Amazon throws down the Gauntlet in the race for E-book sales

There can be no doubt now that electronic books are here to stay, and that they’re becoming increasingly popular. The latest report on e-books by the American Association of Publishers (AAP) shows that e-book sales in the US grew 162.8% for the month of May ($29.3 million), while year-to-date sales through to May were up 207.4%. The year-to-date e-book sales of the 13 publishers submitting data to the AAP in that category currently comprise 8.48 % of the total trade books market. It was just 2.89% for the same period last year.

In publishing circles the news was greeted with mixed feelings, from concern and even trepidation on the part of some small and indie brick-and-mortar bookstores worried that rising e-book sales and online purchases are biting into their in-store sales of physical books, to elation on the part of many authors and e-book fans who revel in the convenience of instant book downloads and the competitive pricing of e-books visàvis hardbacks and paperbacks. 

Amazon CEO, Jeff Bezos

But perchance anyone got carried away by the latest, seemingly impressive AAP figures, Amazon.com recently made an announcement that made them seem trivial. The world’s number one e-book retailer said Kindle sales in May and year-to-date through to May exceeded the market growth rates cited by the AAP. Interestingly, Amazon did not provide comparative figures to substantiate its claim. Amazon CEO Jeff Bezos explained his company’s reticence in an interview with Charlie Rose on PBS.

“We are secretive about the [Kindle sales] numbers because we think it is competitively useful. Other people are planning, it’s a helpful data point for them. We say millions, it’s not helpful to them.”  

Instead Amazon said that over the past 3 months, for every 100 hardcover books it had sold, the company sold 143 Kindle books. Over the past month it did even better; for every 100 hardcover books sold, it has sold 180 Kindle books. This, according to Amazon, is across its entire U.S. book business and includes sales of hardcover books where there is no Kindle edition. Free Kindle books are excluded and if included would make the number even higher, it added.        

According to the online giant, the Kindle Store offers more than 630,000 titles, including 106 of 110 New York Times bestsellers. Over 510,000 of these books reportedly sell for $9.99 or less, including 75 New York Times bestsellers. More than 235,000 books have been added to the Kindle Store in just the last six months, says Amazon. In addition, over 1.8 million free, out-of-copyright, pre-1923 books are available to read on the Kindle.

It gets even better. Amazon’s US and Canadian e-book sales ($3.59 billon) were up 46% from the second quarter of 2009 and international sales on its U.K., German, Japanese, French and Chinese sites, were $2.98 billion, up 35% from second quarter 2009.

Amazon is confident that its e-book sales will also surpass paperback sales in 2011, making the Kindle the world’s # 1 e-reader. In an interview with Pocket-lint.com Amazon senior vice president worldwide digital media, Steve Kessle said, “I think we [Amazon] will sell more Kindle books than paperback books in the next year [2011]. Sometime after that we will start selling more Kindle books than hard covers and paperbacks combined.” He said all Kindle e-books will cost less than the physical books. “”Customers believe that electronic books should be cheaper than physical books and we agree.”

Never one to shy away from igniting price wars in its battle to maintain a dominant hold on the global book market, Amazon recently went for the jugular of its competitors by launching a new wireless Kindle for $139 – a steep drop from the $399 users paid for the first Kindle in 2007. The new ‘Kindle Wi-Fi’ is now the cheapest e-reader on the market. Unlike previous Kindles it connects to the Internet using only Wi-Fi instead of a cellphone network. It’s also smaller and lighter, with a higher contrast screen and crisper text and free 3G wireless.

Amazon also introduced a new 3G wireless Kindle to replace the Kindle 2 which had cost $259. The 3G model is priced at $189. It was reportedly launched within hours of Barnes & Noble’s introduction of a Wi-Fi only version of its Nook e-reader. B&N also reduced  the price of its 3G device to $199. Like the Kindle Wi-Fi, Amazon’s new 3G model is smaller and lighter, with a higher contrast screen and the pages turn faster. It also offers up to one month of battery life, double the storage to 3,500 books, built-in Wi-Fi and free 3G wireless. Both models will be available to customers in over 140 countries and 30 territories from August 27. Pre-orders for both devices are already being accepted.   

he

The Apple iPad

Both Kindles are cheaper than the Apple iPad currently priced at $499 ($629 for the 3G version plus $30 a month for unlimited data).  While the full-colour iPad has multiple capabilities (you can use it to surf the net, watch videos, listen to music, read books, magazines and newspapers, use it as a virtual PC and do a whole lot more) Amazon, for now, is content to offer the Kindle as a one-trick pony (purely a reading device) and is busy wooing customers with competitive pricing and a wider choice of books than are currently available on the iPad. 

As Jeff Bezos told PBS’ Charlie Rose, “The #1 thing people are doing on iPad right now is playing . The #1 thing people are doing on Kindle is reading books.”

Bezos and his team believe that cutting the price of Kindle has contributed significantly to the surge in their e-book sales and the devices are now starting to attract mass market appeal. 

In an interview with USA Today.com, Bezos said, “Evidence is starting to accumulate that this is a mass-market device. I predict that at the $139 price, people will buy multiple Kindles. We’ll have to wait and see. People might buy Wi-Fi-only models for the kids and 3G ones for themselves.”

Ian Freed, an Amazon vice president in charge of the Kindle backed him up. In a one-on-one with cnet.com, he said: “When we look at the device business, we look at it all in, with customer support and everything else, and ask whether it’s a healthy business. The big thing about consumer electronics is that the more units you sell, the lower the overall cost. The more we sell, the more we can lower the costs across the board, which is what you’re seeing with the new Kindles

This appeal to the masses and its obsession with delivering “a great customer experience” underpins Amazon’s marketing strategies.

In the book business Amazon has unabashedly set itself up as a virtual Champion of the People, dedicated to making books cheaper and more accessible to readers and to fending off the big bad publishers and all those hell-bent on keeping book prices high. It made that crystal clear during its recent tussle with Macmillan over Amazon’s policy of pricing e-books at the default price of $9.99. Macmillan who wanted to set its own prices had been trying to price e-book editions of their books at $15. Amazon’s response after eventually caving in to Macmillan’s demands was that its customers would ultimately “decide for themselves whether they believe it’s reasonable to pay $14.99 for a bestselling e-book.” In short, power to the people and let there be no doubt who is on their side.  Go forth and vote with your pocketbooks!  

It’s not a bad place to be when you’re the biggest book retailer, both in North America and overseas. so much so, Amazon’s VP in charge of Kindle, Ian Freed can declare with confidence “we’re pretty sure we’re 70 to 80 percent of the [e-book] market.”

Meanwhile, research has shown that more books are sold on the internet than any other product and the number is increasing – which is more good news for the online behemoth. 

Two years ago the polling company Nielsen Online did a survey of 26,312 people in 48 countries which showed that 41% of internet users had bought books online. In 2007 34% of internet users had done so.

In the US, 57.5 million people or 38% of internet users were estimated to have bought books online, while in the UK it was calculated that 14.5 million people or 45% had patronized online bookstores.

Nielson said much of the increase was in emerging markets, such as South Korea and India. 

No doubt, the competitive pricing of e-books, their accessibility over a wide range of reading devices, and the impulse-buying quality of the Internet are helping to stimulate sales. Amazon data has reportedly shown that Kindle users buy significantly more books than they did before owning the device.

A newly-released report on world internet usage statistics shows that online booksellers and purveyors of e-reading technologies have barely scratched the surface of the potential global market. See diagram below.

 

World Regions  Population
( 2010 Est.)
Internet Users
Latest Data
Users %
of Table
Africa 1,013,779,050 110,931,700 5.6 %
Asia 3,834,792,852 825,094,396 42.0 %
Europe 813,319,511 475,069,448 24.2 %
Middle East 212,336,924 63,240,946 3.2 %
North America 344,124,450 266,224,500 13.5 %
Latin America/Caribbean 592,556,972 204,689,836 10.4 %
Oceania / Australia 34,700,201 21,263,990 1.1 %
WORLD TOTAL 6,845,609,960 1,966,514,816 100.0 %

See Internet World Stats.com for more details.

At the 2009 Making Information Pay, conference organized by publishing consultants Mike Shatzkin and Ted Hill for the Book Industry Study Group it was revealed that many readers now get book information online. Among other things, it was revealed that:

  • 67% of readers say they find reviews onlne vs in traditional media
  • 54.8% rely on online/internet ads to find books
  • 24.8% rely on retailer e-mails

The road ahead promises to be rough for brick-and-mortar bookstores, indies and multiple chains alike. As founder and CEO of the publishing consultancy firm ‘The Idea Logical Company, Mike Shatzkin noted in his recent article Where will bookstores be five years from now?:Shelf space for books is probably dropping faster than the number of stores as book retailers look for other items to keep their customers more satisfied and give those items space previously devoted to books. And shelf space available for publishers who don’t own bookstores is dropping faster than that because Barnes & Noble, the leading provider of bookshelf display space, is aggressively sourcing their own product both to improve their margins and to develop proprietary product not available to their competitors … the reduction of brick-and-mortar shelf space increasingly challenges the core proposition of all of today’s largest book publishers.”

For bookstores and publishers in regions like the Caribbean where the trade in books depends largely on traditional forms of print publishing, and most books are bought in bookshops and on street corners, adapting to the challenges posed by online booksellers and ready availability of e-books will continue to be very taxing.  

President of the US-based Independent Book Publishers Association (IBPA) Florrie Kichler along with Operations Manager for Baker &Taylor’s’ Pub Alley, Jamie Carter  offered some useful advice to some 80 participants at a recent webinar organized by the Book Industry Study Group (BISG). Citing examples from among new self and micro publishers in order to show what it requires to bring new books into the market and reach an audience, they advised publishers and selp-published writers to “know your subject, target a niche, and go for it with the right professional book-making and marketing tools — now readily available to anyone with content expertise who does their homework.”

For established publishers, Kichler advised: “stay nimble and locate expert authors quickly, watch the self-publishing niche for emerging authors with a following, and be aware of emerging topics and genres that are underserved.”

Words of wisdom that indie publishers in the Caribbean and elsewhere would do well to heed while working in tandem with their community bookstores.

UPDATE: Barnes & Noble Up for Sale

In what might be the latest sign of trouble for brick-and-mortar bookstores, the mega-chain Barnes & Noble announced on Tuesday that its board was putting the company up for sale. Read more>

Advertisements

5 responses to “Amazon throws down the Gauntlet in the race for E-book sales

  1. I now use an iphone to do presentations to people about my business and why they should consume, on a regular basis, the worlds highest quality antioxidant food know to man. Soon I will get an iPad an absolute must.

  2. please no special comment. I need your help, please if possible provide me the comprehensive statistic or data of world e-books users, Afican and Nigeria particularly.
    Thanks

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s