Writer and journalist Douglas Preston explained in the New York Times:
Month’s ago, Amazon quietly changed the way it sells books when allowing third-party sellers to trick Amazon’s customers by selling books as “new” that may not come straight from a publisher or its wholesaler. These third-party sellers are now featured atop the primary purchase button for new books. This was always the spot for Amazon’s own inventory, delivered directly from the publishers or indie authors.
Approved third-party sellers “win” this placement through a secret algorithm that considers, among other things, price, availability, seller’s rating and shipping time. In doing so, Amazon abdicates its role as the prime retailer on its own website. The main requirement is that the books offered by the third-party seller must be “new.” So when a customer hits this main buy button, they expect to get a brand-new book, right? No, not necessarily. But how can third-party sellers offer dozens of “new” books at prices way below even the discounted Amazon price?”
- One of the reasons is that such books could have been bought in bulk by a handful of giant online third-party sellers to be re-sold through Amazon as “new” books, while some are not.
- Bookstores can return unsold books for credit. The publisher or distributor will sometimes sell these returns at a discount in bulk as overstocks, or sell excess inventory as remainders. Huge online bookstores buy these books (perfectly legal). Often, these books are marked with a line indicating they are remainders. But sometimes, they are not. In such cases, the online bookstore might resell them as “new” on Amazon.
- Blemished books also seem to feed the gray market for “new” books. Bookstores will return shopworn books or those damaged in shipping under the category of “hurt books.” The publisher sells these books as used books. Online bookstores may buy them in bulk, sort through them, and resell as “new” the least damaged through Amazon.
- Publishers sell books to international wholesalers at large discounts on a non-returnable basis. Due to contract, these books must be sold abroad, but wholesalers could quietly dump these books in the American market through a third-party seller on Amazon, cheating the publisher.”
How Amazon’s Secret Policy Change Hurts Authors & Publishers:
Publishers and authors, deprived of income and royalties, have long worried about this gray market. Amazon, to its credit, quickly tightened up its definition of a “new” book, to the one cited above. These definitions make clear that remainders are not regarded as “new” books, and the company insists that it follows a strict policy as to what qualifies. For publishers, the cost of policing the market, marking and tracking books, and suing malefactors have proven to be daunting.”
Remainder overstock sales bring some revenue for publishers, but the authors receive little to no royalties. See also our former blog: The Shocking Fact Why Authors Don’t Get Paid
Don’t Buy a “New” Book on Amazon from 3rd Parties
Nick Douglas wrote on LifeHacker:
“Amazon, a company Jeff Bezos invented to piss off everyone in the book industry simultaneously, likes to make books as cheap as possible. To that end, this spring they moved third-party options up to the top of the page, sometimes even listing third-party sellers as the default buying option. You might see a “new” option that’s cheaper than Amazon’s actual new option. Here’s who misses out: Mostly the Author.
Usually, authors get royalties from the sale of new books. If you buy a typical used book, you at least know that the author got their royalty when it was first sold. But with a third-party “new” book, the author often gets nothing, or very little. Under most contracts, most or all of an author’s royalty is a percentage of the sale price, rather than a flat rate per copy.”
“In the short-term, buying third-party can save you money.
But in the long term, you are supporting book piracy!”
If you want to save money on a book, go ahead and buy it used, or borrow it from the library. Most of the time, you’re sharing or inheriting a book that once earned money for the publisher and the author.
Amazon’s policy is bad for books, bad for authors and bad for Amazon’s customers. This Amazon action comes at a time when authors are struggling more than ever to make a living in the harsh economics of the digital marketplace. Amazon’s policy will undermine authors’ incomes even further if it directs customers to “new” books for which the author receives no royalty.
As an author, how can you prevent – at least partially – to be screwed by Amazon and their sellers?
For years I wrote in many blogs and in my publishing guidebooks: “Don’t put all your eggs in one basket.”
1. Sell your e-books and books on your own website
2. Diversify – Sell your books through distributors worldwide
Sell From Your Own Website:
The ideal way to sell an e-book is from your own e-commerce site, especially if you have a large, dedicated followership.
– You keep 100% of the revenue (minus a small fee to the e-commerce app)
– It drives more traffic to your website
– You will receive immediate payments.
– You will know your readers, which is absolutely not possible when you sell through online retailers
How to Set-up Your OWN Online Bookstore
Excerpt from: 111 Tips on How to Market Your Book for Free
With all of these fantastic options via e-commerce apps, you have plenty of reasons to sell your book directly from your website in addition to your sales through online retailers. Put your eggs in several baskets – not just in one! And it is good to have access to your readers, to know who is buying and reading your books, in order to communicate with them and inform them about your next works. It is important for your author website to have a large outreach, which can be addressed in this way…
Distributors Who Bring Your Book to Retailers – Worldwide
Loading up your e-books – and now even print books – is easy on Amazon. And you should do it yourself for more control and as you have to set up your author website anyway. However loading up to other large online retailers, such as Apple, Kobo, Barnes & Noble can be daunting. Some retailers might not even want to deal with single authors (Apple) or don’t want to deal with authors from outside the US (such as Barnes & Noble).
Distributors, or aggregators, how they are often called, offer sometimes even free e-book formatting, such as D2D. Some require a yearly fee and don’t deduct any commission, for example, eBookPartnership. Some are only distributing e-books, others distribute print as well. We work with several distributors, one for each author, and are very happy with D2D for e-book distribution.
But all of them are delivering to bookstores, online retailers, and libraries in North America, Europe and many other parts of the world.
If you registered your publishing business and have your own ISBN’s then you can even distribute through LightningSource/Ingram.
When choosing an aggregator/distributor: ask, compare and research before you decide which service company you choose.
In our blog “Who is the Best? Book Distributors Compared” you will find lots of info and addresses.
Publishers and Author-Publishers find info regarding POD and distribution via LightningSoure and Ingram here.
Instead of dealing with many different single-channel services, accounting systems, and payment variations, you deal with only one service and revenues from several online retailers reach you in one amount, which saves writers and small publishers certainly a lot of accounting work.
On a personal note: I loved to order from Amazon in the 90’s. But not anymore. The company became only a warehouse/shipper with a terribly cluttered website. As a customer, you are always wary of the third-party sellers, their goods, and warranties.
And being a supplier of books/ebooks to Amazon feels equally uncomfortable, as they are taking advantage of their market power and changing policies without the consent of publishers and authors.