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Amazon flexes its muscles in the war for brand hegemony

February 23, 2012
Amazon Kindle

Their life in your hands - how will consumers react to the latest moves by Amazon to squeeze independent publishers in the USA?

Regular readers of this blog will be familiar with my views on inherent truth and the importance of brand emotions. Cue recent events in the US where Amazon has pulled access to 4,000 e-books in a dispute with independent publishers. In attempting to assert price and brand dominance by squeezing prices charged to them by independents, Amazon has placed commercial aims over consumer sensibilities. Independent publishers are angry and, it seems, readers too. But, in the words of Oliver Hardy, Amazonhave a care“…

What is happening here? It seems that Amazon is “under pressure from Wall Street to improve its anemic margins“. The online behemoth it appears is trying to squeeze independent publishing suppliers in order to crush a few more drops of profit out of a business notorious for working on slender margins anyway. They failed to get their way with Macmillan and are now trying it on a “weaker” group – the independents.

In some ways, this is the logical outcome of the nonsense of “selling via the trade” – where customer price points rule everything at the expense of product value. Amazon, as a retailer and a publisher in this model, seeks to enhance its offering by being able to sell everything cheaper. But what this means in reality is using a practical monopoly – however rightly earned – to dictate the value proposition of its suppliers.

But this is not like a supermarket. Publisher suppliers are not farmers delivering commodities but investors in a whole array of intellectual and production assets; many of them subtle but not without value. Many independent publishers do this out of love – and rarely out of a demand for riches.

For riches, where they exist, are slender indeed. Independent publisher brands are, as often as not, a badge of honour for those who create them – willing to publish when every business bone in their body advises them that another route would have been better for sanity.

In taking on the poorer independents, Amazon is nipping the buds of fledgling companies and stunting their growth. It is curtailing beauty and slaughtering it on the altar of commerce. This is bad for culture and bad for the future of publishing as all it will do is push us ever more to a cost-based culture where, to paraphrase Oscar Wilde, we know the price of everything and the value of nothing.

Publishing brands will go out of the window and instead consumers will fix on supplier interface – such as the Kindle. Which is, of course, how a large brand like Amazon would like it to be.

Now, some of my readers will say they don’t care about these issues – they just want the cheapest price and Amazon is where they’ll get it. But in pursuing the price buyer Amazon too will corrode their own business model and will be doomed to a world of tiny margins on book sales (just like “trade” publishers themselves). Either that or, once hegemony is achieved, prices will start to creep up. Consumer prices, mind…

But there’s something about books which makes them different to most consumer goods: books are an intellectual pursuit either in the development of knowledge or in the pursuit of relaxation. Either way, books take time to read and digest and, therefore, they have enormous brand potential and, already, have a greater emotional ties with consumers than a bag of peas or an oven-ready chicken.

More, consumers are used to the bogus “concerned” strategies of big retailers (e.g. UK supermarket giant Tesco’s spurious and deeply cynical “Great Price Drop”  and their equally ludicrous, laughable and incredible “every little helps“) because they know that there is always a claw back (anyone checked Tesco’s prices since they reported lower profits – yep, they’ve gone up again).

So Amazon’s actions, despite being one between a company and its suppliers, have the enormous brand-damaging potential as poisoned Perrier water or Coke’s odious and grotesque Dasani experiment. Already, some US readers of A Brand Day Out – consumers I might add – have contacted me about this issue and are taking their business elsewhere; preferring to shop local, not global. There is no doubt that “bully boy tactics”, when brought out into the open, damage brand empathy.

How seriously will Amazon respond to this? Difficult to say but when they messed up over withdrawing “illegal” copies of 1984 from customers’ Kindle devices even Jeff Bezoz was compelled to apologise – and in no uncertain terms. Apologies are great when handled correctly as in this case but I wonder about the long term affect that Amazon’s “corporate” and less funky approach will have on their brand perception.

Meddle with books and you interfere with something much deeper: culture, values, decency. The cosy world of book publishing is in many ways not viewed as commercial but as a mixture of culture and quaint – of committed “custodians” of the language. One wonders, therefore, how this story will scale out for Amazon.

As someone who believes in brand truth, but who yet fully understands the driving passions of publishers themselves, I consider Amazon’s actions to be damaging not only to their own brand but to the brands of their suppliers – especially those of the smaller independent publishers. However, it’s at times like this that I am minded to think of the words of Arthur “Bomber” Harris in describing German tactics in the Second World War:

The Nazis entered this war under the rather childish delusion that they were going to bomb everyone else, and nobody was going to bomb them. At Rotterdam, London, Warsaw, and half a dozen other places, they put their rather naive theory into operation. They sowed the wind, and now they are going to reap the whirlwind.

 Now, to be absolutely clear, Amazon is in no way a reincarnation of the monstrous Third Reich, but there is something in Harris’ words which every brand owner needs to consider extremely seriously. Meddle with the elements of brands of sensitivity and – in these days of social media – a whirlwind will not be far behind. A PR whirlwind which could soon become a fire storm engulfing the business in the flames of its own destruction.

 

Image of an older Kindle courtesy of the Amazon website

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