By Priyal Maheshwari and Sumantra Banerjee (New York University)
Independent bookstores are small businesses owned and operated by families or other small groups of associates. Amazon’s growth and the advent of ebooks have further strained these stores as they faced thin margins within the book industry; now, they must compete with online platforms and ebooks. Even though the number of bookstores have risen in the past few years, their revenue has shown a steady annual decline, with bookstore revenue expected to amount to only $10 billion in 2020. This year, burdened with the global pandemic, countless bookstores have closed for good, while many others are barely staying alive. Amidst this, startups such as Bookshop and established associations like the American Bookstore Association are helping independent bookstores to survive not only this pandemic, but in the fight against Amazon.
Table of Contents:
Section 1 - Story Time: History of Independent Bookstores
Independent bookstores ruled the book industry during most of the 20th century, but they started facing competition from bigger book chains in the late 1970s.
The book chains soon expanded exponentially, and with Amazon, they disrupted the entire independent bookstore business.
Section 2 - Odd Plot Twists: Amazon’s Kindle and Increase in Independent Bookstores
Kindle was launched in 2007, and soon ebooks took over the printed book markets.
Ebooks generated $3.2 in revenue in 2010, putting a dent in sales for larger book chains.
Independent bookstores expanded significantly, yet, still could not reclaim the market share taken by Amazon and ebooks.
Section 3 - Unexpected Villain: Coronavirus Pandemic
Amazon’s market share grew rapidly as in-person retailers were shut down all around the world.
A startup launched in 2019 called Bookshop gained popularity during the lockdown and helped in saving many independent bookstores.
Some individual bookstores are adapting to challenges presented by the pandemic by strengthening their online presence, introducing curbside selling, etc.
Section 4 - The Story Isn’t Over Yet
ABA has launched a campaign called BoxedOut on Prime Day to increase awareness in consumers.
Bookstores that survive the pandemic may see a rise in customer traffic.
Story Time: History of Independent Bookstores
How well do you remember independent bookstores? Many of us have probably not been to these small, cosy, typically family-owned bookstores in awhile. For the most part of the 20th century, also referred to as the “bibliographic golden age” in the book industry, all bookstores were independently owned. However, just like any other “golden era,” this age came to an end as bookstores met new challenges. Starting in the 1960’s mall-based bookstores, including Barnes & Noble and Waldenbooks, started to flourish and quickly expanded into chains.
With big chains growing exponentially, local bookstores such as Kroch’s and Breatano’s (1995, Chicago), Gotham Book Mart (2006, New York City), Printer’s Inc. Bookstore (2001, Palo Alto) and numerous famous and beloved local bookstores struggled to survive and inevitably closed. Those independent bookstores who survived, suffered yet another hit when e-commerce platforms like Amazon entered the market in 1995. With the option of buying online rather than in-store, the number of independent bookstores fell 40% in only 5 years. But there was another plot twist to this story: Amazon’s Kindle launch in 2007.
Odd Plot Twists: Amazon’s Kindle and Increase in Independent Bookstores
The online era of the book industry began with Amazon. With its strength of e-commerce, the book market was heavily shaken. After Kindle’s release, ebooks captured $3.2 billion in 2010 and are estimated to take up $16.7 billion in 2020 (Statista). Amazon dominates the ebook market, currently boasting a massive 83% market share (Publishdrive, 2019).
Despite Amazon and the advent of ebooks disrupting the market, 115 new bookstores opened in 2007 (American Bookseller Association, 2007). Moreover, from 2009 to 2020, bookstore openings have increased by 40% to 2,321 stores, according to the American Bookseller Association (Fig. 1). However, opening new bookstores did not help in winning back the market share acquired by Amazon (NPR, 2018). As shown in the graph below (Fig. 2), their revenue has been consistently decreasing over the last few years, with a slight uptick in 2016. Furthermore, bookstore annual sales dropped by 5.7% from $10.6 billion in 2018 to $10 billion in 2019, according to the U.S. Census Bureau (Publishersweekly, 2020).
Fig. 1, Number of Independent Bookstores from 2009 to 2017, Brandon Gallie
Fig. 2, Annual revenue of bookstores from 2010 to 2017, Brandon Gallie
However, this low revenue is a result of the independent bookstore pricing model. As Amazon sells at very low prices, bookstores have to lower their prices to remain competitive, making their margins even thinner. This led several bookstores to join forces with Amazon and sell on their platform, because as the old saying goes: if you can’t beat the competition, join ‘em.
Due to the sudden boom of Amazon, two things happened which led to the unexpected increase in the number of bookstores. First, readers perceived independent bookstores to have more consumer value than both Amazon and bigger chains combined, as they were considered more authentic. Secondly, Amazon started selling books at a very cheap price, affecting the bigger bookstore chains who offered books at a premium. In 2016, Barnes and Noble reported a loss of $14.4 million, while their sales fell by 6.6% and have been declining ever since (Forbes, 2018). Barnes and Noble also had to close 90 of its 720 locations due to this weakening in sales (Axios, 2018).
Unexpected Villain: Coronavirus Pandemic
With the arrival of the pandemic, the world itself seemed like a dystopian novel, with countless industries being negatively impacted. Many independent bookstores had to close their doors, and with customers unable or unwilling to enter public buildings, fears of Amazon strengthening their domination of the market grew. During the pandemic, 35 bookstores belonging to the American Booksellers Association (ABA) shut down for good, and 20% of ABA bookstores are also expected to close. Furthermore, sales turnover from brick and mortar bookstores declined by 31% from January to July 2020 (Deccan Herald, 2020). Some bookstores are even seeing year-over-year sales declines as high as 80% (KCRW, 2020).
Nevertheless, online efforts have helped keep bookstores alive. One such effort is Bookshop.org, founded by Andy Hunter this January, which provides an online delivery platform for bookstores to sell their books. Moreover, Bookshop also offers 10% of sales to publications, more than doubling Amazon’s offer. The New York Times, Vox, and Conde Nast have all become affiliates of Bookshop (Times, 2020), which is expected to surpass $40 million in sales by the end of the year (New York Times, 2020).
Furthermore, individual bookstores and associations are implementing reimagined solutions. Avoid the Day, a local bookstore in Queens, requires that appointments be scheduled for 30 minutes for visitors up to a group of four as well as curbside book pickup (Pix 11, 2020). In Chicago, Semicolon Bookstore and Gallery utilized Instagram posts to grow its follower base from 3,500 pre-pandemic to 67,000, with orders now coming from various parts of the world (ABC News, 2020).
The Story Isn’t Finished Yet
The longer bookstores remain closed, the more time Amazon’s advantage over independent bookstores and ability to expand their market share continues. Amidst this, ABA has launched a campaign called “Boxed Out” on Amazon’s “Prime Day.” This campaign was launched to alert consumers about the threat Amazon poses to bookstores and consumer privacy (See Fig 3, Deccan Herald, 2020). On top of that, Bookshop and larger independent bookstores have started to strengthen their online presence to fight back against the increasingly strong threat that Amazon poses. Bookshop has currently raised more than $7 million in donations to bookstores to keep them in business (Bookshop).
Fig. 3, Outside of a bookstore that comes under ABA, American Bookseller Association
While Amazon offers consumers convenient delivery services and low prices, it cannot replace the community bonding experiences independent bookstores offer. Bookstores must keep utilizing reimagined marketing strategies, such as online events and book fairs, to continue providing value for their communities. Although the pandemic shows no signs of slowing down, whichever bookstores continue operating post-COVID may see increased traffic as people seek to congregate and meet others with common interests.