Everyone, we need to talk about this. I was eating breakfast reading yesterday's New York Times as usual when I came across this article and realized what it means.
Amazon continues to lose money or make almost no profit, yet investors continue to support it because they believe that eventually it will "pay off" in a higher stock price.
So, while my employees and I get ready for another day of work making our town as great as it can be, writing checks to the local writers and artists whose works we carry, and for our store to be a bastion of incredible books, independent thought, and cool stuff, people here and all over the country are pouring money into a hole, either buying Amazon stock or shopping at Amazon, believing that the world will be a better place when they've finally managed to put businesses like mine under. Some people aren't aware that this is what they believe or that this is what they are doing. That's why I feel compelled to talk about this.
Listen to what they say:
"Wall Street has always been about promises more than results, and Amazon is always on the verge of converting its overwhelming online presence into buckets of cash." Strange. At BookPeople, my creditors and vendors need actual cash, not promises. Kind of like the way my customers need actual people to help them find what they want, not algorithms.
"Investors took some time to buy into this idea [that subsidizing higher discounts and free shipping is the 'only reliable way to create lasting value for shareholders']...'Wall Street gets in a kerfuffle when we lower product prices and invest heavily in the future,'" said Jeff Bezos.
What does he mean, "lasting value" and "invest heavily in the future?" He means destroying the competition. The only way they are going to eventually make buckets of cash is by raising their prices when there is nowhere else for people to shop. It's not safe to raise them yet, after all. Borders is barely in its grave and B&N is still kicking, not to mention the hundreds of lively independent stores with fiercely loyal customers. Keep feeding Amazon, and eventually everyone else - that is, me and BookPeople and all business like mine - will starve. In a fair marketplace, Amazon would be forced to survive on its own merits, without investor support, just like all Main Street businesses have to do.
"Who's going to undercut Amazon? They're only making half a cent on every dollar. Who can run a business at less profit?" I certainly can't and neither can any other independent business that makes this town and your town the great place that it is. This kind of news can be very discouraging. But just yesterday a customer told me when pre-ordering a book, "I could preorder this on Amazon but I'd rather get it from you." She looked at me a little strangely when I got a little teary-eyed when I thanked her, but that was just yesterday. If that transaction had occurred this morning, she'd be in danger of me leaping over the counter to give her a hug.