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Karyne Bailey, an independent bookseller, stands among shelves of her stocked books in her garage at her home in Cobble Hill on Vancouver Island, BC. Bailey sells her books online through her own website (www.baileybooks.ca) and Amazon.com.

David Murray will close his CD Exchange shop in Kingston this summer. But he doesn't blame competition from Amazon.ca.

Mr. Murray said his bricks-and-mortar store would have closed a year earlier had he not been able to sell CDs on the online giant's website to supplement his income.

Debate continues about U.S.-based Amazon.com plans to open a new Canadian warehouse to support its Amazon.ca site. The company's competitors, ranging from Chapters Inc. to smaller, independent stores represented by the Canadian Booksellers Association, have expressed dismay at the potential impact of the multinational on the homegrown book selling and publishing business. One fear is that Amazon's Canadian expansion could drive more mom-and-pop bookstores out of business.

But many sellers of books and CDs have, in effect, embraced the beast by accepting Amazon's terms and agreeing to sell their wares on the Amazon site, directly to Amazon customers, giving up a slice of their profits in the process.





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Anyone can sign up to sell in the "Amazon Marketplace" and have their books, CDs and other products listed alongside Amazon.ca's offerings. The only restrictions are on "publisher's proofs" – the sometimes collectible not-for-sale editions sent out early for review purposes – and CDs produced for review purposes, "bootlegs" or other unauthorized recordings.

Sellers pay $29.99 a month plus 15 per cent of the sales price as a "referral fee." There's also a "closing fee" that ranges from 24 cents for books and VHS tapes to $1.35 for software and video games. A seller who doesn't expect to sell more than 20 items a month can sign up as an "individual seller" and avoid the $29.99 fee – but pay an additional $1.49 per item sold.

Amazon launched its Marketplace in the United States in 2000 and in Canada in 2003, but not without controversy. The Authors Guild complained at the time about the practice of selling used books alongside new ones, noting there are no royalties on used books. It asked its members in 2002 to stop linking to the Amazon site as a result.

The efforts did little to derail Amazon Marketplace, which now accounts for 30 per cent of Amazon's unit volume, according to its securities filings.

Since Amazon records just the fee revenue from these transactions, it notes the Marketplace sales "generally result in lower revenues, but higher gross margin per unit. Since we focus on profit dollars rather than margins, we are largely neutral on whether an item is sold by us or by another seller." Amazon disclosed no other details, and the company failed to respond to repeated requests for comment.

"Amazon really started off with the idea they'd do all the selling," said Sandeep Krishnamurthy, a professor at the University of Washington-Bothell, just north of Seattle, who specializes in e-commerce. "Then they realized they were not profitable – they were growing too fast and losing money on every product they sold in some categories. With eBay taking off, they realized it was not about the company selling to one set of customers, it was about creating a marketplace. So for a long time, they've been in the business of enabling local companies.

"The ones who are really affecting local companies are the big boxes," Mr. Krishnamurthy added. "If Barnes & Noble comes to your town and opens a monstrosity, that really affects the mom and pop."

Mark Lefebvre, the coming president of the Canadian Booksellers Association, has no words of warning for independent sellers who partner up with Amazon – he acknowledges that members of his group who have taken advantage of the Marketplace opportunity sell used books.

The issue his group's members have is when they attempt to sell a new book and find they can buy it cheaper on Amazon than they can from the wholesale distributor – and what that means in the long run. "We were speaking out more or less from the fear of what could happen next – if nobody is around to offer a choice, what happens next? We don't want a single player dominating the industry."

Denis Dupuis, owner of the cheekily named One More Bookstore in Sudbury, has embraced selling through third-party sites, maintaining a presence not just on Amazon but also Alibris.com and British Columbia-based AbeBooks.com. "The more exposure you have, the more chances you have to sell a book," he said.

Mr. Dupuis purchased his store, then eight years old, in 2008. He started on Amazon in February, 2009, and he sold more books there than on the other two websites combined "almost from the beginning." He now sells about 2,000 books a year on Amazon, roughly 20 to 25 per cent of his overall sales.

"From my perspective, out here in Sudbury, it's not like Toronto, where I have millions of people to work with; I've only got 150,000," he said. "There are books here that people here aren't interested in, so it's a complement to my business."

Like the other sellers interviewed, Mr. Dupuis said selling on Amazon is intensely price-competitive – but he has a specific complaint: While he is unable to sell on Amazon.com without a U.S. address and credit card, there is no such restriction on Amazon.ca. "American booksellers can sell in Canada, but Canadian booksellers can't sell in the U.S.," he said.

Unlike some retailers who supplemented their in-store sales with Amazon, Karyne Bailey started out as a Marketplace seller and found enough success that she launched her own website, baileybooks.ca. "It started as a lark to earn a little extra spending money, and it's turned into a full-blown business."

She established her Marketplace seller account four years ago and sold just under 500 books in her first full year. That grew to 1,400 the next year, then 2,500 in 2009. She now has 17,000 books in stock. In the non-virtual world, that means she's taken up two bays of a three-bay garage at her home in Cobble Hill, B.C.

Ms. Bailey acquires her inventory from garage sales and thrift stores, staying away from overstocks and other new books. "It's so competitive."

"Amazon has definitely influenced the marketplace in that independent sellers are shutting down – but it's not just Amazon – Chapters is online," she said. "It's a reflection of Canada Post and us not getting the super deals versus a Chapters or Amazon – we're buying an envelope for Express Post for $2 more than they are."

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 0:01pm EDT.

SymbolName% changeLast
AAPL-Q
Apple Inc
-1.28%171.1
AMZN-Q
Amazon.com Inc
+0.32%180.4
EBAY-Q
Ebay Inc
+1.56%52.73

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