Emergency “Amazon Bookselling State Of The Union Address”

The current state of Amazon bookselling: Coronavirus, and every reason now is a good (and bad) time to be selling books on Amazon

In this article:

1. Why Amazon bookselling is a bad business to be in now.
2. Why Amazon bookselling is a good business to be in now.
3. What the Coronavirus means for booksellers in the near and long term.
4. Why Amazon sellers are positioned perfectly for this new world.
5. A key reason book sales are about to go way up.
6. Lots more…

Everyone wants to know: What does Coronavirus mean for Amazon sellers?

It’s a weird time, and I’m about to cover Amazon bookselling from every angle: The good and the bad.

Is bookselling recession-proof? Assessing the strength of Amazon selling over the next 6 to 24 months

Here’s what I’m not going to do: Talk about “What will happen to our revenue over the next 30 days.” (at least not very much).

It’s key to keep in mind that (unless you’re running a grocery store) – nearly every business is down this month. And possibly next.

So the question is not “are book sales up?” They may or may not be, but that’s not the question.

It’s possible we are entering a recession, and the next 6 to 24 months is what matters, not the next 3 weeks.

The more intelligent question to ask is: “Is selling books on Amazon more insulated from a recession than other businesses?”

Spoiler alert: In much of what follows, I will make the case that the answer is “yes”: Amazon sellers are much better positioned than the vast majority of businesses to actually thrive in a (possible) recession.

Sidebar #1: A note on resilience

Any business needs to be able to weather some temporary turbulence. If it can’t, you’re not in the correct mindset to run a real business.

You simply have to be buffered against a little disruption. If you can’t handle uncertainty, the best options are a 9 to 5 job (or at least that was the case until this month), or bank robbery. Everything else with money is inconsistent.

Sidebar #2: The Coronavirus is very temporary

I’m not going to get into macroeconomic forecasting or some weird lecture about virology. I’m not an expert on either, and even the experts give so much conflicting advice that the only conclusion is that no one knows anything.

But here’s some facts we can agree on:

1. Viruses come and go.
2. The worst-hit countries are past the worst of it, and are now putting this behind them.

Cases in China and Italy have peaked, and they are coming out of this.

It’s hard to remember there will be an “after” when you’re in the middle of something. It’s also hard to remember that it will likely be sooner rather than later. But keep in mind: This will be behind us.

So let’s get into the state of Amazon FBA bookselling in 2020: The good and the bad.

Why Amazon Bookselling Is A Bad Business To Be In Now

Bad Thing #1: Sources are closed.

Chances are that all of your sources are now closed.

This is a very double-edge sword: If booksellers can’t buy in brick and mortar, either can book buyers. (More on that in “Why Amazon Bookselling Is A Good Business To Be In Now.”)

But unless you’re also doing the “online book arbitrage” model, you’re likely finding you have nowhere to source right now.

Bad Thing #2: Amazon has frozen incoming shipments.

This could be behind us in a matter of days, but as of this moment Amazon is restricting incoming shipments of “non-essential” products.

So not only is it harder to source inventory now, even if you can get new inventory, you can’t ship it in.

The backstory: The total shutdown of retail sent the whole country onto Amazon. Unprepared for the surge in demand and lacking the manpower to handle the surge in orders, Amazon limited incoming shipments to free up their workers to focus on keeping up with the demand.

What can you ship in now? The official word is as follows: “household staples, medical supplies, and other high-demand products.” You’ll notice books are not on that list.

How do you know what you can ship in? Your Restock Inventory page on Amazon Seller Central. Check this link.

Amazon was set to lift this freeze on April 5th while they rushed to hire 100,000 new workers.

After announcing that date, they pushed it back to an undetermined date while they continue to struggle to meet demand.

Will the FBA shipment freeze go on for a long time? Pretty close to zero chance.

First, Amazon wants this to be over, fast. Amazon is losing a lot of money not being able to receive (and thusly, sell) our products. Our needs are in harmony here, and you can bet Amazon is working like crazy to get this behind them.

Personally, I have full faith the shipment freeze won’t last a second longer than needed. Amazon is very motivated to resolve this.

Sidebar: It’s a big internet myth that “Amazon has shut down Prime.” There are the usual clickbait headlines about “the end of FBA,” but its all fake hype from unscrupulous bloggers and YouTubers. FBA orders are seeing delays, but a lot of orders are still shipping second-day. Fulfillment by Amazon isn’t going anywhere. Prime benefits are at the core of Amazon’s value proposition, and they will fight to maintain it at all costs.

Bad Thing #3: Are Amazon sales down? 

There’s conflicting evidence.

First, there’s actually some anecdotal evidence that book sales are up right now. In a recent thread in my private Facebook group, about 2/3 of people were saying their sales have gone up this month.

I didn’t want to be unethical and put this under this in the “Good” column, because the evidence is anecdotal (personally, my sales are down a little).

There’s no hard data on whether book sales have gone up or down. And a lot of people are seeing their sales down.

Hard to know which is correct. On one hand, people are at home and buying online exclusively.

On the other hand, people are cutting any spending right now that is perceived as discretionary or non-essential. Economic uncertainty = reduced discretionary spending

So are sales up or down? We don’t know.

One thing we do know: March is historically slow for book sales. Unreleated to Covid-19, but this is a slow month in general.

Why Amazon Bookselling Is A Great Business To Be In Now

Now the fun part….

Good Thing #1: All non-online options for buying books are closed.

This is the big, obvious one.

You’re in an online business… when no one can go outside. How cool is that?

I don’t want to celebrate the shutdown of all brick and mortar. Most small business are suffering a lot right now, and its pretty sad.

Yet the unfortunate state of the world does have a accidental side effect that benefits Amazon sellers: People no longer have a choice but to buy from us.

Good Thing #2: Feeble Amazon Sellers Will Be Purged

I love it when this happens: Any disturbance in the Force, and Amazon sellers run for it, leaving the business en masse. Which means less competition for us.

In my (almost) 15 years of selling on Amazon, I’ve learned that Amazon sellers are a sensitive bunch. Any turbulence and sellers start fleeing the business in large numbers.

Between the shipping freeze, sales (maybe) being down, and general economic uncertainty, I expect a similar purge is underway now. (We saw this exodus when Amazon raised their fees dramatically a few years ago.)

One of the side-effects of Amazon being an easy business to get into is that it attracts a ton of people who aren’t fully committed. Low-friction in, low-friction out.

This Amazon seller fickleness is good for the rest of us: This brief turbulence will filter out the weak and create a low(er)-competition environment for the rest of us.

Good Thing #3: FBA prices went way down… then way up.

This one is hard to measure beyond the anecdotal, but three weeks ago it seemed like everyone was freaking out and doing reckless things to raise cash. Part of that was dropping FBA prices like crazy.

Over the last week (again, unscientific observation), it seemed like the lowball inventory sold through, and prices feel unusually high right now.

(Comment below if you have personal observations on this).

Good Thing #4: Books Are Insulated Against Obsolescence

There very few “safe” moves right now. Even fewer safer businesses.

In a time when everything is uncertain, the last business you want to be in is one that capitalizes on trends. This is a bad time to be in a “trendy” shiny-object business. (E.g. CBD oil, “house hacking,” etc.)

The only businesses that are safe right now are those that are (nearly) timeless. So what is second only to being in the food business now? Anything that is proven, sustainable, timeless, and will expand as we exit bunker-mode.

If you’re going to be in a business right now, it should be something either

1. Totally innovative.
2. Totally timeless.

Nothing in between.

To drive this home: Picture a house in 1920.

There are only a handfull of things in your home now that someone in 1920 would recognize. They wouldn’t recognize your appliances, your Alexa, your computer, or probably even your shower.

Books are one of the few common denominators between a home 100 years ago and today.

Books aren’t going anywhere.

(PS: Don’t say “ebooks.” People have been saying this for years. And ebook sales have been down year after year for a long time).

Good Thing #5: College Enrollment Is About To Explode

This is big.

After “trauma” or times of extreme uncertainty, people historically flee towards what’s safe (not what’s risky).

What this means is: Tough economic times send people running towards college.

“The recession saw a 33 percent increase in enrollment in two-year colleges from 2006 to 2011.”

That statistic is worth reading twice.

No one knows if we are head for (or in) a full blown recession, but I think a lot of people believe we’re headed that way.

I’ve been saying for a long time that a hugely disproportionate percentage of any booksellers business come from college students. I’m not just talking about the obvious sales of textbooks. I’m talking about all books.

The average post-college adult doesn’t read at all (sad but true), and I believe that WAY more of our books are going to students than we realize. I don’t think we can rule out that over 50% of our sales could be to customers in academia to one degree or another.

That means when college enrollment goes up, our sales go up across the board.

Again, not just sales of textbooks – all books.

A quick search for “Does college enrollment increase during a recession?” brought up these results on the first page of Google:

 

 

Institutions or businesses that will thrive are those that sell safety. And “safety” is at the center of the value proposition offered by colleges. Enrollment is going to go way, way up.

No one likes a recession, however…

It is paving the way for a virtually guaranteed increase in book sales over the next several years.

Good Thing #6: The World Is Not Going Back To Normal, It Is Going Online

Right now, every college in the country has shifted their classes to online.

Now that online classes are normalized, many will never return to a real classroom. The spell of a classroom has been broken, and the marginal utility of going into an actual classroom has been revealed.

And people who only go to school online, only buy online.

If we can accept my previous premise that a hugely disproportionate percentage of all book sales (not just textbooks) are from academia, moving all book sales online (vs a college bookstore) will mean a significant boost to our sales over the years to come.

The Verdict

If there’s a recession after this, you’re positioned perfectly:

1. You’re in an online business.
2. You’re in a (nearly) timeless business.
3. You’re in a rare business that is poised to be stable or even grow in a recession.

The Takeaways

• People who plant seeds now for a post-virus world are ones who reap the harvest.
• Viruses come and go, and its already peaked in the hardest-hit countries.
• Feeble sellers are self-purging.
• All sales have moved online.
• Many customers will never return to offline purchasing.
• College enrollment is about to explode.
• As Amazon FBA booksellers, we are positioned perfectly for the future.

And that concludes the “State Of The Union Bookselling Address.”

-Peter Valley