July 16, 1995 – Amazon.com began operation. To get there, you clicked on a computer icon, heard the weird dialup modem sounds, the hissing, and you were on your way to the World Wide Web. Type in www.amazon.com and there it was.
It will never catch on. People need to hold something in their hands before they buy it. According to several sources, the first book ever sold on Amazon was this: Fluid Concepts & Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought.
Ten years ago, Amazon was a good customer for publishers, doing about 5-10% of their sales at the online retailer. Today, Amazon is the #1 customer for almost every traditional publisher. In some cases, they generate over 50% of publisher revenue between physical and eBook sales. Smaller digital-only publishers and indie authors are almost entirely dependent on Amazon.
A hundred years of book publishing and retailing culture changed in less than a generation.
Not long ago, if someone told you Amazon would be dropping packages on your front steps carried by drones, you would have thought they were crazy. Who knows what the next few years will bring? Amazon spent $9 billion on research and development in 2014, which is one and half times the total annual revenues of Barnes & Noble. My guess is that Amazon is not resting on their laurels.
In 2014, the Amazon Corporation did just under $89 Billion in business (and didn’t turn a profit). Less than 10% of that revenue came from the sale of books.
Compare this to bookstore chain Barnes & Noble, which generated a little more than $6 Billion in revenue last year (had a less than 1% profit).
Prior to the growth of Amazon, publishers were very careful not to allow any individual retail customer too much control over their business. The reason mostly related to the fact that books could be returned to the publisher if they were not sold.
Publishers limited sales to giant big box retailers because they could (and would) return large quantities of a book if it didn’t sell quickly enough. If they didn’t control them, there was a potential of severe financial damage to a publisher.
Because Amazon orders products only as needed and carefully maintains inventories, they have virtually no returns and therefore are of little risk to the publisher. Obviously the companion technology of digital printing has combined to make a much better process overall.
But while Amazon critically damaged physical bookstores, as I’ve stated before in this space, changing channels of distribution have affected the global retail economy more than a few times over the decades. Door-to-door sales, mail order catalogs, chain stores and even home party-selling each caused disruption to other retail selling markets.
Now is the time when online is that disruptive force.
So, the 20th birthday of Amazon creates an opportunity to consider the myriad ways it changed our lives.
Not surprising, a level of skepticism surrounds companies that become either too big to fail or use their size to control and dominate. The U.S. economy has always sought to have choices for consumers, to not allow a single company to dominate. Federal anti-trust laws are in place to prevent that.
And yet, we are now in a very interesting era where consumers have happily made a few companies so large and dominant, all because customer experience, products or services are so good and make our lives easier.
All this might not matter, but maybe it will. Should a few stockholder owned companies decide that the Bible is a disruptive force and Jesus is a troublemaker, authors and publishers of Christian materials might be surprised how quickly the doors can close, even in a free society.
I need to end this post. Have to order some stuff on Amazon, download an app for my iPhone and check the news on Google. Couldn’t live without them.
