Amazon's tremendous bargaining power comes from their market domination. The Codex Group conducted some research to determine exactly how powerful Amazon is in the book world. As it turns out, Amazon is not only the biggest player in the game, they also work hard to maintain the illusion (and often the reality) of rock bottom prices.
As of March, Amazon's share of all new book unit purchases was 41 percent. They also dominate 65 percent of all (yes, all) new online book units, in both print and digital copies. They have the largest share of the e-book market as well, with 67 percent. As for print, Amazon controls 64 percent of sales of printed books online.
Right now, brick-and-mortar stores still have an overall majority over online retailers, but e-book sales are growing (although slowly) and online sales of new printed books continues to increase.
Amazon's fiercest competitor is Barnes & Noble, but they are still a long way away from Amazon's market share. B&N has been trying to overhaul their e-commerce, and it isn't going too well. Last August, B&N's Mitch Klipper said "We plan to launch a new e-commerce website next year." Almost a year later, we are still waiting for this launch. This means Amazon's biggest and baddest competitor is still comparatively a weakling.
After B&N, Amazon faces minor competition with wholesaler Readerlink and successful independent booksellers who are moving their operations online. The American Booksellers Association CEO Oren Teicher told Publishers Weeklythat their IndieCommerce product is now service 375 stores and seeing increased sales by 5 percent in the last year. They are also planning a system upgrade for later this year. Certainly not a major threat to Amazon, but indie sellers are slowly but surely building a customer base, and pulling sales away from the e-retailing giant.
As for Readerlink, they are a wholesaler, so its a different flavor of competition. They offer a program allowing merchandisers to sell print books online. They also have one million e-books available. Readerlink has a long way to go, however. Amazon has had a couple of individual titles from their own publishing arm that have sold one million copies (and they sell far more books than that overall.) Still, Readerlink is carving out a small chunk of the market for themselves, as well.
Amazon does offer something its competitors have a more difficult time with: rock bottom prices, or at least the perception of them. Amazon has a reputation as being a cheap place to buy books. Their sales page is covered in discounts, promotions, and the inclusion of used book sales means even lower prices appear on landing pages, adding to the perception that they always offer the best deals. For comparison, here's Harry Potter on Amazon vs Barnes & Noble:
Amazon is only a thirteen cents less expensive than B&N, plus for a book that price they wouldn't offer free shipping. But their sales page is overwhelmed with bold red prices that scream "CHEAP." B&N is more demure and less crowded, but offers much less information. The overwhelming aesthetic works when it comes to creating the illusion of bargains.
Because Amazon has so successfully established themselves in the bookselling world, and has built a system reinforcing their efficiency and low costs, they aren't concerned with their competitors. This means they can push book publishers, like Hachette, to sell under terms most beneficial to Amazon. If that publisher doesn't like it, sure, they can go to the next best retailer. But that's a long fall to take.
This article is from the archive of our partner The Wire.