The Evils of Amazon Showrooming: A Response

The following is a response to Emma Straub’s Time.com piece, “Browse at a Bookstore, Buy at Amazon: The Evil of Showrooming.”

Dear Ms. Straub,

I was surprised to learn, in your recent article on Time.com, that I am evil. While I am generally regarded as an obnoxious smartass, I had foolishly believed, until I read your article, that only my wife’s cat and my first-grade teacher, Sister Victorine, saw me as truly evil.

Admittedly, you did not single me out as the devil’s spawn; you took a broad swipe at a large and growing segment of your own customer base – those who [shudder] scan the barcodes on books with their smartphones while browsing in independent bookstores like yours. You reached the summary judgment that we lowly, “sneaky” barcode scanners are “selling out” your bookstore by using it as a showroom to browse books that we intend to purchase from the depths of Hades itself, Amazon.com.

I understand why independent booksellers and other local merchants are vexed by the problem of shoppers defecting to Amazon for lower prices; White Horse’s own Digital Futures Group studied this phenomenon in its report on mobile retail behavior. But perhaps my own buying habits will prove illuminating. When I’m not busy plotting cruelties to inflict on puppies, small children, and the elderly, I collect first editions of postmodern fiction. My geeky preferences pretty much require me to be democratic in my book buying; I buy books from Amazon about once a month, but I more frequently buy from the greatest independent bookseller on the planet, Portland’s own Powell’s City of Books.

Powell’s is often the best place to buy older first editions, and often not the best place to buy newer ones. In the latter case, I sometimes – yes, it’s true – scan the barcode. I do so partly to read reviews, but if the price is much better at Amazon, sometimes they get the sale.  (Despite rumors that evil is highly profitable, I have so far failed to cash in.) Much more often, I’m caught up in the reverie of book smells, great writing, and my own impulse control issues, and I buy the book at Powell’s despite the price difference.

It’s simple, really: Powell’s wins me over because I feel great about going there, and that’s a sure way to trump price with nearly any customer, in any context. Would I feel great about visiting your bookstore, with you glaring at me over the rims of your hipster glasses as I fumble with my smartphone? Probably not. The stance on mobile browsing that you endorse – seething hostility – is the worst one available, and it’s sure to lose you customers.

Instead, retailers need to embrace mobile browsing as an inevitable evolution in consumer behavior and plot strategies to take advantage of it. For instance, Powell’s, despite great service and selection, doesn’t make the reviews on its website easily accessible via mobile. Would doing so make me less likely to visit Amazon while in the store? Yes it would. Not every retailer can offer reviews, but every retailer can offer better customer service, which includes making the customer feel welcome to do whatever they need to do to reach a purchase decision.

The bottom line is that no business, large or small, is entitled to its customers. My own agency has to go out and make the case for ourselves against our larger competitors every day, and we will never win that case by blaming or resenting the customer. As consumer behavior evolves to include in-aisle mobile browsing, retailers must evolve too, or risk obsolescence. For booksellers, it’s not enough to love books – you also have to love readers. Even the evil ones.

Advertisements

How Netflix Killed Itself with Kindness

During the dot-com boom of the early oughts, the New Yorkermagazine’s financial columnist  JamesSurowiecki wrote a piece called “How Kozmo is Getting Killed By Its Customers.”He explained the plight of dotcom delivery service Kozmo.com, which lostmillions of dollars because its customers took advantage of its low deliveryfees to purchase one-off items, like a pint of ice cream. This caused Kosmo’sdelivery costs to outpace its revenue at rate of almost two to one. Surowieckirailed not against Kosmo’s flawed business model but against the bad behaviorof its customers; he called them “little terrors” and claimed that theirprofound sense of entitlement required a “New Economy mantra: Know when to fire your customers.”

I wonder if anyone at Netflix had occasion to readSurowiecki’s piece in the last month. Right now the once-beloved dotcom, if notexactly being killed by its customers, is at least being taken behind thewoodshed for a serious thrashing. Netflix’s former business model – a singlelow price for streaming and DVD rentals – was simply unsustainable. The companycouldn’t pay the licensing fees demanded by studios, win the rights to newstreaming content, and continue to ship DVDs at the same price it once chargedfor DVDs alone. But Netflix was in a precarious position precisely because ithad provided its customers with something that was too good to be true – anexcessively dangerous position that has sunk many more dotcoms than Kozmo. Ingame theory terms, Netflix’s predicament was the patsy position, in which thecustomer has very little incentive to continue the relationship if the branddoes anything to upset the delicate balance of cost vs. services. When Netflixdefected by raising their fees for the combined services, did their customershappily agree to it, reasoning that a price increase should be expected? Um,no. Naturally, they voted with their feet and left in droves; more than 800,000customers have given the brand the boot in the last quarter alone.
Netflix was missing a core insight than any behavioraleconomist could have given them: when pricing models in a given market – inthis case, the streaming content market – aren’t well established, you’reentirely at the mercy of your customers’ own perceptions, however irrational.Since Netflix customers had been given streaming content for absolutely nothingfor several years, their perception was that the streaming content is worth,well, absolutely nothing. If Netflix had never provided that streaming servicebefore, but instead introduced it in August for an additional six bucks amonth, they would not have lost customers, and their streaming service wouldhave taken off like gangbusters. Exact same price, vastly different priceperception. In the latter scenario, Netflix’s price increase would have beenseen as a form of cooperation, not defection – another triumph for a brandknown for delivering great service at low cost.
So what’s the lesson here? Online business models that keep prices low in order to fuel growth haveto pay attention to the end-game. Consumer perception accrues quickly to thestatus quo; that’s why it’s easy to sell taxpayers on the idea that letting atax cut expire on schedule is actually a “tax hike.” Above all, know what yourcontent is worth and charge accordingly. Believe it or not, your customers willthank you.

First frost


First frost, originally uploaded by Unsettler.

Probably *not* the first frost of the year at this spot, 5,000 feet up in the Blue Mountains in Central Oregon. Just the first one I’ve been around for. It’s a pretty area, lots of big mountain meadows, for which I am a sucker. This had all burned off an hour later, and I was fishing in shirt sleeves.