Lessons from Amazon: Reevaluating Your Business Model

Your business model is the result of the decisions you have made to generate sales, earn revenue, and manage risks. The business model of choice for most authors and publishers is to sell books through book retailers (bricks and clicks) and perhaps to libraries. This choice is usually made because "it's the way we've always done business," rather than a calculated decision based on competitive and market analysis.

However, according to BookScan, 93% of all new books do not sell more than 100 copies. Perhaps thinking about different ways of selling your books might be necessary, or at least considered.

You do not have to make enormous changes to your current model to exploit opportunities. All you may need is little exploration into new ways to reach your objectives. For example, in addition to selling books only through book retailers and to libraries, why not investigate other ways to generate sales? Different opportunities include selling to corporations, associations, schools, and even the military. There are also retail stores other than bookstores through which you could sell your books. These include gift shops, airport stores, supermarkets, discount stores, and warehouse clubs.

Think about other ways in which you could implement your marketing plan. Then reflect on how you could apply your existing strengths and resources to them and become more profitable. Amazon.com provides a good example of how revising and updating a business model can place a company in a better position to exploit opportunities and maximize long-term sales, revenue and profits.[1]

Jeff Bezos founded Amazon.com in 1994 with the goal of using the internet to revolutionize the way in which books were sold. Development during the early years required vast amounts of cash, so the company persuaded distributors and publishers to carry slow-moving inventory. However, these partners could not keep up with Amazon's meteoric growth and quick-shipment promise. In 1997 the company reversed course and began to build its own warehouses.

As time went on, Bezos recognized that his early model would not sustain the growth he desired. He also understood the need to diversify and spread the risk. Around 1998 Amazon expanded from books into music, video, and games. These were logical modifications of Amazon's business model since they utilized the same logistics capabilities that books did.

Not all business-model adaptations are successful. Around 2001 Amazon built upon its earlier diversification and hosted the websites of, and performed fulfillment for, Toys "R" Us, Borders, and Target. As history has shown, this was not destined to be a profitable strategy.

In 2005 Bezos and his team went back to the basics, but per-item shipping costs were becoming a deterrent to sales. Over the protestations of many top executives, Amazon introduced a shipping subscription rather than paying for individual shipments: Amazon Prime. This move also encouraged impulse purchases.

During this time period, Amazon ventured into on-demand book publishing with the acquisition of BookSurge and CreateSpace.

Still driven to update its business model, Amazon began expanding into computing services, including storage and cloud computing in 2005. This move demonstrated the fact that focused business models are most effective when they appeal to distinct market segments with clearly differentiated needs. So between 2008 and 2010 Amazon acquired two companies in vertical markets: Diapers.com (baby products) and Zappos (shoes).

The growth of Amazon.com from one person's idea into an enormous retail juggernaut was the result of regular, strategic adaptation to market changes and evolutionary opportunities. In other words, they re-evaluated and modified their business model. Although you may not be the next Amazon, you can improve your business with a little attention to finding alternative ways for selling your books.

[1] These facts were taken from the book, The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone