Internet upstart Amazon.com edged out No. 3 bookstore chain Crown Books last week, moving itself into the triumvirate of booksellers — that’s on- and off-line, as founder and prexy Jeff Bezos points out. Amazon now trails only superstore behemoths Barnes & Noble and Borders.
“Bookstores are just a lousy place to sell books,” observes Dan Poynter, author, consultant and prexy of Santa Barbara-based Para Publishing.
Poynter actually goes a step further by saying, “The days of the bookstore are numbered, even the superstores … just too inefficient.”
It may be too soon to take that prediction to the bank, but it’s hard to ignore the rapid-fire success stories coming out of Amazon.com’s Seattle headquarters, home of the virtual world’s largest retailer, Earth’s Biggest Bookstore.
The nearly 3-year-old Web site — among the Top 20 Web sites as determined by Media Metrix — already consists of more than 3 million book and music listings, and will soon offer videos online.
Figures for the quarter ending March 31 show a whopping 446% increase in sales over a year ago, climbing to $87 million. Amazon.com also reports that its cumulative customer count rose to 2.26 million by March 31, an increase of 50% since December 1997’s 1.51 million.
Key in all this is the fact that repeat customer orders represented more than 60% of orders placed during the quarter.
“It took us 27 months to serve our first million customers, and less than six months to serve our second million,” says Bezos.
And the company is keeping up with Bezos’ plan to “get big fast” by last week acquiring three Internet companies. Two of the acquisitions (U.K.-based Bookpages Limited and Germany’s Telebook) are part of the Amazon plan for European expansion; the third, Internet Movie Database, will give Bezos a jump on online video sales. All that, and a two-for-one stock split for shareholders.
Bezos would admit, however, that Amazon.com has yet to make a profit, and accompanying the quarter’s huge sales gain was a tripling of the company’s net loss (now at $9.3 million) over year-ago figures.
With its hefty market capitalization of $2.3 billion, though, the company is described by both equity and high-yield — or junkbond — fund managers as “sexy.”
So far, it can be said, Amazon.com is virtually head-and-shoulders above the online bookselling efforts of Barnes & Noble, Borders and German media giant Bertelsmann AG.
That landscape may change radically eventually, with Amazon’s competitors having vast distribution systems and long histories in bookselling.
But electronic bookselling is clearly on the rise, getting praise from big and small publishers alike for putting more books and readers together. Sales are expected to reach $400 million this year (that’s about 3% of the $13 billion retail book market), according to wholesale distributors Baker & Taylor Books.
Quite simply, electronic bookselling is the future, says Poynter.
“I find it ironic that the real, printed page is coming to life again through electronic means,” Poynter offers. “And virtual bookstores can afford to offer all 1.1 million books currently in print, and millions more that are out of print.
“Tell me, what bookstore in the real world can do that?”