Wednesday, December 14, 2011

Amazon and the "Death" of Brick and Mortar Stores

Anyone following the news lately will have heard about's new Price Checker app. If you haven't a summation is this: the app allows you to scan a barcode on a product using your iPhone or Android smart phone and check how much the item costs on Amazon versus how much it costs in-store. To entice users into test-driving the app, Amazon offered a deal on December 10th that offered savings of 15% (up to $5) off qualifying items.

Predictably, this announcement led to outrage among independent retailers of all stripes. News websites and blogs have blown up with coverage about the app about how it's an attack on small business. The New York Times ran a blog post about Amazon's seeming small-business problem, Fox Business reported on Amazon taking heat from Maine Senator Olympia Snowe, the American Booksellers Association calls it a "cheesy marketing move" in an open letter, Josie Leavitt at the Publishers Weekly ShelfTalker blog said it was a "new low for Amazon," and that's just a smattering of the coverage. A quick Google News search resulted in nearly 150 news articles and blog posts about this very topic in the past few days.

But, like I said, this outrage was all terribly predictable. Amazon has been in an implied war with traditional business structures like brick-and-mortar retailers basically since its inception, so an app like this where it turns consumers into spies isn't really that big of a surprise (to me at least). One of the things that's struck me so far, however, is the argument many independent retailers make for why they're a better shopping option than Amazon. This has so far included charitable contributions to the surrounding community, keeping people employed in the community, and having the ability to hand-sell books people might not otherwise find. That's not an exhaustive list, but you get the picture. And these things are all well and good, but to illustrate my point I'm going to tell you a story.

When I was 16, I got a job at a local Wegmans supermarket. The company, which had been in business since the 1930s, was fairly high-priced in terms of groceries when compared to other stores like Price Chopper, Giant Markets (a local chain), and the Wal Mart supercenter. Wegmans had locations in New York State, Pennsylvania, Virginia (I think), and a few other states by that point, but they were by no means a major player in the marketplace. Mostly because of their prices, I think, but that's a story for another day.

Wegmans knew they weren't going to compete with major supermarkets like Kroger, Safeway, and Supervalu among others. And they were OK with this, because they'd discovered a philosophy that worked for them: "Do fewer things better." I got educated in this philosophy over the course of those two years I worked at Wegmans, and it's stuck with me ever since. The crux of it is this: You can't compete with the big boys on price, product selection, or any number of other things. Rather than do that, look at what you do really well and focus on offering that product to customers better than anybody else possibly can.

For independent bookstores, the philosophy of "Do fewer things better" might include shrinking certain sections of the store. If you don't sell a lot of history books, for example, you might eliminate that section from your salesfloor and shift it to an "order only" status. You might choose to stock more copies of books by local authors than NY Times bestsellers, or maybe you decide you're going to devote more space of your salesfloor to things like science fiction and fantasy, romance, and mysteries to the point where functionally all of your fiction section is those three genres. Maybe you've got an expert in unknown books on your staff and you give them a vehicle on your website to talk about great finds. There's a lot of possibilities open.

Sure, Amazon has their suggestion engine that people say shows them books they might not have otherwise thought of. But are you really going to trust Amazon to recommend a book from 10 years ago when you're purchasing the latest bestseller?

At the end of the day though, I feel like independent brick-and-mortar bookstores will still be around for some time to come. There's a major backlash already happening against Amazon, and this is going to only keep growing.What say you?


Eliza Tilton said...

one of the bigger local writing groups in my area actually meet at a local bookstore. There's a section in the back with plenty of chairs set up and it brings in quite a group. After, all those writers can browse the shelves. I think it's a great idea.

Matthew Delman said...

Eliza -- And that's my point. Offer something different that your competitors either can't or won't, and you'll bring in customers.

Adam Heine said...

I do think brick-and-mortar will be around for a while, and I despise many of Amazon's business practices, but I also think that convenience will pretty much always win.

So long as Amazon has better prices and selection than anything out there, I don't see any backlash hurting it very much. What will hurt Amazon is if someone comes along with the same prices and selection, but also with the perception that they are a Good Company.

But even then... I mean, that's what happened to Microsoft, but they're still very much around.