The global king of online bookselling (and reselling), Amazon.com Inc., just found out how difficult brick-and-mortar retail bookstores are to make profitable, something independent bookstore owners have understood for generations.
The Seattle-based retail giant took a leap into physical bookstores in 2015 as a hub for online purchase returns and one way to curry favor with customers still interested in curling up with electronic or, heaven forbid, real books.
In Arizona, Amazon opened its 4,000-square-foot bookstore inside Scottsdale Quarter in November 2019.
The Scottsdale Quarter mixed-use development is home to high-end brands like home goods retailer West Elm, chef-inspired restaurants, and features splash-pad style fountains beneath giant palm trees as one slice of urban paradise complete with plastic deck chairs.
About 28 months ago — and before the global coronavirus pandemic swept across the world — the company attempted to leverage computer algorithms of books with "four stars or above" to stock the store but tried to "localize selections" with books "of interest to Scottsdale residents."
"We built the stores to help customers find their next great read," said Drew Sheriff, director of Amazon Physical Stores, in a statement to the Arizona Republic
This, some independent bookstore owners might say, was the giant's fatal mistake, as nobody knows exactly how many paid reviews and bots have sabotaged the algorithm's accuracy.
Instead, often bookstore owners and their staff rely on reading the books themselves before suggesting titles to their customers. You know, using their brains and building real relationships with people. It’s the original neural network, no artificial intelligence or software development training required.
"Indie bookstores thrive because they learn from the communities that they are within," said Cindy Dach, co-owner of local bookstore chain Changing Hands. "It is difficult when an online retailer tries to embed itself into a community using online algorithms."
It was not immediately clear how long the company's lease at the luxury mixed-use development in north Scottsdale might be. A spokesperson for Ohio-based real estate investment trust WP Glimcher, which is responsible for leasing retail tenants at Scottsdale Quarter, could not be immediately reached for comment for this story. It was not clear how many workers may lose their jobs.
While this indie bookstore owner said she was sad to see any storefront book shop go under, she wasn't surprised to see their family-owned enterprises outlast the retail behemoth in the offline marketplace.
"Their model never looked sustainable," Dach said. "Customers love their online customer service, but that didn't translate into a physical space."
Amazon told investors on Wednesday
it expects to close all 68 physical bookstores, any pop-ups, and stores with toys or other consumer goods across the nation and into the United Kingdom.
The online retail giant is under pressure from the 90-day cycle and churn of the stock market and investors to show returns. Amazon saw its "physical stores" revenue, which represents a paltry 3 percent of the company's $137 billion in quarterly sales, grow sluggishly. That figure includes Whole Foods and it has not seen the exponential "hockey stick" growth investors expect from technology stocks.
In the meantime, grab yourself an iced coffee and visit your local bookstore to buy something if you want to run a victory lap around Amazon's bigfooted misstep.