In January 2012, one of the sales representatives for my company, Educational Development Corp., made a call on a school that was unfamiliar with our books. As a result of the presentation, the school committed to a purchase, but a few days later the rep discovered it had placed the order with Amazon instead. This was particularly distressing to me: Selling 101 dictates that the person who makes the sale is the one who should be compensated. Recently, I heard from a longtime customer in Mill Valley, Calif., that closed its doors because it had effectively become a “showroom” for Internet retailers—people would see books in the store and then buy them online.
Amazon continues to trounce many of its bookselling rivals, in part because of deep discounting and sales tax exemptions (in most states). But, for all intents and purposes, Amazon does not make money. Amazon lost money in 2012, and in the most recent quarter it reported a virtually meaningless margin relative to its size. As business journalist Matthew Yglesias wrote in Slate’s Moneybox blog in early 2013, “Amazon, as far as I can tell, is a charitable organization being run by elements of the investment community for the benefits of consumers.”
In late February, 2012, after months of deliberation, taking a variety of factors into account, I made the difficult decision to stop selling our Kane Miller and Usborne books on Amazon. It was a bold move (or a misguided one, depending on your point of view), with little support in an industry where many were experiencing record growth through Amazon sales.
But, as I subsequently told the New York Times, I had long felt that the rapid growth of Amazon was bad news for the publishing industry. And I believed that Amazon was trying to gain control of publishing and other industries by making it impossible for other retailers to compete effectively (or, in light of recent developments and price wars, impossible for them to compete at all.) I still believe this—just as I believe in healthy competition and a level playing field, just as I feel that unbridled enthusiasm for short-term growth can often be very shortsighted.
According to figures that appeared in Salon.com, “roughly 60% of book sales—print and digital—now occur online. But buyers first discover their books online only about 17% of the time. Internet booksellers specifically, including Amazon, account for just 6% of discoveries. Where do readers learn about the titles they end up adding to the cart on Amazon? In many cases, at bookstores.”
In EDC’s case, discovery is also attributable to our direct-selling division. I believe that recommendations from friends, mentions in media, and other sources generate more sales than most people think, and that the personal touch still matters a great deal.
EDC has supplied Usborne books to bookstores, toy stores, gift shops, and museum shops for over 30 years (Kane Miller books have been a part of EDC for the last five years). In addition to our retail sales division, EDC operates a division that sells direct to consumers, as well as to schools and libraries, supports fund-raising and book fairs, and offers a matching grant program for organizations. I believe in the free market system, which gives consumers the choice of where, when, and from whom to buy, but I also strongly support the Fair Tax Amendment, which will force Amazon and other online retailers to collect state sales taxes, leveling the playing field between them and bricks-and-mortar retailers. While many states and municipalities are facing fiscal crises, it is estimated that they are losing a total of $23 billion in sales taxes each year due to Internet purchases, and these purchases are also destroying local tax-paying businesses.
It has been nearly two years since the Amazon decision and I can proudly report that our company is still alive, well, and prospering. Our direct-selling division has recorded seven consecutive months of year-over-year growth, and new sales force hires are up 25% over last year as well. And, thanks to our loyal retail customers, we recorded the largest ever sales month in the history of that division in October—and we did it without Amazon!
I believe the marketplace is large enough to accommodate many different sales channels, and I choose to lend my support to those who actually sell our products, whether it is our retail customers or our thousands of direct-sales representatives. All we need is a level playing field, and there will be a great “life after Amazon.”