Amazon plot thickens in Book Depository buyout
Published 06/07/2011 | 08:00
Who'd be a bookseller in this day and age? The Kindle enables us to shun print, ink and binding in favour of downloading thousands of titles onto a handheld gizmo.
Books are available to buy at such low prices online they make Waterstone's staple 'three for the price of two' offer look somewhat dog-eared.
Falling sales as Waterstone's prompted its former owner HMV to off-load it to Russian billionaire Alexander Mamut for £53m. He appointed James Daunt to run the shops. Daunt has said a successful bookshop needs three elements: "really good books", a "really nice environment" and "really good people".
It sounds simple, but the business of books is not quite so cuddly. The latest plot twist is American giant Amazon's purchase of British rival The Book Depository for an undisclosed sum. Its Irish-born founder Andrew Crawford vows the acquisition will not affect the company's independence.
Now there's some concern that the takeover could increase Amazon's stranglehold over the online books trade in the UK. OFT is expected to announce an investigation.
The Book Depository will have made an attractive proposition to Amazon, as it had operating profit of £2.3m on sales of £69m in the year to June 2010, and those profit figures are thought to have gotten even better. It has also located much of its business in Egypt where operating costs are cheaper.
It wants to sell "less of more" rather than "more of less," deliberately avoiding front-loading with bestsellers in order to attract custom.
With a father who ran an international trading business from Africa, founder and former chief executive Mr Crawford has always shown independence of thought. After leaving security company Group 4 following a two-year traineeship, he worked for Book Pages, a small bookseller which was flogging books over the internet when the idea of doing so was in its infancy. It was eventually sold to Amazon.
Crawford left, and started up The Book Depository a few years later in 2004, with a desire to make all book titles available to all. He worked on the company's supply chain so that it could send books anywhere for free and aimed for the small business holy grail of 'the long tail' - selling high numbers of those low-demand products at the tail-end of a demand curve.
Now Amazon has pulled that long tail, with Mr Crawford's baby being bought by the big company for which he once worked.
It's been a circular kind of plot, but it remains to be seen whether this corporate marriage will be a happy one.