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What did I tell you?

Earlier this morning, I put up an article titled “Starting a discussion on the future of independent publishing“.  In it, I said (bold print is my emphasis):

In the sense that indie authors provide content that aggregators like Amazon can use to drive traffic to their channels, we have a certain amount of “job security” – but that will last only as long as the traffic we bring to those channels justifies their investment in a hospitable environment for us. I submit that if Amazon, or any other major sales “channel”, decides that it can derive a more profitable return on investment by reallocating what it spends on us to something or someone else, it will do so in a skinny minute.

It was an eerily prophetic statement.  Bloomberg reports:  “Amazon Suppliers Panic Amid Purge Aimed at Boosting Profits“.

Amazon.com Inc. has abruptly stopped buying products from many of its wholesalers, sowing panic.

The company is encouraging vendors to instead sell directly to consumers on its marketplace. Amazon makes more money that way by offloading the cost of purchasing, storing and shipping products. Meanwhile, Amazon can charge suppliers for these services and take a commission on each transaction, which is much less risky than buying goods outright.

Amazon is determined to boost profits at the core e-commerce business, even if that means disrupting relationships with longtime vendors. Because many suppliers source products from manufacturers months in advance, they’ll have to quickly shift their sales tactics if the expected Amazon orders don’t come in.

“If you’re heavily reliant on Amazon, which a lot of these vendors are, you’re in a lot of trouble,” said Dan Brownsher, Chief Executive Officer of Channel Key, a Las Vegas e-commerce consulting business with more than 50 clients that sell more than $100 million of goods on Amazon annually. “If this goes on, it can put people out of business.”

. . .

The abrupt cancellation of orders prompted panic this week at the ShopTalk retail conference that drew more than 8,000 retailers, brands and consultants to Las Vegas.

There’s much more at the link.  It’s worth reading the entire article.

This development isn’t about indie authors as such:  but it illustrates just how quickly Amazon can cut the ground out from under a business’s feet – and with little or no warning.  We, as indie authors, are just as vulnerable to any change in the conditions under which we do business.  We must, repeat, MUST remain alert to such changes, and plan ahead for what we might do to address them.

There are times when I don’t like to be proved right.  This is one of them.  It’s going to hurt a lot of suppliers, particularly smaller businesses – and, by extension, those who work for them.  Spare a thought for them today.

12 Comments
  1. Alan #

    As an indie author, what does Amazon do for you? Which of those things does it actually have to do, to get a percentage of your transaction? Everything else, you need to have a plan B for.
    Independent publishing, as a part of society, needs to be robust.

    March 8, 2019
  2. Draven #

    … which is why I think Baen should set up a digital-only imprint for second-stringers that isn’t beholden to Simon and Schuster’s publishing schedule either.

    March 8, 2019
  3. I like Draft2Digital for ebooks in all the various formula. They also offer the option of a print book version – so there are other alternatives to Amazon out there.

    March 8, 2019
    • Mary #

      I like them, too.

      March 10, 2019
  4. One upon a time I had some product (including book) review websites. I made $10-12K/month from a combination of Google adsense advertising and Amazon affiliate links. The best part was that after I did the initial work, almost all the site maintenance was automated.

    The sites weren’t immensely popular, no well-known, but they were un-obscure enough to get mentions as places to get your book reviewed in how-to style books for the new indie author community.

    Then, within the space of a few months, Google decided to stop driving as much traffic my way in one of their search rules updates which pretty much eliminated anything with amazon product info and then Amazon decided to completely change their APIs and the rules around them in a non-backwards compatible way so that after I redid all the initial work to get everything linked up again, there was still no way for me to do things (legally) exactly how I’d had them setup before.

    So that side business basically died in the space of those few months. That also taught me not to rely as much on the way another company did something essential to your business, because they were bound to change it and not always in such a way that you could survive. Amazon and Google were both making more money from my sites than I was, and I’m sure others were in a similar boat, but that didn’t deter them from grand changes which hacked and slashed away at the rest of us.

    March 8, 2019
    • Dorothy Grant #

      Sorry, I didn’t realize you’d reposted when I found this in the spam bucket and kicked it out!

      March 9, 2019
  5. (Sorry if this comes across as a duplicate, but the first comment attempt doesn’t seem to have taken)

    One upon a time I had some product (including book) review websites. I made $10-12K/month from a combination of Google adsense advertising and Amazon affiliate links. The best part was that after I did the initial work, almost all the site maintenance was automated.

    The sites weren’t immensely popular, no well-known, but they were un-obscure enough to get mentions as places to get your book reviewed in how-to style books for the new indie author community.

    Then, within the space of a few months, Google decided to stop driving as much traffic my way in one of their search rules updates which pretty much eliminated anything with amazon product info and then Amazon decided to completely change their APIs and the rules around them in a non-backwards compatible way so that after I redid all the initial work to get everything linked up again, there was still no way for me to do things (legally) exactly how I’d had them setup before.

    So that side business basically died in the space of those few months. That also taught me not to rely as much on the way another company did something essential to your business, because they were bound to change it and not always in such a way that you could survive. Amazon and Google were both making more money from my sites than I was, and I’m sure others were in a similar boat, but that didn’t deter them from grand changes which hacked and slashed away at the rest of us.

    March 8, 2019
    • Draven #

      yeah, i freelanced for $majortechsite and they screwed themselves over by over-selling ad space, thus shooting themselves in the foot,.

      March 8, 2019
  6. c4c, because whooo.

    March 9, 2019
  7. John R. Ellis #

    https://www.bloomberg.com/news/articles/2019-03-09/fighting-fakes-was-a-big-reason-behind-amazon-s-big-vendor-purge Another article directly related to the linked one.

    March 10, 2019
  8. snelson134 #

    And while it may not be the major reason for the change, the fact that damaging small businesses will damage the portion of the economy providing most of the improving job numbers for Trump ahead of the 2020 elections wasn’t exactly an argument AGAINST doing it.

    You may not be interested in politics, but politics will definitely be impacting what you do and how you are allowed to do it.

    March 11, 2019

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