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Falling Bookstore Sales And Amazon

The census bureau just reported their preliminary number for June bookstore sales, and they are down. They aren't just down for June, they've been down, on a year-to-year comparison every month since last September! I keep a running tally of bookstore sales reported by the census bureau on my oft-updated page about industry book sales:

http://www.fonerbooks.com/booksale.htm


All this is occurring while there's a new Harry Potter book out with record sales and several large publishers have reported sales growth. So what's going on?

The answer, I believe, lies in the small print of the census bureau reports, and where they categorize Amazon. Amazon isn't just the world's largest bookstore, they are either the #2 or #3 book retailer in the US behind Barnes and Noble. The reason I can't tell for sure if they are still behind Borders is that neither retailer breaks out their product mix to the extent where I can separate book sales from CD and DVD sales. And, of course, the comparison is in dollar amounts. If the average book sold by Amazon is appreciably cheaper than the average book sold by Borders, than Amazon is likely selling more books, even ignoring the influence of their Marketplace sales.

But back to the Census Bureau. Their category for bookstores specifically excludes:

"Retailing books via electronic home shopping, mail-order, or direct sale--are classified in Subsector 454, Nonstore Retailers"

The Nonstore Retailers segment has sales nearly 20 times as high the bookstore segment, I should do some forensics to see how it's grown. In any case, Amazon's Media sales have been growing in the double digit percentages, in the mid-teens, for the past five years. It's entirely possible that what the census bureau numbers are really telling us is that brick-and-mortar bookstore sales, despite price inflation, have peaked and are falling, but the publishing industry is still growing, slowly, by the amount of growth shown by Amazon. I'm going to drop them (the Census) a line and make sure I'm interpreting their categories correctly.

2 comments:

Jazon Dion Fletcher said...

I love going in my local bookstores and buy a lot of books but I do buy way more online and from Amazon because of the simple fact that 9 times out of 10 Amazon has what you want in stock and ready to ship overnight or in less than 2-3 working days.

Whereas with someone like Barnes and Noble even with a huge selection cannot possibly stock as many titles as Amazon under one roof. So I tend to make most of my random / impulse / easy to find buys at my local bookstore and make all my hard to find / obscure/ self published / smaller press purchases from amazon.

The people who say the industry is in trouble are simply simple minded. People have more options that ever and lots of companies large and small still make money. Some make billions, some make enough only to keep the lights.

In my opinion the main problem is the mentality that growth be constantly heading uphill. Common sense will tell anyone that there is a ceiling in any business or hobby in which you get to the point where thats it, you've peaked.Current models, styles, trends, authors, publishers, etc. have hit that ceiling and it's not the publishing industry but music, movies, real estate, blogs, podcasts, etc.

We live in a saturated society that is in a transition faze that could last 10-20 years before a lot of the current models adapt to the new marketplace and understand how to use the new technologies and business models to their full advantage and even then people will be screaming that doom is on the horizon.

The money making marketplace of our society is a lot like a religion, it is filled with true believers and it is filled with lots of people that forever fortune telling about the end it all crash of crashes that is coming.

The best thing to do if your a artist of any kind be it with a paint brush, pen, laptop, or instrument and you want to make some money in the long run is just keep creating until you create something that not only you like, but other people like as well....... and are willing to pay for.

Morris Rosenthal said...

Jazon,

You make some good points, and you're dead right that no business can show infinite growth. The problem is not one of the number of books sold or the availability of new choices for shoppers, it's a problem for people trying to raise money for new bookstores or chains.

From an investor's standpoint, investing in a business with shrinking sales and tough competition is rarely an attractive investment.

At some point, the shrinkage in independent outlets may lead to a less selection, at least in terms of publishers, but it hasn't happened yet as the Internet has opened new doors.

Morris