Quote:
Originally Posted by charmian
Sregener: they can't start pricing all of their books the same as Amazon. Then they'd be losing money in all of their stores, not just twenty of them.
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I know that the markup for printed books is incredible, well above 50%. But I think we also have to consider some of the costs that Amazon faces. Shipping isn't free, and they have tens of thousands (hundreds of thousands?) of Amazon Prime members who take advantage of free 2-day shipping. That $79/year fee doesn't begin to cover that cost, and then there's streaming and free "loans" of ebooks - where they effectively are paying the author full price and giving readers the books for free. That's huge. And of course the rest of the world tries to get to $25 for free shipping - except that USPS still charges Amazon quite a penny for those shipments.
Yes, Amazon doesn't have to lease prime retail space, heat it, cool it, light it, etc. And they can staff it with basic staff who know nothing about books. But as an accountant once told me, those are all fixed costs: they don't change based on how many units you sell. Thus, you can cover your fixed costs by pricing things just above marginal costs and make a whole lot of volume. In other words, what I am proposing is not that B&N change their retail presence to books-only and then sell only as many books as they sell now. I'm proposing that they sell a whole lot more books by becoming the instant-gratification price leader. Why wait 2 days or more for Amazon to ship you a book when you can have it right now for the same price? Why not impulse buy something at the mall if you can't find it cheaper later?
But if, ultimately, a bookstore cannot sell at Amazon's prices and get enough volume to cover their costs, then everyone is just rearranging the deck chairs on the Titanic. The ship is made of iron; she will sink.