The Economic Sociology Of The Book Business: Essay Examples
The Failure of Borders and the Rise of Amazon and the Local Bookstore
Population ecology can be defined as the position of an organization in the social and physical spaces that affect the business’ ability to act, for good or ill. In the case of traditional brick-and-mortar booksellers, the age of the Internet and global shipping of books, as well as the advent of ebooks, has led to physical bookstores becoming a thing of the past. This is increasingly true in the case of popular booksellers such as Borders and Barnes & Noble, the former going out of business in 2011 and the latter seeing flagging sales in subsequent years. Much of this is due to the change in market sociology and the way the market has reacted to the development of the Internet and ebooks – the way ebooks are priced and sold is still in flux, and so brick-and-mortar bookstores find it increasingly difficult to compete with online book retailers in this way. In this exploration of the online book industry and how it has changed both economically and sociologically, the ways in which the traditional book industry is failing, and how it can possibly thrive in the form of local bookstores, can be elucidated.
According to research, digitization of books has led to a sea change in the way literature and book consumption is navigated by its audiences and the public at large; consumers focus much more on the ease and affordability of online book readers. What’s more, customers “are increasingly conducting searches for books at retailer sites and closed systemsrather than at general search engines,” demonstrating that certain book retailers are solidifying their foothold as sources from which to get these ebooks, rather than relying on the Internet at large (Baye, De los Santos and Wildenbeest, 2013). Consumers are seen as much more sensitive to price, as the respond very strongly to offers being put on the table from well-known retailers (Smith and Brynjolfsson 555). In this respect, the book industry has been changing because its consumer base is looking to entirely different sources (the Internet) for their product, rather than at bookstores altogether.
The most important dimension of population ecology theory is density dependence, in which organization births/deaths depend on how dense organizations are within social spaces. Because of the aforementioned new developments (i.e. the change to ebooks, the consolidation of bookstores into national chains that can offer national or international coverage of book sales and distribution), brick-and-mortar booksellers are no longer necessary to sell to a specific neighborhood area. People can either buy their books for much cheaper online and have them shipped for even cheaper, or download them in an instant onto an e-reader. In this way, there is no longer a need for customers to go to the local bookstore if they want something – they can have it immediately online.
One of the fundamental ways in which the market has changed for books is the loss of localization in product selection and a greater focus on centrality and consolidation for book sales. Even if they want to have a physical copy of the book, they can order it from a website that will ship it to them within days. With these new and innovative methods of distributing books for lower overhead and printing costs, it is no surprise that the density dependence of the traditional brick and mortar book industry has dramatically lowered in recent years.
Online booksellers have oversaturated the market for booksellers, leaving many traditional bookstores redundant, another important factor leading to this current shift in market forces and emphases in the book industry (Goolsbee and Chevalier 2). These locations can only serve their specific neighborhoods, and must carry a substantial inventory which they most often do not sell the vast majority of. The incredible competition that traditional booksellers has endured with companies like Amazon, which can serve a national (or global) audience with a comparatively more controlled inventory, increases their legitimacy at the expense of traditional booksellers.
These large stores have the ability to capitalize on the homogeneity of books, and the maturity of the online book retailing industry as an established and flourishing field (De los Santos, Hortascu and Wildenbeest 2955). Furthermore, overhead is extremely low, particularly with ebooks, as additional physical copies do not have to be made in order to make more sales (i.e. the same e-copy of a book can be bought by multiple people without any additional cost to the retailer). In these ways and more, the online book retail industry has dramatically changed both consumer and retailer behavior within this model.
The issue of how to price books in this new market has also led to tremendous issues within the book market, as the lower costs inherent to online booksellers such as Amazon has led to tremendous price competition that is difficult for companies such as Barnes & Noble to keep up with (Goolsbee and Chevalier 3). The very nature of the Internet increases the number of sellers to a much higher number than in a normal market, making demand for seller extremely elastic, based on the prices of the seller and their competitors (Goolsbee and Chevalier 4). Furthermore, the Internet has created dramatically lower transaction costs for customers and retailers, which also plays into the buying habits of online retail consumers, who “want customized products, but are only willing to pay a mass-produced price for them” (Punj 799).
Because of these factors, prices are able to be much more elastic and changeable as compared to traditional bookstores, allowing them to keep up more readily with the market demands of Internet-savvy consumers. Since the market for books is so oversaturated, this kind of adjustment of demand can meant the difference between success and failure, as companies need to keep up with trends and buzz in a second to raise or lower prices to get books sold very quickly (Goolsbee and Chevalier 20). In this respect, Barnes & Noble’s outlook in terms of population ecology does not look optimistic, as their ability to successfully compete with Amazon is limited at best.
While the big bookstores are possibly seeing their last days, there is still hope for the local bookstore to find a measure of success, as it provides different economic and sociological needs than most retail bookstores. According to resource partitioning theory, certain conditions can allow social spaces to be partitioned out so that some organizations can establish a niche. In the wake of the death of traditional booksellers like Borders, and the impending failure of chains like Barnes & Noble, resource partitioning dictates the survival of niche bookstores like used, local and independent booksellers. Online stores and Barnes & Noble will compete for the ‘middle’ of the market; however, local and independent booksellers keep their overhead low by simply catering to their immediate area and providing used books for cheap.
The strength of the local bookstore is in creating an experience that is decidedly unlike the corporate homogeny of Barnes & Noble, while offering more of a personalized, social experience than Amazon can offer. Profits to these local bookstores are increased by maximizing the quality of their bookstores through initiatives such as locally published books, rarities, providing a unique local ambience, and benefiting from a personal relationship with the community. Because the local and independent bookstores are centrally located to one single location, they bank on familiarity, novelty, exclusivity and authenticity rather than mass-produced standard products. In essence, these booksellers form their own ‘specialist identity,’ which they can then leverage into a unique brand that can be found nowhere else. As a result, they can maintain their status in the community as one of the only local/independent booksellers in town. They are not trying to compete with Amazon, as they sell a different type of book with a different experience attached to it. In this way, resource partitioning allows them to succeed by not shooting for the middle and focusing on a niche market they can monopolize.
In both local bookstores and large online retailers, one primary focus is on branding – the need for the company itself to establish a strong name for itself. While local bookstores can rely on their niche appeal and local character for their brand, online entities like Amazon and Barnes & Noble are able to successfully demonstrate their sense of quality through their strength of brand, which customers respond to (Smith and Brynjolfsson 556). However, unlike Amazon, which maintains a strong foothold on the online book retailer experience, Barnes & Noble suffers strongly from attempting to copy Amazonin a poorly-timed manner. For example, in the case of the Nook e-book reader, they waited until after Amazon had successfully cornered the e-reader market before releasing their own competition which they could not successfully sell. Furthermore, issues with Barnes & Noble’s poor customer service, higher prices compared to Amazon’s, and less exclusive content, all leave the largest remaining traditional book retailer lagging behind when it comes to making their online and e-book services competitive (Goolsbee and Chevalier 20). These factors and more all play into the new retail book market’s emphasis on visibility and branding – if a company or store’s reputation is appropriately established, it is possible for them to stand out and fit in within this new online retail market.
In conclusion, the changing nature of the book market, and its gradual shift toward online, on-demand electronic books (which can be adjusted for price to compensate for a shifting market and other factors) has altered the way people consume books and buy them. Instead of going to retail booksellers, people are now shifting toward the convenience and competitive pricing of e-books or online book retailers, which have more sizeable selections and the ability to quickly ship any book one wants to a customer. While this has spelled doom for companies such as Borders already, and companies like Barnes & Noble may soon follow, there is still a sense of optimism to be found in the local and/or used bookstore, as they form specialist identities and offer a different experience than Amazon and other e-book retailers. In this way, the advent of the Internet has ironically placed added value onto the local buying experience, as it allows them to build up a niche market and audience built more on individual experiences and consumer loyalty than large book retailers can hope to offer.
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Brand still matters." The Journal of Industrial Economics 49.4 (2001): 541-558.