Amazon may already be a bigger account for most publishers but that doesn’t change B&N’s unique importance. So it is not surprising that publishers obsess about the chain’s financial and operational health. And although I am still skeptical that their demise — or even a rapid shrinkage — is imminent, the consequences whenever it were to come to pass would be industry-changing.

. . . .

Of broader interest is the impact Amazon is having on all retailers. So many of them — Sears, JC Penney, Macy’s — are very obviously struggling. This year alone, we’ve seen stories about the death of department stores and other retailers from the Atlantic, Business Insider (citing Warren Buffet as their expert), and Time, among many others. Borders is gone. Radio Shack is gone. And then last week came the word that Toys R Us is filing for bankruptcy. So Barnes & Noble’s struggles are within a context that goes way beyond them and way beyond the book business.

. . . .

The current story attributes Best Buy’s success to the obvious tactic of matching Amazon’s prices and to soft factors like being quiet about cutting costs (so as not to panic the employees) and “staying humble”. But the one single operational change Best Buy made to enhance their competitive position actually demonstrates why Amazon has the advantage over them and everybody else. And why that is not likely to change.

The operational change Best Buy made was to use their distributed store inventory to ship online orders received centrally. The Times piece highlights the reduction in delivery time to customers that can be achieved by shipping from one of the 1000 stores that is closer to the purchaser than a warehouse with the same product. In fact, that’s only one of at least three advantages. The most significant is that they are undoubtedly able to fill orders with stock on store shelves that they would have lost completely by not having stock of the same item in a warehouse. The other is a much more efficient, and therefore profitable, use of their inventory. They effectively need less stock to fill more orders.

Link to the rest at The Shatzkin Files

PG says the history of retail stores in the US is one of more efficient and better-managed upstarts putting established retailers out of business. Why? Because customers liked the newer retail idea better than the old one.

Montgomery Ward, Sears (barely not dead), A&P, Marshall Field, Wanamaker’s, Gimbels, Eaton’s in Canada, Jacobson’s, Bamberger’s, Bullocks,  I. Magnin, Joseph Magnin,  and Carson Pirie Scott immediately come to PG’s mind. They disappeared because their customers went somewhere else.

Since Walmart was founded in 1962, it has put thousands of retailers out of business, including many small retailers in small towns.  And don’t forget how many bookstores that Barnes & Noble and Borders forced to close.

In each of these cases, customers voted with their dollars. Today, millions of people say, “I like Amazon better than Walmart” and “I like Amazon better than Barnes & Noble.” And spend accordingly.

Economic freedom in action.

Amazon bringing 2000 jobs to New York City by 2019

21 September 2017

From Seeking Alpha:

Amazon plans to bring over 2K jobs to New York City and 6K to the state by 2019.

Amazon plans to open a 360K square foot office in Manhattan’s Hudson Yards development project next year.

The facility will become the new home for the company’s advertising team but full-time positions will also go up for AWS and Amazon Fashion.

. . . .

A CNBC source says the New York employment plans were decided before the second headquarters and shouldn’t be seen as an endorsement or hint that NYC will house HQ2

Link to the rest at Seeking Alpha

Amazon Is Working on Alexa Smart Glasses

20 September 2017

From PC Magazine:

Amazon wants to push Alexa-powered devices into as many areas of our lives as possible. That’s why we have multiple Echo-branded devices to suit different areas of the home, why Alexa is on smartphones, is being integrated into wireless earphones, and why there’s an Alexa Voice Service Device SDK for easy integration with other commercial products.

But Amazon wants Alexa to be available everywhere, at all times, and without the need to even take a device out of a pocket to use it. To achieve that, Amazon is apparently working on perfecting Alexa smart glasses.

According to the Financial Times and The Verge, Amazon is hard at work on a pair of glasses.

. . . .

Forget about a built-in display or a camera, Alexa smart glasses will be extremely simple. They are thought to be as close to a standard pair of glasses as you can get while still integrating Alexa functionality and the necessary power for the voice assistant to function. A lack of camera or display not only cuts costs, but bypasses any privacy concerns.

Hearing what Alexa says is expected to be done through bone conduction, meaning people will be seen talking to themselves in the street and receiving responses no one else can hear. I think we’re all used to seeing that already thanks to hands-free gadgets.

Link to the rest at PC Magazine

PG expects the world to look like a better place when one is wearing Amazon glasses.

He can hardly wait for vision-based Amazon orders. Forget the Dash button, just look at a box of laundry detergent and the UPS driver will drop it on your porch the next day. Look at a diamond ring . . . .

Amazon in Manhattan

19 September 2017

What the “Book People” Won’t Tell You: Print is Dead

18 September 2017

From The Digital Reader:

I have been writing about industry trends in bits and pieces in each news story, but it has been a long while since I last pulled everything together, took a step back, and told you what I see.

I can sum it up in a single sentence: The major publishers are dead because they bet against digital, which is the future.

The thing about the major publishers is that they thought they could make the market go where they wanted.

They didn’t want ebooks to cannibalize print sales, so they conspired with Apple in early 2010 to bring about the Agency model. Then they doubled down on their bet with Agency 2.0, and hedged that bet by sabotaging subscription ebook services like Scribd and Oyster by saddling them with nonviable business models.

It is now 2017, and book publishing is in the later stages of a transition to digital.

. . . .

The major publishers bet against digital, and they continue to do so, and it is going to kill them in the long run. In fact, we can see them die bit by bit. First they dropped mid-list authors, then they started dropping best-selling authors.

Link to the rest at The Digital Reader

PG thinks the illegal collusion between the big publishers to force Amazon to set higher prices for ebooks was an important milestone on their path to suicide. They got together in various New York restaurants to engage in face-to-face groupthink.

Here’s a summary from Wikipedia:

The Publisher Defendants sold over 48% of all e-books in the U.S. in the first quarter of 2010. The Publisher Defendants along with Random House Publishing are the six largest publishers in the United States (collectively the Publishers) and are often referred to as the “Big Six” in the publishing industry. In 2009 Inc. had nearly 90% of the e-books industry. Amazon charged $9.99 for certain new releases and bestselling e-books which helped make it the market leader in the sale of e-books and e-readers with its Kindle.

Amazon’s price point caused discontent among the Publishers. The Publishers believed that the low price point was a problem for their sales of more profitable hardcover books. Approximately every three months, the CEOs of the Big Six would meet in private dining rooms in New York restaurants “without counsel or assistant present, in order to discuss the common challenges they faced, including most prominently Amazon’s pricing policies.” The Publishers used several different strategies to fight against Amazon’s pricing point, including selling e-books for the same price as their printed version through a continued wholesale model and “windowing” new releases. Windowing is a tactic that would delay the release of books to their e-book form for a certain window of time.

. . . .

Amazon sent a letter to the Federal Trade Commission complaining about the simultaneous nature of the demands for agency model agreements from the Publishers who had signed with Apple. By March, Amazon had completed agency agreements with four of the five publishers. During the negotiations over the agreements, the publishers would talk with each other and share information about what Amazon would concede with each. Apple was closely following all of this progress and Cue was in contact with the publishers. Following Amazon’s move to agency amounted to “an average per unit e-book retail price increase of 14.2% for their new releases, 42.7% for their NYT Bestsellers, and 18.6% across all of the Publisher Defendants’ e-books.”[2] The Publishers also raised the price of some of their New Release hardcover books so as to move the e-book versions into a correspondingly higher price tier. Amazon saw Random House (who for the moment had not joined Apple) e-book sales having an increase of 41%. Two studies showed that the Publishers who moved to agency model sold over 10% fewer units at major retailers. In contrast, other publishers’ sales increased 5.4% in the same period. In January 2011 Random House also moved to the agency model and raised the prices of its e-books, and then experienced a decline in its e-book sales. This allowed Random House to join the iBookstore.

. . . .

Beginning on December 8, 2009, Apple’s senior VP of Internet Software and Services, Eddy Cue, contacted the Publishers to set up meetings for the following week. During the meetings Cue suggested that Apple would sell the majority of e-books between $9.99 and $14.99, with new releases being $12.99 to $14.99. Apple also adopted the agency model which it used in its App Store for distribution of e-books. This let Publishers control the price of the e-books with Apple receiving a 30% commission. Apple also set up price tiers for different books. Apple also included a MFN clause in their contract with the Publishers which allowed for Apple to sell e-book at its competitors’ lowest price.

. . . .

On the day of the launch, Jobs was asked by a reporter why people would pay $14.99 for a book in the iBookstore when they could purchase it for $9.99 from Amazon. In response Jobs stated that “The price will be the same… Publishers are actually withholding their books from Amazon because they are not happy.”[2] By stating this, Jobs acknowledged his understanding that the Publishers would raise e-book prices and that Apple would not have to face any competition from Amazon on price.

This collusion between the top executives of five out of the (then) six major US publishers to destroy Amazon’s pricing model for ebooks helped accelerate the development of anti-Amazon/anti-ebooks groupthink throughout Big Publishing.

Later, when the Justice Department charged these publishers with illegal anti-competitive behavior and publicly humiliated their management by requiring an admission of guilt and forcing monetary settlements, the anti-Amazon/anti-ebook sentiment blossomed into something of an industry-wide psychosis.

Publishing couldn’t live without Amazon and hated the company even more for their dependence upon it.

When Borders, the second largest bookstore chain in the US, went bankrupt in 2011, that shocking event should have set alarm bells ringing in CEO offices of every publisher.

The second-largest bricks-and-mortar customer for every major US publisher had just imploded. Perhaps it was time for some new thinking? Would the future be a lot different than the past? What a silly thought.

Borders would have been happy to sell its assets to virtually any willing purchaser, but smart money was not interested. Neither was dumb money and about 650 retail bookstores in the US just disappeared.

At the time of the Borders bankruptcy, reporters and business writers (often relying on traditional publishing sources) concluded that Borders had made a big mistake by working with Amazon to sell ebooks. On the other hand, Barnes & Noble was brilliant because it had spent lots of money to build up its Nook business as a viable competitor to Amazon’s Kindle.

Amazon Derangement Syndrome was running rampant through the publishing business and that, combined with widespread ignorance of technology among management, blinded them to a simple fact that was evident to anyone with an ounce of internet savvy: Amazon was much, much better at selling books (and a lot of other things) online than Barnes & Noble and the gap between the two organizations was growing at a rapid pace.

The traditional book industry and its convoy of pet pundits have not gotten any part of selling online right for well over ten years and show no indication that anything is going to change in the next ten years (to be clear, PG is not predicting that Big Publishing has ten more years ahead of it).

Barnes & Noble is running on fumes. Whether it continues to sink into the sunset or suddenly implodes won’t impact the overall trajectory of the retail book business. It’s dying. At this point, even if Barnes & Noble were able to hire talented management, PG thinks it’s too late for that to make a difference.

When Barnes & Noble is gone, what’s left for legacy publishing? A bunch of mom and pop bookstores. There may be some fancier moms and pops in Manhattan and Washington DC, but they’re all small businesses with tiny profit margins.

PG ran out of time before he could bloviate about traditionally-published authors heading for the exits and hedge funds taking over management of the gazillion legacy publishing contracts which represent the only value of Big Publishing.

Amazon tests one-hour delivery for your fashion show picks

17 September 2017

From Engadget:

Ever seen a style at a fashion show that you wish you could wear out the same night? Amazon might just fulfill your wishes. It’s testing an option that delivers highlights from Nicopanda’s London Fashion Week lineup to local Prime subscribers within an hour — think of it as Prime Now for your wardrobe. Customers still have to pay on top of the subscription requirement, but it means you can get a bomber jacket or scarf in time to impress everyone at your next social outing.

Link to the rest at Engadget

Europe’s Effort to Raise Tax Bill on Google, Amazon Gains Momentum

17 September 2017

From Fortune:

Nearly one third of Eu ropean Union states backed a plan to tax digital multinationals on their turnover, France said on Friday, as the EU weighs a range of other measures to increase the tax bill of companies like Google and Amazon.

The moves are part of a growing campaign in the EU to claim tax revenues that online giants are accused of skirting by routing most of their profits to low tax rate states, like Ireland and Luxembourg.

“The digital economy should be taxed as the rest of the economy,” the EU commissioner for taxation, Pierre Moscovici, told reporters upon his arrival on Friday to a meeting of eu ro zone and EU finance ministers in Tallinn, the Estonian capital.

A report published on Thursday by influential EU lawmaker Paul Tang estimated that Google, which has its EU tax residence in Ireland, paid taxes not higher than 0.8% of its EU revenues between 2013 and 2015.

Facebook, also based in Ireland, had a ratio as little as 0.1% in the same period, while Luxembourg-based Amazon paid almost nothing as it reported nearly no profits.

. . . .

A plan proposed by France to tax large digital corporations on their turnover, rather than on their profits, is gaining supporters, although still needs technical work.

. . . .

A tax on turnover would raise revenues also from companies, like Amazon, that do not report profits, and would be likely applied quickly, a Eu ropean official said.

However, it would need to be made compliant with EU internal market rules. States could also apply it unilaterally, but that would expose them to a higher chance of legal challenges, the official said.

Opposition from smaller states would need to be overcome, as countries like Ireland and Luxembourg may lose tax revenues from the new framework.

Tax reforms in the EU need unanimity among EU states, a factor that has blocked many overhauls in the past.

Link to the rest at Fortune

PG recalls an old saying that if you tax something, you’ll get less of it.

For Amazon, Can Two Headquarters Still Equal One Culture?

17 September 2017

From The Wall Street Journal:

In planning Inc.’s second headquarters, Chief Executive Jeff Bezos faces a new challenge: how to maintain the online retail giant’s carefully cultivated culture when he can’t be in two places at once.

The answer to his riddle may lie in one defining element of Amazon’s business practices. Its highly decentralized structure, with small, siloed teams, is the equivalent of “1,000 independent businesses, all marching in the same direction,” says former Amazon senior manager Eric Heller, who now helps brands sell on the site.

Mr. Bezos has been fundamental in defining the Seattle-based company’s culture, setting the tone on everything from innovation to how many pizzas teams should need to order in for lunch. Amazon emphasizes 14 leadership principles that guide employee behavior, focus and goals.

Former executives say that while they saw Mr. Bezos infrequently—in part because the 33-building Seattle campus is so large—he still has an outsize presence at the company he founded in his garage in 1994. Mr. Bezos is known for encouraging employees to reach out via email directly for his guidance. That’s even as the number of Amazon’s employees surpasses 450,000 globally, including the recent acquisition of Austin, Texas-based Whole Foods Market Inc.

But Amazon, having outgrown Seattle, is now planning to split its headquarters in half, an unusual step that presents the risk of reduced collaboration, decreased face time and an off-kilter leadership structure if executives don’t split their time evenly between the two sites, management experts say.

Amazon said the new location, which could house as many as 50,000 employees, will be equal in stature to Seattle. Amazon is soliciting proposals for the $5 billion project from metro areas that meet criteria including access to an international airport, mass transit and more than a million people.

. . . .

Mr. Bezos, 53 years old, still works to preserve the remnants of startup culture at Amazon, including a mandate to make quick decisions.

“I’ve been reminding people that it’s Day 1 for a couple of decades,” he wrote in his annual shareholder letter this year. “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”

Mr. Bezos constantly emphasizes Amazon’s leadership principles, such as customer obsession, ownership and frugality. Managers know that the optimal size of a team is one that can be fed on two pizzas.

He frequently forwards customer emails to teams with the message “??,” to jog them to respond.

Through “feedback mechanisms like that, we got clarity of what he was looking for,” said Jennifer Arthur, who worked at Amazon for 16 years and is now a general manager at online home-improvement marketplace BuildDirect. “He also delivered a lot of the messages and a lot of that consistency” via his senior leadership team.

. . . .

Mr. Bezos will “probably send over some of his leaders who he thinks are some of his strongest culture carriers,” says Adam Grant, an organizational psychologist and professor at the University of Pennsylvania’s Wharton School. “The people make the place.”

. . . .

“Every team functions like an independent company,” says Elaine Kwon, founder of e-commerce management and software firm Kwontified and a former Amazon manager. “They’re all moving as quickly as they can because they’re given a lot of autonomy.”

That can lead to confusion or duplication at times, some former employees say—something that could worsen with two headquarters.

“One team rarely knows what another team is doing,” says Chris McCabe, a former Amazon performance evaluation and policy enforcement investigator who now works with sellers on the retailer’s marketplace.

Still, Mr. Bezos expects employees to act like owners, even if that pits teams against each other.

Link to the rest at The Wall Street Journal

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