Publishing in the Social World
I Live in the Future & Here's How It Works, by Nick Bilton

Bookstores Need to Respond to Amazon Prime...Soon

Amazon's decision to launch the Prime shipping service several years ago was brilliant.  The $79 annual fee means free two-day shipping and has created retailer loyalty like no other campaign I can think of.  So isn't it remarkable that the brick-and-mortars have mostly just watched with envy, offering their own loyalty programs that lack the punch of Amazon Prime?

I belong to the membership programs for the two largest U.S. chains and I sometimes forget to even show the card at checkout.  How often do you suppose Amazon customers forget to use their Prime memberships?  How about never?  This BusinessWeek article about Amazon Prime got me thinking about the brick-and-mortar store situation and the need for them to offer a compelling alternative.

I'd start off by recognizing and leveraging the single most important advantage the brick-and-mortar stores have over Amazon: a physical presence, probably fairly close to your home.  It's funny that the BusinessWeek article talks about how "instant gratification" is part of the secret to Prime's success.  Really?  I'm not convinced two-day shipping is really "instant."

I suggest the brick-and-mortars turn "two-day availability" into "today availability."  Here's the program: Pay $79 for our new bookstore membership program and we'll give you 34% off on all your purchases.  No limits.  Rather than waiting two days to get it from Amazon, stop by your local store and grab your book today, all for the same price you'd get online.  If we don't have it in stock we'll get it for you within two days (for no additional charge) and you'll still get 34% off the cover price.

The naysayers will start off by pointing out how the brick-and-mortars can't afford to compete with Amazon on discount.  Really?  I stopped in one of my local stores a couple of days ago and saw several of the books our company published that are available for 30% off and an additional 10% off for members.  So they're willing to sell those books for 40% off the cover price.  The thinking is they'll get customers in the door for those deals but they'll end up buying other products at full cover price.  Based on the various quarterly financial reports I've seen from the big chains it doesn't look like that model is working all that well.

So why not be bold and offer a program that's more competitive with the Amazon model?  Imagine how many customers would sign up for it, creating a new loyalty to their favorite brick-and-mortar.  I wonder how many of them would be Amazon customers looking for real instant gratification.

Maybe this program is just too ambitious and unpredictable for a big chain to take on.  I'd ask whether they can afford not to do something this big though.  If it's too scary though, how about initially just testing it out on a smaller scale?  Make an announcement that the plan is coming, but it will be limited to the first 1,000 customers in certain key locations at first.  Maybe even make it half price for those first-wave members the first year.  Now you've introduced a scarcity component that's likely to drive even more buzz.  Then launch it, measure the results and determine next steps.

What do they have to lose?  In the short term the chain might wind up losing money on certain customers.  Longer term they probably need to reevaluate store square footage and existing lease commitments/terms.  This sort of program would probably help determine those future needs, especially if they realize a higher-than-anticipated percentage of long tail sales (e.g., books to order, not on shelves already).  It would also create a feirce loyalty to their stores; just as Prime members want to get the most out of their $79 annual investment, so too would these members with this campaign.

If one of my local stores offers it I guarantee you I'm signing up.  Why?  I don't have an Amazon Prime membership.  My family and I tend to believe in the "instant" part of "instant gratification", so we tend to buy most of our books in the local stores.  We still buy from Amazon, just not enough to warrant a Prime membership.  The other reason I don't have a Prime membership is that almost all of my own purchases are ebooks now.  As more customers shift from print to ebooks there will be an opportunity to create new loyalty programs.  I don't think the big brick-and-mortar chains can wait till then to launch something exciting though.

 

Comments

Jimlevalley

Good points Joe. I wonder if the brick and mortar division bookstore retailers are too focused on "cost containment mode" to get back to the basics of competing. The delay in making these decisions has significant impact on their customer lifetime value metrics.

There are companies like shoplocal and others that directly support this scenario to enhance the ability of retailers to compete. The concept of "loyalty" is truly changing.

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