What small business can learn from Amazon Books

Photo credit: Tonya Garcia, MarketWatch

Amazon opened its first New York City bookstore in Columbus Circle on May 25. The interesting twist from this giant company credited with putting so many traditional bookstores (such as the closed Border’s that was located nearby) is that it uses the local online data aggregated from its e-commerce customers to determine which books to carry its store.

And while Amazon Books presents like a conventional bookstore, with shelves and reading nooks, they will carry less books than most stores — about 3,000 on average. According to Marketwatch.com, every book in stock will have reached a four-star-or-more rating on the Amazon website with the exception of certain bestsellers and new releases. Amazon devices like the Echo and Fire tablets, candles and other gift items are also offered, but the focus is on books.

Unlike traditional bookstores, all the books at Amazon are presented with their covers outward and accompanied by a placard featuring customer reviews and a bar code that can be scanned using the Amazon app for pricing and additional information. Subscribers to Amazon’s $99 per-year Prime service will receive the same, discounted Prime pricing they would see if they were shopping online; if you are not a Prime member you will have to pay the regular retail price listed on the book.

Another way it differs from other brick-and-mortar retailers is that Amazon Books doesn’t accept cash. Instead, Prime members can use the Amazon app on their smartphone to pay for purchases. Non-members can use a credit or debit card.

In an interview with CNN, Jennifer Cast, vice president of Amazon Books said that the stores are a “blend of art and science.”

CNN explains, “The books are categorized in a way that makes it clear how the retail behemoth is using its troves of data. Sections of the store include: ‘Books Kindle Readers Finish in 3 Days or Less,’ and ‘Fiction Bestsellers in New York City.’”

When CNN asked Cast whether the brick-and-mortar store is just a mechanism to convert more customers into Amazon Prime subscribers, she responded, “’Our main purpose is to help people discover great books. It’s that simple,’ she said, adding that it is ‘certainly great’ if customers want to take advantage of Prime’s discounted pricing.”

The real question is will this work? In an age where many say print is dead (although it is sometimes hard to believe when you look at the New York Times Sunday paper), will curating the bookstore offerings to reflect local Amazon customer’s buying habits and reviews really give New Yorkers what they want in a bookstore? Will non-Prime members convert to Prime to gain the discounts and payment conveniences, or will they turn to other, more egalitarian bookstore options?

Computerworld speculated about the impact of Amazon Books after the company launched its pilot store in Seattle in 2015: “In order to grow, of course, Amazon has to attract new customers — people who aren’t already using its services. In fact, the majority of all retail sales still happen in physical stores. Those real-world sales are Amazon’s growth opportunity… One way to get new customers is to get their credit card information and other personal details. Amazon can do that by offering killer deals in physical stores. Once Amazon has someone’s credit card, it will be able to remind that person later that buying more stuff is just a one-click deal now.”

While the e-commerce giant is often blamed for killing main street stores, small businesses can watch and learn from Amazon. How can we use big data about our own customers to offer them what they want? How much can we ask from them, such as a member sign-ups or fees, and what do we need to give in return in order to get the data that helps us deliver a better experience than our competition? How can think small and big like Amazon by minimizing overhead and waste through streamlining technology, inventory, and utilizing cloud technologies to facilitate subscriptions, payments and shipping? How can we use our hardware inventory to stay ahead of slow devices and warranty expirations to be more efficient — the same way Amazon is not bothering to stock books they know don’t sell or take cash which they know most of their customers don’t use?

The Columbus Circle store is Amazon’s seventh in the country, and it has plans to open six more this year, including a second New York City store on 34th Street. We will be watching carefully to see how people adopt to this new store that “blends art and science.”

Sinu is a technology managed service provider with offices in New York City and Washington DC. www.sinu.com