Will other booksellers follow Powell’s in just saying ‘no’ to Amazon?

Discussion
Photo: Powell’s Books
Aug 31, 2020
Tom Ryan

Twenty-six years after Amazon.com was founded as a bookseller, Powell’s, the iconic independent book chain in Portland, OR, has decided to stop selling books on the e-tailing giant’s platform.

Powell’s, which was founded in 1971, claims to be the world’s largest new and used independent bookseller with four stores, including a downtown flagship spanning a full city block.

“For too long, we have watched the detrimental impact of Amazon’s business on our communities and the independent bookselling world,” CEO Emily Powell wrote last week in a blog entry to customers. “The vitality of our neighbors and neighborhoods depends on the ability of local businesses to thrive. We will not participate in undermining that vitality.”

Like other retailers, Powell’s had been supplementing its in-store and own online business by listing its books on Amazon’s marketplace and sharing a cut of every purchase.

“It was hard to give up, sort of like smoking,” Ms. Powell told CNBC. “We knew we shouldn’t be doing it, but, you know, we sort of needed it from a sales perspective to keep going. We couldn’t face the possibility of not having that sales channel.”

Powell’s was finding it more expensive to support its Amazon sales with advertising and fast shipping.

The independent retailer was forced to lean more heavily on its own e-commerce sales in recent months as it closed its stores in March and Amazon prioritized essentials across the platform due to the pandemic. Sales from Powells.com initially surged due to pent-up demand and community support but slowed by late May as the chain found itself in a more normalized selling climate competing directly with Amazon.

“They have all the money and they have all the technology,” Ms. Powell told The Oregonian in an interview in late May. “Certainly, we don’t have that kind of firepower.”

The move comes as Amazon is facing greater scrutiny from regulators over its market power and treatment of sellers on its platform.

DISCUSSION QUESTIONS: Is now the right time for Powell’s to stop selling on Amazon’s marketplace? Will the changes brought about by COVID-19 incentivize other independent retailers to forego selling on Amazon?

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Braintrust
"I don't think it has to be all or nothing."
"Most independent booksellers need revenue more than attitude. The best a local independent can do is to create a destination for a cult following."
"Powell’s is standing up and leading an effort, at their own risk of defeat to preserve the kind and gentle nature of small human-run businesses."

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20 Comments on "Will other booksellers follow Powell’s in just saying ‘no’ to Amazon?"


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Bob Phibbs
BrainTrust

Bold, smart move. I applaud their public divorce and I’m sure it resonates well with their local Portland fans. And in the process it will get them more publicity. America loves the comeback story of David v. Goliath. Here’s my own in the New York Times — the one that built my business.

Doug Garnett
BrainTrust

Absolutely, Bob. And as a passionate Powell’s devotee who knows a great many around the country, they WILL be just fine. In fact, they’ll be better by NOT putting money into Amazon’s pocket by helping attract more people to buy books there.

Their billboard in PDX is, perhaps, the best image of the week. It says:

“Amazon’s gonna be fine, folks. Shop Independent. Powell.com”.

Suresh Chaganti
BrainTrust

Unfortunately,I don’t see this making a meaningful impact. Book publishing as an industry has long been upended. Content creators like newspapers have created paywalls – and rightfully so. Book retailers had to give way to Amazon and Apple.

Nikki Baird
BrainTrust

I don’t think it has to be all or nothing. I’m very sympathetic to the idea of supporting local businesses, and that this is a contributor to strong communities and neighborhoods. But I think a differentiated assortment strategy will ultimately include marketplaces (and Amazon is not the only one) for most products that are easy to ship (and books are definitely that).

For a bookseller, unloading used books that are not moving could be a great use for Amazon, one that we see fashion brands using more and more. Some companies are turning those engagements into marketing tactics to entice customers to shop with them more directly, with some success. It’s not guaranteed, you have to be creative and put some effort into it, but I believe there is a spectrum of opportunity here. It just depends on your inventory, and what you can do with the data you get from selling through the platform.

Bethany Allee
BrainTrust

Powell’s is unique in that it has the power, prestige, and physical presence in Portland – a place that’s already on-board with the anti-Amazon sentiment. This idea, unfortunately, won’t work for other independent retailers.

Neil Saunders
BrainTrust

People talk about Amazon’s detrimental impact but the blunt truth is that Amazon has simply provided what a lot of consumers want. The issue with physical bookselling is that if a retailer wants to be a specialist it has to have a massive catalog of books, even those rarely bought. That necessitates very big stores that are expensive to operate and since a lot of books don’t sell very often it pushes down the productivity of that space. It is far more efficient, and cheaper, to operate a warehouse system and allow customers to order online. That’s what Amazon did, and consumers liked it.

All that said, there is absolutely still a place for good physical bookstores – especially independents. Those that emphasize the social side – book events, cafes, kids reading hours, book clubs, and so forth – are much more likely to secure success. A player like Powell’s will know that better than most and I wish them good luck!

Ananda Chakravarty
BrainTrust

Dependency on the sales channel matters until it doesn’t. Despite the sales, margins are most likely becoming slimmer. Getting their store and books into the buy box is amazingly difficult with so much product arbitrage out there and when Amazon drives preference for their own products (esp. books) What Powell’s can do is get back to the basics of what makes independent booksellers more valuable. Scarcity. The ability to offer books that aren’t available, specialty books, rare books, and used books will be a key way to build business with existing demand. Is it the right time? Well, I don’t see how a truly “independent” bookseller could ever be so dependent on a distributor. It wont make a dent to Amazon, but it will force Powell’s to compete on a local, personal level-where they should be anyway.

Others will follow suit only if Amazon sales margins are taking a hit (higher shipping costs, lower sale price, lower sales volume).

Richard Hernandez
BrainTrust

I have seen independents band together to not sell on Amazon and have not seen the needle move because of it. I don’t know if Powell’s can make an impact to get the needle to move…

David Naumann
BrainTrust

It is a tough but noble decision by Powell’s. For many retailers, selling on Amazon is like sleeping with the enemy. There isn’t really a good time to cut off a revenue channel, but many people are following their conscience in this troubling economic and political climate. As a PNW resident, I am proud of Powell’s.

Liz Crawford
BrainTrust

Most independent booksellers need revenue more than attitude. The best a local independent can do is to create a destination for a cult following.

Steve Montgomery
BrainTrust

The decision for each independent retailer to stop selling on Amazon depends on a number of factors. Examining the proportion of sales being done in-store, on Amazon and via their own website would be logical starting point. Then they should do the same analysis for margins. This will give the retailer a quick view of how important Amazon sales are to them currently.

I am sure Powell’s did this and said, we have a strong customer base and can afford to lose a percentage of our sales if we stop selling on Amazon. Another retailer may not have the same metrics or strong customer base and will make a different decision.

Ricardo Belmar
BrainTrust

It’s a bold move for sure, and if the margin was getting squeezed by higher costs to operate on Amazon’s marketplace, then this may be the best decision for them as long as they can leverage their local following to maintain sales. Unfortunately, the ship sailed on book sales long ago. Independent book stores can thrive if they are able to maintain a well-curated, specialty selection with a cult-like following. COVID-19 forced them all to close so they needed to shift their efforts to online and grow their customer relationships via digital means. I’ve seen many examples around the country of book stores who did this well, so it can be done. Long term, marketplaces are here to stay and it’s not just Amazon who will be around. Avoiding marketplaces ultimately will result in limiting your growth and sales and isn’t the best strategy to pursue.

Georganne Bender
BrainTrust

This is a gutsy move. But when it becomes too expensive to support selling on Amazon then it’s a business decision that had to be made. Standing up to the big guy is a smart PR move, too.

Will parting with Amazon work for other indie book shops? Maybe. Powell’s enjoys a cult like following so I think it will be okay.

Cynthia Holcomb
BrainTrust

Powell’s has always stood for independent thinking. I know, I live in Portland. Feeding the giant has a tipping point. Conquering independent, small businesses have been the fuel feeding the giant’s voracious appetite of market domination for too long. Powell’s is standing up and leading an effort, at their own risk of defeat to preserve the kind and gentle nature of small human-run businesses. The electronic giant has been feasting far too long on small businesses. As a unique point of reference, the consumption of small businesses has provided the Amazon founder a net worth of $200 billion.

RandyDandy
Guest
26 days 8 hours ago
A small retailer’s independence relies on its expectations. If they can be successful within the smaller confines defined by their immediate reach and are, as a company, happy with those limited results, then so be it. However if one is looking to compete on a larger stage: beware. Meanwhile, circumstances enabling or undermining an independent’s chances for success are very often out of the total control of that operation. Rent, business zoning laws, a neighborhood’s changing or stagnating demographics, a worker/talent pool living nearby (over commuting), customer interest-cum-loyalty and, hell, even things like weather and parking, among other factors, all play a part in this game. The gist is this, though: within the social context of each city – and for argument’s sake, let’s make it just a bunch of American ones – there should be a sense of unique “flavor.” This individuality of an urban environment used to come from its one-of-a-kind retailers, which often hewed their message and merchandise to the likes of neighbors (and visitors looking for local tastes). That unique spirit… Read more »
Ken Lonyai
BrainTrust

This seems more like an ethical stance than anything else, albeit way too late. Barnes & Noble may be convinced it’s still an Amazon competitor, but in reality, for books, Amazon has no competitor. Whatever Powell’s does is mostly about their micro-community and positioning there, 25 years after Amazon came on the scene.

Gene Detroyer
BrainTrust

This strikes me as a classic “cut off your nose to spite your face” decision.

Amazon marketplace participants get the opportunity to reach and be reached by Amazon customers. Amazon customers get the opportunity to shop for and choose widely from products on the platform.

For Powell’s, fewer shoppers will find them and shoppers looking for specific used books will still get them, but not from Powell’s.

Roy White
BrainTrust

Powell’s has likely made the right decision. While Amazon’s marketing reach is truly seductive, it’s no picnic for a third party seller to use its site. When a consumer selects a third party seller, a lot of alternatives appear on the screen. At the same time, third party sellers are subjected to a great deal of control. Amazon’s newer search algorithms are apparently calibrated to favor Amazon products. Amazon also gets to access the sales data. Amazon is concerned with developing its customers, not the sellers.

Craig Sundstrom
Guest

Only Powell’s can really answer these questions. I’m not going to question their decision(s), but whether they’re right to do so or not, it hardly seems applicable to the average merchant. When you’re “the World’s largest (whatever)” you have certain advantages that smaller sellers don’t.

That having been said, (particularly for books) there ARE marketplaces other than Amazon; the problem is getting people to (1) know about them, and (2) actually use them.

Mel Kleiman
BrainTrust

It is the right time to make the move. Amazon, in some ways, is like a bad addiction. It feels good in the short run, but will kill you in the long run.

wpDiscuz
Braintrust
"I don't think it has to be all or nothing."
"Most independent booksellers need revenue more than attitude. The best a local independent can do is to create a destination for a cult following."
"Powell’s is standing up and leading an effort, at their own risk of defeat to preserve the kind and gentle nature of small human-run businesses."

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