Not just Canadian booksellers should fear Amazon threat

If you ran a Canadian bookstore, you would likely oppose the idea of a big American online retailer opening up a distribution centre in this country.If you did not run a bookstore, if you were just an ordinary Canadian, you might take the opposite view.

After all, as consumers, we Canadians are like those everywhere else. We want stuff cheap and we want stuff fast.

The U.S. giant Amazon.com, which has earned a reputation for delivering what consumers want, has been making headlines in recent days.

The company is lobbying the federal government to allow it to build its own distribution centre in Canada, a move that runs against the grain of our country's cultural protectionist policies.

The Canadian Booksellers Association, which represents mostly small and independently owned bookstores, has vocally opposed an Amazon incursion. Small Canadian publishers and cultural nationalists, too, have felt threatened.

And with good reason. There is no denying that a couple of generations of protectionist policies have helped build a viable publishing industry, and all bets might be off if the American behemoth beat down the door.

The same issue is facing the broadcast industry. The Harperites are also examining the advisability of letting the U.S. cable giant Comcast gets its claws into Shaw Cable, which itself wants to buy Winnipeg's dying giant Canwest Global.

But back to bookselling. Figures published Feb. 27 by the New York Times show just how large the Amazon threat has grown.

Online retailers, of which Amazon is the largest, accounted last year for 20 per cent of American book sales. This from essentially nothing in a decade. Let's assume that figures in Canada are roughly the same.

Large chains -- Borders and Barnes & Noble in the U.S., Indigo-Chapters in Canada -- captured 27 per cent of sales.

The category with the largest market share is labelled "other." This would comprise, one supposes, retailers like Walmart, Costco, Superstore and even airport shops.

So-called independent bookstores accounted for five per cent of the total.

Looking down the road, it is reasonable to assume that e-commerce is only going to grow. Amazon, by the way, says that Canada is the only country in which it does business without its own distribution centre.

Today, if you order a book from Amazon.ca, it is shipped from a warehouse in Mississauga operated by Canada Post. If it's a Canadian title, it will be sourced from a Canadian publisher, or at least the Canadian arm of a big multinational.

If it's a non-Canadian title, Amazon still attempts to acquire the book from a Canadian distributor. In fact, some industry types say privately Amazon is a better corporate citizen than Indigo-Chapters, which has been known to source its American titles from a big distributor in Tennessee.

On the other hand, Amazon is also known for demanding high wholesale discounts from small publishers and for paying them slowly.

The company has taken flack from newspaper publishers with the terms it demands for distributing online versions via the Kindle e-reader -- as high as 70 per cent of the subscription rate.

E-readers are in some ways the elephant in the room. Booksellers may face a bigger long-term threat from e-books than from e-commerce sites -- which are essentially the modern version of catalogue shopping.

Jason Epstein, one of the grand old men of U.S. publishing, has a fascinating article in the March 11 New York Review of Books on the "revolutionary future" of publishing.

The physical book, he says, will always have a place. But he himself has invested in a print-on-demand machine that will allow books to be produced from a digital file, one copy at a time, without the need for expensive shipping and warehousing.

Amazon can see this future -- which, probably, is still decades away -- as well as anyone. Its business plan calls for expansion beyond books and CDs, into physical goods of all kinds. It wants to kill in every retail category.

It won't be long before booksellers aren't the only ones feeling threatened.

morley.walker@freepress.mb.ca

Republished from the Winnipeg Free Press print edition March 13, 2010 C6