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Will Amazon's New Book Club Kill Brick-and-Mortar Bookshops?

[Updated: Apr 25, 2021 ] Apr 25, 2021 by Maurie Backman
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When Amazon (NASDAQ: AMZN) first launched its business back in 1994, it was billed as an online bookstore. Of course, we all know how that story turned out. Over the past 27 years, Amazon has expanded its scope to become a one-stop-shop for online orders. It had also managed to worm its way into a number of market segments that are a far cry from its initial book-selling business, from the pharmacy sector to supermarkets to its newest venture -- a hair salon.

But now, Amazon is going back to its roots by introducing a book-club feature. And the fear among real estate investors is that doing so could solidify its position as a go-to source for books -- and drive brick-and-mortar booksellers into the ground.

Capitalizing on a trend

The timing of Amazon's new book-club feature makes a lot of sense. The online giant began offering its book club back in August 2020, and it's working on additional features to improve upon its existing model.

For much of the past year, consumers have been stuck at home with more free time on their hands than ever to read. At the same time, many people have felt isolated due to being removed from social situations. Amazon's book club merges an uptick in reading interest with the desire to interact with others. Amazon account holders can become book-club administrators, and from there, they get the option to set up their own club, oversee their privacy settings, add suggested books, and manage club members. It's a move that's apt to boost online book sales, especially given Amazon's competitive prices.

But while all of that is a very good thing for Amazon, it's a bad thing for bookstore chains and independent booksellers alike. If Amazon takes too much business away from physical stores, many will have no choice but to permanently close their doors. And at that point, their commercial landlords will get stuck in the unwanted position of having to find replacement tenants or otherwise suffer revenue losses.

Given the number of retailers that have closed stores over the past year, filling vacancies is no easy feat. As of 2020, there were over 2,500 independent book stores scattered throughout the U.S. That number may have declined due to the impact of the pandemic, but it's not insignificant. And those are tenants shopping centers can't afford to lose.

Of course, if there's one thing independent bookstores have going for them, it's customer service. Amazon's automated recommendations might pale in comparison to a book-lover employee who can walk customers through an aisle and give personalized advice to reading enthusiasts and newer readers alike. But independent bookstores often can't compete with Amazon's price point, and that alone could take a lot more business away from them in the coming years. Throw in a new book club on Amazon's part, and it's clear that while the online giant is busy expanding its empire, it's also unwilling to let go of its hold in the bookselling realm.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.