Back when Amazon was ‘an insignificant speck in the book-selling universe’

Analysts are uncertain about Amazon.com’s future now that Barnes & Noble has finally gone online to peddle books.

“The difference between the two is that Amazon.com is an insignificant speck in the book-selling universe,” says Bill Bass, an analyst with Forrester Research. “But they’re a rapidly growing speck. Still, book publishers are first going to take care of the people who sell billions of dollars of books, and that’s Barnes & Noble.”

But Bass doesn’t believe Amazon.com is out of the game.

“What Amazon has done better than any other Internet merchant is take its store to the people,” he says. “They’ve just cut deals with America Online and Yahoo!, so now they’re weaving themselves more into the fabric of the Internet. Where ever you go on the Net, you will see an Amazon.com store. But they’re going to be in a dogfight with Barnes & Noble.”

Bezos says he always knew he’d eventually do battle with the giant book retailer.

“I’m surprised at how long it has taken (for Barnes & Noble to sell online),” he says. “It’s extremely unusual in the business world to have almost two years to compete against, more or less, a vacuum. We’ve been especially lucky, because the fact of the matter is unless you get a substantial head start like that it’s very difficult to compete against a company with $2.4 billion in sales and 28,000 employees.”

Bezos says he and his estimated 300 employees are going to survive by providing better service. It’s the offline bookstores that have to worry and rethink their selling strategies because of the Net, Bezos says.

“Physical bookstores are going to have to compete on the basis of being fun places to be – you know, with softer sofas and tastier lattes,” he says.

David Unowsky, owner of Hungry Mind Bookstore in St. Paul, pooh-poohs that, and says online bookstores are no more of a threat than any new retailer on the street.

“I’ve seen the list of the top 100 books sold last year by Amazon.com and 95 of them were business or computer books,” he says. “Those aren’t strong departments in our store.”

Unowsky notes that many people still savor the traditional method of choosing books.

“A lot of book lovers want to see the physical book,” he says. “And (Bezos) can talk about some cutesy things like sofas and lattes, but most people I know like the social interaction they have when they go to a store and that you can’t get on your computer.”

The Hungry Mind owner notes, too, that online book retailers have yet to prove they can turn a profit on the Internet.

“They did $16 million in sales and lost $5 million last year, so they’re more of a threat to their stockholders,” he says of Amazon.com.

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In 2000, Unowsky sold the name Hungry Mind and used the profits to keep his store going. He went out of business four years later.

» Jeff Bezos talked to reporters back when Amazon was ‘an insignificant speck in the book-selling universe’ JIMROMENESKO.COM.

 

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