News about e-books are all the rage, as most of you are well aware. You only have to read this blog to know Apple’s iPad is the talk of the (business) town at the moment.
What’s also interesting is where this leaves everybody else, especially light of this news:
The immediate reaction to this is that Macmillan forced Amazon to raise prices because a powerful competitor entered the market. Amazon’s Kindle once rode the top of the e-book ship, but other competitors have been drifting in the market and now the biggest, baddest brand of them all has arrived.
Here’s the funny thing: Amazon could have staved off this market shift to come with a brand that spoke emotionally to the marketplace. While Amazon’s Kindle is the market leader with nearly 60% of the market, the introduction of competitors with stronger brands threatens to shrink that share significantly over the next few years.
That’s not even counting the other forces they’re now facing, such as publishers wanting more buck for their bang because they aren’t just tied down to one distribution channel anymore.
Yet, I can’t help but think the reason Amazon “capitulated” (Amazon’s own words) is that, in having no leverage, they didn’t even have brand leverage. Think of it this way: A manufacturer of shoelaces has many options of sneaker manufacturers it supplies. However, do you think one would force Nike to “capitulate” on price? The power would be in the hands of the one with the powerful brand.
Amazon lost its brand focus when it became a simple portal for retail shopping of all kinds and its brand on books began to fade away. From a simple business point of view, the portal idea has brought billions to the company and has made Amazon the world’s largest e-retailer.
However, more shopping portals are opening up and taking share. Even Procter & Gamble has launched a new retail site called ecost.com, and there are many more to come. That means market pressure – and market share loss – is sure to strengthen for Amazon. The lack of a strong brand means it no longer can bend the market to its will. Amazon is the bended now.