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For booksellers trading on Amazon.com, 2006 was a year of upheaval. The company rolled out a series of policy changes making life more difficult and less profitable for its Pro-Merchants.
Despite those unpopular changes, Amazon's Marketplace grew more crowded than ever.
Amazon increased its market share in the online used book market, becoming a critical venue for most
online booksellers. Individual booksellers continued to migrate to Amazon after aggregated listings
from Alibris and Abebooks were booted from Marketplace in late 2005.
Meanwhile, volume at half.com seemed unusually light, and eBay made a series of missteps that seemed to drive even more booksellers to Amazon. Although auctions of rare and collectible books remains brisk, eBay lost some rank-and-file booksellers after it jacked up its Store fees and reduced visibility of Store items in search results.
But just as Amazon's grip on the online used-book market tightened, an even bigger giant loomed over its shoulder: Google.
Throughout the year, Amazon introduced policy changes making selling more difficult and third-party listings less competitive against Amazon's own listings:
Although Amazon still provides buyer e-mail addresses within its "Sold, ship now" e-mails and order fulfillment reports, in June it announced plans to eliminate all buyer information from the order e-mails - even names and addresses. Starting in February 2007, Amazon plans to provide Windows desktop software for sellers to download order details. No word yet on how Mac users are expected to deal with the change.
Perhaps Amazon's biggest news of the year was its testing and rollout of "Fulfillment by Amazon," a program enabling booksellers to outsource customer service and shipping. The beta test began in April, with booksellers sending their books to an Amazon warehouse.
In addition to relieving sellers of their fulfillment chores, FBA makes the seller's listings more attractive to buyers, compared with regular Marketplace listings. The FBA listings have special badge indicating "Fulfilled by Amazon," and the items qualify for the Super Saver Shipping, Prime shipping, and gift wrapping options normally reserved for Amazon's new items.
However, FBA has two big downsides: One, sellers aren't able to list their books on other selling venues, and two, they have less control over the quality of customer service. Buyer feedback rates for some of the FBA sellers nosedived after Amazon responded slowly to FBA orders during the beta test. Amazon charges added fees for handling FBA orders, as well as monthly storage fees for inventories.
On the bright side, Amazon made a series of improvements to its bulk-listing tools that makes it easier for sellers to list pre-ISBN books in bulk. Also, Amazon cracked down on questionable collectible listings, requiring that listings be priced above the retail price and have some unusual quality, such as being a first edition.
As Amazon and eBay continued to make storefronts less attractive for sellers, Google offered the potential for more exposure. In late 2006, Google began distributing free software enabling sellers to upload their Amazon, eBay or Yahoo store listings to Google Base, a giant collection of product listings. The tool, called Google Base Store Connector, could result in lower customer acquisition costs for booksellers, when compared to commissions and fees at the marketplace venues. For the time being, it provides enhanced exposure (and improved sales) for eBay Stores and Marketplace sellers.
Is Google planning to build a full-fledged online marketplace? It's unclear today, but the company is certainly collecting book product listings on its Google Base site. And, considering the control Google exerts over Internet traffic, this situation bears watching no matter what you're selling. Currently, Google sends most people searching for books to Amazon, eBay, ABE and the other marketplaces. Whenever Google decides Base is ready for prime time, there's nothing to stop them from flipping a switch and sending all that search traffic to Base. And who knows, maybe Google will integrate Base listings with Google Checkout, the search giant's answer to PayPal.
As if the threat from Google wasn't big enough, Amazon is also looking over its shoulder at Barnes & Noble, which is beginning to crank up its long-dormant used marketplace, BookQuest. Previously, only sellers from Alibris and Abebooks were allowed on BookQuest, but in late 2006, B&N began signing up new sellers directly.
In another setback for Amazon, Borders Group, another big U.S. brick-and-mortar bookstore chain, announced it would develop its own online bookstore. For the past five years, visitors to Borders.com have actually been shopping on a Borders-branded version of Amazon, with revenue split between the two companies. It's unclear whether Borders will simply begin selling its own new books on its site or develop a full third-party selling system.
Meanwhile, ABE launched an initiative to lure back some of its booksellers who had closed accounts during 2006 and defected to Amazon. In an apparent attempt to boost its competitiveness against Amazon, ABE contacted former vendors and emphasized these recent improvements:
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