The high cost of low priceNovember 3rd, 2009
Faceless corporations versus buying direct from your local entrepreneur.
CAVEAT EMPTOR (Let the buyer beware): Please make informed decisions, because every decision we make has an influence on the community we live in, which eventually raises or lowers the standard of living for everyone, as our current financial crisis is proving. Every dollar you spend is like voting for a business.
Before I begin, I should say there are many reasons why Amazon.com has been a great resource to book lover’s everywhere. One reason is the selection of rare and used books and the worldwide network of resources, and their innovations in the e-boos and e-boo reader. Amazon has even helped authors earn higher royalties with other publishers like Barnes & Noble and Apple. However, along with this came a host of parasites.
Example: mega-stores and online bookstores are driving your friendly corner stores out of business, and seriously impeding an author’s ability to earn a living wage and bring new products to the market. Not only are the online bookstores impersonal, automated machines, but they take up to 8 times the profit that the author earns (depending on cost of printing, discounts, service fees, etc). In addition, with the growing number of competing online stores (computer programs), most offer bargain discounts that further undercut authors and entrepreneurs. Ultimately, these tactics drive down the entire economy by reducing the cash flow and de-motivating innovation.
Here’s how it works: Some of the country’s largest bookstores are Amazon.com affiliates with no actual brick-and-mortar store or helpful staff. Many online stores, believe it or not, don’t even have any books. A very simplified version of their business model looks like this: After the author/publisher invests the time, money and effort to produce a book (which can take years and thousands of dollars), they upload the book into the book distribution database and begin their marketing efforts (spending additional time, money and effort). Meanwhile, the online bookstores have automated systems that download the book database, posting thousands of books on Amazon.com, and just wait for the author’s marketing efforts to begin to reap rewards. Every time a potential customer searches for a book, it appears as “in-stock” in various online bookstore warehouses across the country; however, most new books are actually printed on-demand. There is NO stock. LIkewise, if it says “Used — Like new” it is also probably being printed new on-demand. So, when a customer purchases a book, the online bookstore’s computer relays the order to the author’s publisher/printer. The printer prints the book (on-demand) and ships the book to the customer on behalf of the online bookstore.
Since there is little to no human effort these online companies can afford to offer huge discounts, spend extra money on commercial shipping and the additional printer service fees for individual or rush orders, not to mention the dozens of other costs of doing business to simply piggyback off someone else’s efforts. In fact, I have calculated that most online bookstores are earning roughly $0.25-1.25 per book. Some bookstores I suspect make zero profit on books, while compensating with inflated shipping prices. A nickel here and a dime there adds up to millions—so they hope!
These tactics artificially inflate book prices and drain the cash flow away from the people that created the product, which eventually reduces the cash flow for the entire community, because in turn the entrepreneurs have no cash to invest in their own community.
There are a lot of good and bad reasons to use Amazon, we just request that you make informed decisions.
Thanks for your support,
Authors and artists and small business owners everywhere
PS. We recommend the movie Wal-Mart: the High Cost of Low Price. Or at least click here to watch the movie trailer. You’ll see one small friendly bookstore be driven out of business and the owners become employees of Wal-Mart.