The Independent Bookstore Versus Amazon

Politicians talk about helping small businesses. But what can they do? During the Covid lockdowns, one third of all American small businesses closed. They were already struggling. In Steubenville, where our bookshop is, the mall killed off downtown decades ago. Then the internet killed the mall. Most small retail spaces downtown have already been demolished. Of the rest, fewer than a quarter are occupied.

We will need more than one solution to save small businesses. But in the book world, there is an easy fix that would help ease the burden: regulating fees for online platforms. If fees were capped between 5 and 10 percent—the way bank interest rates are—the large online platforms could be made to serve small businesses rather than decimate them.

Let me give you an example of how the book industry works at present. We sell books both in our store and online. We sell on our website, but the majority of online sales come from the big online platforms: Amazon, AbeBooks (owned by Amazon), and Biblio (which remains independent but unfortunately does not have the traffic of Amazon or AbeBooks).

Every now and then, Amazon will run out of a book we stock, and until they get new inventory or we run out of supply, we become the nation’s preeminent supplier of that particular title. This is good for Amazon, which can use the redundancy in its system to smooth over supply chain problems. 

This happened just a few weeks ago with the Arcturus Ornate Classics edition of A Christmas Carol. This is a lovely edition, a facsimile of the first printing of the book, durably bound in red hardback, with color illustrations and G. K. Chesterton’s essay on the classic as a bonus. It’s cheap, too: Printed in China, we buy it for $7 and sell it for $14. We promote Dickens in our store, sponsor a one-man performance of A Christmas Carol in a local theater, and Dickens sells well for us in general. We had a hundred of them in stock ready for Christmas.

Then they started selling like hotcakes on Amazon. We mark up our books substantially on Amazon—you’ll see why in a minute—but even at $19.59, we were getting multiple orders per hour. We looked to order more, but both the publisher and the distributor were out, and since the book is printed in China, it’s unlikely we’ll get any more this December. We decided to reserve forty copies for our in-store customers, and sold the other sixty copies in a day and a half.

That sounds very nice for a bookstore—$1200 in online sales in a day and a half on a single title. But let’s take a closer look at how that money gets divided.

Amazon charged the customer $25.59 per item: $19.59 for the book, $1.37 for sales tax, and $4.63 for shipping. Of that $25.59, Amazon sent me $18.79; they paid the sales tax themselves, and kept as their fee $5.43, a whopping 28 percent. Amazon sends me the address and I send the book to the customer, paying the postage of $4.63. I paid $7.79 for the book, leaving me with $6.37 out of the $25.59 the customer paid. 

That’s not profit, of course. From the $6.37 I pay for rent, utilities, computers, printers, internet, wages, payroll taxes, and supplies including the envelope to mail the book. Our profits are about industry standard for bookstores: 5 percent. A $20 sale, in other words, brings home a dollar to feed my five kids. That $1200 in sales becomes $60 for the work of sending out sixty packages. Most of my excitement from bookselling, as you might imagine, comes from the satisfaction that sixty people are going to be reading a nice edition of A Christmas Carol. It’s not from the money. There are a lot of easier ways to make $60. Amazon, meanwhile, keeps $325.80 and never touches the book.

I’m sensitive to Amazon’s needs: They put in massive amounts of money to maintain an excellent website, and they have created a loyal customer base. They should get their cut. But they don’t price things this way for books they fulfill themselves. Their volume is so vast that they often mark up books only 1 to 5 percent from publishers. For their own fulfillment business, their model emphasizes price. But for third-party sellers, they emphasize extraction and heavy fees. They don’t upcharge 28 percent from publishers. Those kinds of fees they reserve for their general purpose of crushing small businesses and taking control of the American retail market. They don’t need them to keep their business going.

What if fees for online selling platforms were capped, say, at 10 percent? We’d have an extra $3.50 per book from this sale, which would be $210 for the sixty books. That kind of thing makes no difference to Jeff Bezos. It means covering utilities at home for another month for my family, though. Access to online platforms can mean as much to a small retailer as access to banking services— which are heavily regulated. Alexis de Tocqueville long ago suggested that American democracy was linked to the small businesses that dominated American commerce, when the majority of the population was self-employed. Today, by contrast, we are a nation of employees, and small businesses need help. This kind of regulation would be easy to enact, easy to enforce, and would be one more tool that would help independent retailers make it to another Christmas. 

John Byron Kuhner owns Bookmarx Books in Steubenville, Ohio. He writes at https://johnbyronkuhner.substack.com/.

Image by Andy Mabbett via Creative Commons. Image cropped.