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.