
As Competition Wanes, Amazon Cuts Back Discounts - kanamekun
http://www.nytimes.com/2013/07/05/business/as-competition-wanes-amazon-cuts-back-its-discounts.html?pagewanted=all
======
zaroth
> It is difficult to comprehensively track the movement of prices on Amazon,
> so the evidence is anecdotal and fragmentary.

I guess this is the difference between award winning journalism and
essentially an editorial.

David Streitfeld of the NY Times should be inspired by the work of the Sally
Kestin and John Maines of the Florida Sun Sentinel, who won the 2013 Pulitzer
for Public Service for their "investigation of off-duty police officers who
recklessly speed and endanger the lives of citizens, leading to disciplinary
action and other steps to curtail a deadly hazard." The Sun manage to acquire
and then data mine the timing data from on and off-duty police officers' toll
transponders to reverse engineer their average speed, and in the process blew
the lid off some seriously reckless driving by the officers.

By comparison, the data that Streitfeld and the NY Times was looking for to
turn their cute anecdotes into hard hitting journalism were only an API call
away. I'd love to see journalists collaborating more with hackers and the open
source community, or perhaps even big data competition sites like Kaggle to
collect and parse this data into a real expose. Like what we saw with
Strongbox
([http://www.newyorker.com/strongbox/](http://www.newyorker.com/strongbox/)) -
the New Yorker's platform for protecting anonymous sources - or Barret Brown's
ProjectPM ([http://trueslant.com/barrettbrown/2010/03/24/project-
pm/](http://trueslant.com/barrettbrown/2010/03/24/project-pm/)) - but
targeting specific topics and data sets. Note to reader, you might want to
visit those links via Tor...

Nothing like hard evidence to shine a bright light on anti-competitive
behavior of a wanna-be monopolist. On the other hand, maybe Amazon is just
intelligently pricing their products using their sophisticated proprietary
models based on tried and true supply and demand. Based on this article, who
can say what's closer to the truth?

~~~
kommissar
Actually, a website already exists to track Amazon prices. They could have
just searched for it:

[http://camelcamelcamel.com/](http://camelcamelcamel.com/)

~~~
moconnor
By looking at the prices of a few fiction books in my collection over the
period 2011-today I didn't see any evidence of the increasing price trend
hinted at by the article.

The tech books I looked at might do, certainly a larger sample size would be
interesting:

[http://camelcamelcamel.com/Joel-Software-Occasionally-
Develo...](http://camelcamelcamel.com/Joel-Software-Occasionally-Developers-
Designers/product/1590593898?context=browse)

[http://camelcamelcamel.com/The-Innovators-Solution-
Sustainin...](http://camelcamelcamel.com/The-Innovators-Solution-Sustaining-
Successful/product/1578518520?context=browse)

[http://camelcamelcamel.com/Hackers-Painters-Big-Ideas-
Comput...](http://camelcamelcamel.com/Hackers-Painters-Big-Ideas-
Computer/product/1449389554?context=browse)

I'd like to see the results of deeper analysis. A report following an
investigation. I suppose that would be _investigative reporting_?

------
ChuckMcM
This is poor journalism. From the article:

 _" Now, with Borders dead, Barnes & Noble struggling and independent
booksellers greatly diminished, for many consumers there is simply no other
way to get many books than through Amazon. And for some books, Amazon is, in
effect, beginning to raise prices."_

Now what they are really saying is that Amazon is pricing books closer and
closer to "list price" which is the price that brick and mortar book stores
can sell books at and survive (generally). So if Amazon were to suddenly sell
every book for list price, there would be a great cheer heard from all the
book sellers as they now had a viable business.

No question that Amazon has used its position to establish market dominance
and its pricing has killed a lot of book stores. Amazon can't raise prices too
far without allowing book stores to flourish. As the article points out, the
publishers aren't changing their prices, Amazon is.

~~~
kryten
To be honest, Borders was like a library with built in coffee shop in the UK.
People just went in there, checked out the book and bought it on amazon whilst
sitting in the shop eating blueberry cheesecake and drinking a nice
cappuccino...

~~~
xyzzy123
I used to be an avid Borders customer; I could physically go to the store and
check out their computer section and through serendipity I would find things I
liked and buy them.

They were enormously overpriced, like most computing related books outside the
U.S. ($100 NZD +), but I would wear that because I liked the experience.

This was in about 2003. By 2008, the section which held the long tail I liked
had shrunk to maybe 2 shelves. They no longer kept the kinds of books I liked
in inventory, just "Photoshop for dummies" or perhaps the odd "Learning
Python".

At the point where everything I might want had to be ordered in and would take
longer to arrive than from Amazon, I stopped bothering to go :/

~~~
ChuckMcM
This was my experience as well. When I first discovered borders they were very
well run. They had a lot of interesting books and a very energetic staff. Then
they sort of lost their way and suddenly they didn't have any books I wanted
and the staff was replaced by people who always seemed to have "just started."
I stopped going.

That said, every time I go to Portland I spend a couple of hours and at least
a couple hundred dollars in Powell's books.

------
manojlds
The penultimate paragraph compounds my confusion:

> For Mr. Hollock, the “Born to Lose” author, the issue is readers, not
> dollars. His award-winning book, published by Kent State University Press,
> had a steep list price of $35 to begin with. In the author’s view, Amazon is
> simply compounding the trouble by raising its price to more than $30 from
> $23.

Why is the author complaining about Amazon, when the list price is as high as
$35? Yes, Amazon might have gone from $23 to $30, but that is still a 14%
discount.

Why was the list price so high in the first place? Shouldn't the author be
complaining about the press?

~~~
_delirium
It's a 14% discount only thanks to the strange way pricing in the publishing
industry has developed: it's a 14% discount off of an 100% markup.

For mostly historical reasons, wholesale price has become quasi-fixed at 50%
of list. So in this case what's happened is the publisher has chosen to sell
the book for $17.50, and the way you do that is by setting an entirely
notional "list price" at 2x the intended wholesale price. But the $35 is not a
real price; the real price in the publisher-bookstore exchange is $17.50. It's
then up to bookstores how much they want to mark the book up above $17.50.
Here, Amazon is choosing to sell it for a 70% markup above wholesale, whereas
previously they were selling it for a 30% markup.

(This is U.S.-specific; list prices mean different things in different
countries. Also, I believe the 'standard' ratio of wholesale-to-list varies in
some categories, e.g. it's different for textbooks.)

~~~
gabemart
You are correct, but the system isn't really as strange as you imply. Many
wholesalers in many different markets set a recommended retail price that's
some multiple of the wholesale price they charge to their customers.

As far as I understand, Amazon works out the optimal discount for a book based
on a number of factors including the popularity of the book and the prices
charged by their competition. The same book at B&N is $31.49 [1], 88 cents
more than Amazon is charging.

[1] [http://www.barnesandnoble.com/w/born-to-lose-james-g-
hollock...](http://www.barnesandnoble.com/w/born-to-lose-james-g-
hollock/1113551830?ean=9781606350973)

------
jmduke
By "as competition wanes," the headline means "Amazon has a 29% market share."

By "cuts back discounts", the headline means "Amazon is selling books for
slightly more, which is still less than brick and mortar stores."

~~~
_pmf_
I'm always looking for the catch with Amazon (from a consumer standpoint, not
from a labor conditions standpoint), but there's nothing at all. They're the
cheapest and the ones with the easiest return policies. They even replaced
some stuff that was missing from a ripped-and-patched-up parcel that I
accidentally signed off as being complete.

~~~
kryten
Agree. Never had a single problem that wasn't immediately resolved in over 300
orders.

Prior to using amazon my options were basically phone up then trek to Foyles
in London or go to my local book shop and try and work out how to get them to
order something that wasn't top 100 dross.

If you buy used books from them as well, they are actually cheaper than a lot
of the charity shops now as well and you get a better hit rate.

And that's just the books side of things. Lenovo parts from China, phone parts
from Canada, phones, computer parts, memory cards, camera, laptops. Just the
best experience so far.

And you can talk to a human pretty much instantly from experience.

------
rogerbinns
The publishers/authors who think Amazon are making too much profit can open
their own stores/sites and sell that way. It is a free transparent market.

They can also go to competitors like Walmart and give them whatever deal works
for the goals. Or they can use rebates which keep the profit the same for the
store (Amazon) but lowers the price the consumer pays.

I don't see any reason why they are making demands on Amazon's pricing and
profits, but don't see fit to adjust their own.

------
salmonellaeater
Amazon is intensely interested in finding the right price for everything. If
you pay attention you can see small adjustments in the prices of a lot of
products; they're most likely doing the equivalent of A/B testing to discover
their most profitable point for every product. A product without competition
will be less price sensitive, so they'll end up pricing it higher. An
interesting question is whether Amazon could end up in legal trouble for what
their pricing algorithm does.

A major theme of the small publishers and authors quoted in the article is
that Amazon's price is higher than the publisher would want. If Amazon pays a
fixed price for every book, then there's a fundamental conflict between the
parties. Amazon wants to make margin, the publisher wants to make volume. If
the publisher wants Amazon to keep their best interests at heart, they'll have
to change the nature of their deal with Amazon so that their interests align.

~~~
temp453463343
I think there is a lot less black magic than you think. The overwhelming
majority of the time the small price fluctuations are in response to changes
in the price by 3rd party sellers (the ones selling the same item in "new"
condition).

just check for yourself at
[http://camelcamelcamel.com/](http://camelcamelcamel.com/)

They virtually always undercut the 3rd party - which always begged the
question: why do the 3rd parties even bother trying to sell on amazon?

Actually if you think about the kind of testing you're talking about, it
doesn't make a whole lot of sense from a human psychology perspective. You
don't look for a camera and think: "This should cost $123.76" and anything
less will be huge turn off. There are probably more drastic things at play,
like if the price ends in .99 or if it's more than a hundred dollars, or maybe
people don't like certain price numbers for some completely random reason.

They probably have some internal database of the average (across all
inventory) of the rate-of-sales vs. the listed-price and the algo just looks
for a local maximum around the price that is a bit lower than the 3rd parties.

------
staircasebug
Just seems like typical retailing to me. Non mass-market books don't get
discounts. If someone is really searching to purchase "Jim Harrison: A
Comprehensive Bibliography, 1964-2008", they're probably going to buy it with
or without the discount attached.

Btw, Kindle price of "Born to Lose" is $9.34 at the moment. Seems like a good
discount to me.

~~~
cranefly
Amazon kindle price here is US$20.35 even though I'm using Amazon.com. Usual
excuse for gouging us here is the cost of transport to our small market. Never
thought that applied to electrons too :(

~~~
barking
With a netherlands ip address it's $10.59 on amazon.com.

------
n00b101
> Amazon, which became the biggest force in bookselling by discounting so
> heavily it often lost money

IANAL, but this sounds like a potential anti-trust case to me. "Predatory
pricing practices may result in antitrust claims of monopolization or attempts
to monopolize. Businesses with dominant or substantial market shares are more
vulnerable to antitrust claims. However, because the antitrust laws are
ultimately intended to benefit consumers, and discounting results in at least
short-term net benefit to consumers, the U.S. Supreme Court has set high
hurdles to antitrust claims based on a predatory pricing theory. The Court
requires plaintiffs to show a likelihood that the pricing practices will
affect not only rivals but also competition in the market as a whole, in order
to establish that there is a substantial probability of success of the attempt
to monopolize." ([http://bit.ly/12pG6gq](http://bit.ly/12pG6gq))

~~~
dangrossman
Amazon's sales are just 29% of the book selling market (2012 share, even after
Borders was out of the picture for over a year). B&N's are 20%. If their
discount pricing hasn't even gotten them 1/3rd of the market after all these
years, it'd be hard to prove that they're soon going to monopolize it.

~~~
adventured
I agree with your overall premise, but anti-trust law is far broader in scope
than monopolization. Indeed, there's nothing about anti-trust law that forbids
a monopoly, and there's no specific market share requirement.

Market share is but one market-power consideration when the government looks
at whether a company has caused harm.

There are several angles to anti-trust, such as collusion and predatory
pricing, that can matter even at modest market share points, if the government
can prove consumer harm.

------
ajtaylor
Maybe I'm hopelessly naive, but why don't the publishers drop their prices by
5-10%? Since Amazon is selling books at a percentage of the cover price,
dropping the cover price should theoretically offset the decreasing Amazon
discount. I know that books have the price printed on them, but what a great
marketing project it could be: "Look, we're dropping our prices across the
board by 5%. Go buy a book!"

~~~
lettergram
or Amazon just keeps it at the same price, making more money.

~~~
ajtaylor
It was hinted at in the article, but the publisher sells the book to Amazon
for less than the cover price. Of course, I have no idea if Amazon's purchase
price is a percentage of the cover. But if it's not (and that's what I would
have negotiated) then changing the cover price won't affect the revenue to the
publisher.

~~~
abhaga
Retailer's purchase price is almost always a percentage of the cover price.

~~~
ajtaylor
Then I guess it's up to the publisher to do the math and see what works out to
more profit in the end: keeping prices the same w/ less volume, or dropping
the price and (hopefully) increasing the volumn.

------
styrmis
It seems strange that there is no mention of inflation in the article given
that they are comparing prices from up to four years ago to today's prices.

> When Mr. Striphas’s book, “The Late Age of Print: Everyday Book Culture from
> Consumerism to Control,” first appeared in paperback in 2011, Amazon sold it
> for $17.50, the author said. Now it is $19.

Well, given that the 2011 $17.50 price would be ~$18.12 today (due strictly to
inflation) then it is not as big an increase as suggested.

> When the University of Nebraska Press brought out a bibliography of the
> novelist Jim Harrison four years ago, Amazon charged $43.87. The price this
> week: $59.87.

2009: $43.87 Today: $59.87 Correcting only for inflation the price would be:
$47.63

Inflation doesn't even account for the majority of the price increase in this
case but still this article appears to draw rather strong conclusions from
rather flimsy analysis.

------
fauigerzigerk
What keeps publishers and authors from starting a non-profit that sells books
at exactly the price they determine?

I realise that selling books from their own websites is difficult, especially
for individual authors, and it gives them less visibility than Amazon
provides. Banding together would solve that problem.

~~~
chii
you might find that the accumulated cost (admin/server/people etc) might end
up making that sort of service on par with amazon, not cheaper, and thus find
that it is either unsustainable (can't sell at a loss), or is at amazon's
price level (and so no real benefit?).

------
javajosh
BTW where is a good place to buy books online that isn't Amazon?

~~~
nness
bookdepository.com is the one I often hear about. Particularly because Amazon
isn't available in all countries, and The Book Depository's prices are
sometimes pretty comparable. Shipping is still 1-2 weeks though.

~~~
steve19
Amazon purchased The Book Depository in 2011.

~~~
nness
... goes to show how long ago I ordered something from them.

------
marme
I dont understand why they are complaining to amazon. The publishers are the
ones negotiating the deals with amazon so they should complain to their
publisher to renegotiate the deal. Or else they could just open their own
amazon seller account and price the books how ever they wanted

------
lancewiggs
I'd argue that the real issue here is not Amazon reacting to less competition,
it's Amazon reacting to less demand for printed books. I suspect ebook pricing
is still as sharp as ever, and that the affected authors should be looking at
their format and market.

~~~
JacobJans
Is there actually less demand for print books? According to Amazon, print book
sales are still growing.

[http://www.publishersweekly.com/pw/by-topic/industry-
news/pu...](http://www.publishersweekly.com/pw/by-topic/industry-
news/publisher-news/article/55721-amazon-e-book-sales-soared-print-
crawled.html)

------
rabbitonrails
"It is difficult to comprehensively track the movement of prices on Amazon, so
the evidence is anecdotal and fragmentary."

[data upon which entire thesis of article rests] -> stopped reading

~~~
robryan
It isn't actually all that hard. There is an API call to get the prices for
each seller on an item. Not sure if that also works for Amazon as the only
seller listings but you can definitely track the marketplace with it.

~~~
reiichiroh
Is this what [http://camelcamelcamel.com/](http://camelcamelcamel.com/) uses?

~~~
robryan
Yep, looks like it judging what they have on each product.

