The New York Times has an interesting article by Virginia Postrel about how Amazon loses less business when it raises prices than BN.com. Quoting a paper (pdf link!) by economists Austan Goolsbee and Judith Chevalier the article notes:
"Raising prices by 1 percent at BN.com reduces sales about 4 percent but increases sales at Amazon.com by only about 0.2 percent," the economists write. "Many of the lost customers from BN.com evidently do not just go buy the book from Amazon.com."
In the book business, at least, Amazon has demonstrated that it's possible to build a large base of customers who won't bolt to the competition if you raise prices a little bit.
This was a surprise to the economists, who expected us all to act like perfect little cost minimizing agents. That's not how I buy books. How about you?
Since I'm lucky enough to live in Boston, I'm spoiled with lots of great bookstores. First, I stop by Kendall Square at Quantum Books, the MIT Coop, or the MIT Press bookstore for geek books. For non-geek reading, I try Wordsworths or the Harvard Coop.
If none of them have what I want, I slink home and buy it on Amazon. I like the reviews, and I've never had bad customer service from them. Their hookup with used booksellers is also really good for finding out of print books. Why on earth would I try BN.com?
The NY Times article says:
For traditional independent bookstores, this is all bad news. "It just looks like it's a very competitive retail business," Professor Goolsbee says, "and it doesn't bode that well for the bookstores," since most of them have a lot less pricing clout than Barnes & Noble.
I don't agree with that at all. There must be many people like me that support their local bookstores, yet use Amazon rather than special ordering a book. Finding a good book you've never heard of by browsing the shelves is worth much more than saving a few cents. We all have to support our stores!
