I like shopping in book stores. There’s something about wandering the aisles and waiting for a book to jump out at you that I can’t get shopping online. Unfortunately, whenever I compare the price of a book Amazon has every in-person store beat, often pricing their offerings 30%-50% lower (or around $10/book in my experience) even when I go to a large chain like Barnes and Noble.
How is it that Amazon is able to afford to offer the books so much cheaper and also support all of the infrastructure involved in shipping it to my doorstep compared with in-person stores?
Not in Germany.
I don’t know the full details, but part of it:
- In the store you can walk between the books. This takes loads of room. In the Amazon warehouse, this can be veeery cramped.
- The land value of the store is probably mich higher than the Amazon warehouse land.
- They sell much more, so all costs can be shared across a million orders, instead of across just 10 books sold.
don’t forget taxes evasions
Also there are times Amazon prints on demand. They don’t keep anything in stock taking up space, instead printing it as soon as it’s ordered allowing them to save space
At a guess:
- Volume discount: Amazon will buy a hell of a lot more books than a single mom and pop store
- Retail rule of thirds: (very loosely) a third of the price you it goes to manufacturing, a third to distribution/logistics, and a third to the retailer. Amazon vertically integrates the second two.
- Online only: website capacity costs a lot less than running a brick and mortar store
- Margin: amazon will make less per book but sells more books because people prefer to buy them cheaper. There’s a separate discussion here about anti competitive practices (eg undercutting competition to put them out of business, then raising prices later) but that is a whole other debate
