Amazon UK Move Goalposts on Advantage Program

Amazon Advantage is a program offered to smaller publishers who do not use large distributors with exclusive contracts. Small publishers will often try to sell their books direct to retailers, but as in any area of publishing, having a distributor with a dedicated sales team who are proactive is the key to successful sales and getting books on to store shelves, nationally and globally. A small publisher benefits far more from not having an exclusive contract with their distributor, if they have one, because it allows them also to sell their catalogue of books directly to stores, and this can be critical at a local and national level. Small publishers signed up to Amazon UK’s Advantage program get back 40% of the retail price of each book while Amazon keeps their 60% discount. However, with this deal, the publisher still has to pay shipping costs.

The core ‘Advantage’ to a small publisher is that Amazon work out a relative amount of books to hold in stock based on the sales record over a period of time. In theory, this gets the book to the end customer quicker, but it can take a while with a new title before an ‘ideal’ amount of stock is clearly defined against erratic on-off sales. While it may not be the answer to a large distribution deal for a small publisher—it remains a valuable and useful method to deal with on line sales. Some discernible author solution companies using POD (Print On Demand), actually use the Amazon Advantage program to ensure Amazon have a small stock holding of their ‘best sellers’.

On March 24th, Amazon UK contacted publishers signed up to the Advantage program and informed them that they were changing the terms of the deal. Currently publishers are paid for their books over a 30 day period, better than the standard 60 day payment period. Amazon is offering publishers the option to be paid in just 15 days, provided they agree to increase Amazon’s discount share to 62%. Publishers were given a deadline of one week to opt in or out. Those who decline will have their 30 day payment period revert to the standard 60 day period.

Amazon to their credit has very much defined the blueprint for on line sales for all manner of products. If Amazon had laid this deal on the table of publishers signed up to the Advantage Program without the jettisoning of the 30 day payment option and pitched it simply as an opt in or out—I would have said fair enough—business is business. To effectively rip up the 30 day payment terms is simply an exercise in cynicism. Amazon’s critics will say that this is another example of the on line monolith exercising its muscle on small publishers in light of the current economic downturn. It is the smaller publishers, without large trade distribution, who tend to rely far more heavily on Ebook and on line sales. They are the ones feeling the economic pinch the most. They are the publishers paying the highest discounts out and the least able to absorb a prolonged sales downturn.

Amazon claims these changes are part of their global program across all products and not just effective on book products. With the April deadline having passed, it remains to be seen how many publishers have opted in or declined. What is clear is that there is reluctance on publishers’ part to concede another 2% of an already high discount for a shallow 15 day payment option. Most businesses operate their finance departments on a 30 day cycle on receipts, invoicing and expenditure and it is hard to see the realizable value in a 15 day payment from Amazon. It is akin to the boyhood schoolyard when your ‘best mate’ hounded you to swap your single ‘star’ player card for his 10 crappy football player cards.

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