Ever since Amazon opened its first physical bookstore a year ago, people have been speculating what the point was. Amazon, after all, has strived above all else to keep infrastructure costs down. Spending more on infrastructure spooks its investors, who are obsessed with growth (something Amazon does effortlessly) and profit (not so much).
One theory was that the physical stores would become shipping hubs for Amazon’s expanding mail empire. Another was that, despite Amazon’s small collection of titles, it was planning on finally digging Barnes & Noble’s grave. The stores also could be giant experimental labs to test various schemes, or showrooms for Amazon products, like the Echo and the Kindle, that encourage people to shop at Amazon.
All of those might still be true, but the evidence suggests that Amazon wants to use the bookstores to lock in more customers to Amazon Prime. Geekwire reports that Amazon bookstores are changing their pricing models. Before, prices in the store were the exact same as those online. Now, only Prime members get the online price—other customers pay full price.
Amazon has been more margin-focused in recent years, so one explanation may simply be that this is in keeping with a larger shift in the company’s strategy. Amazon’s books were often sold at such a steep discount (in order to increase market share) that the company made little money on them. And, as Geekwire points out, Prime members spend significantly more money at Amazon than non-Prime members.
Interestingly, this would be similar to the membership program that Barnes & Noble has had in place for years, where you pay a sum (currently $25) and receive a set discount on all books (currently 10 percent). And Geewkire notes that Costco and Safeway also have similar programs. But, as Sarah Weinman wrote on Twitter, Amazon has used these stores as testing grounds, so it’s very possible that Amazon will roll out a similar program online in the months to come. This means that non-Prime members will no longer get the discounts they have long been accustomed to.
It’s an interesting pilot program, and interesting pilot programs seem to be the Amazon bookstores’ purpose. They’re good at testing pricing schemes, even if they’re still pretty lousy bookstores.