Live

Watch CBSN Live

How Amazon Is Clinching the Market for E-Books: The Illusion of Ubiquity

Editor's Note: to see our infographic slideshow on Retail Shopping in 2015, click here.
The (GOOG) eBook store arrived this week, amidst varying claims that it would harm small bookstores and prop up struggling book publishers. But what matters here isn't the economics or the technology: it's the marketing. And by that metric, Amazon's (AMZN) Kindle may already have clinched the market for electronic reading.

Books don't matter
Google has been trumpeting its inventory: three million book titles (many of which it scanned itself, much to the dismay of several authors' rights groups who sued and won a settlement). It has put that "three million" number atop its ads and graphics. But do consumers care?

Probably not. Three million books is great -- but compared to what? Other e-book vendors -- Amazon, B&N (BN), Apple (AAPL) and Sony (SNE), among others -- don't make a big deal about how many books they have (although estimates for each vary between one and four million). So while three million is an impressive number, it's completely without a frame of reference. Do most of us even know how many books their local University has in its stacks? How many paper copies are in stock at the local bookstore? Probably not. Three million, 20 million, it's all the same to us.

Economics don't matter

I've made the argument that e-books should be dirt cheap. My colleague Lydia Dishman has argued that if books are cheap, they will be crappy. But both these arguments are moot on a macro level: Amazon and Google have decided that e-books are the future, and neither of them are in this fight to make money (at least, not in the short run.) As Web companies are wont to do, they're putting usership over profit motive, so for now, bottom-line rationality doesn't carry much weight in this retail sector. Everything is a loss leader.
Technology doesn't matter
Every time Amazon releases a new Kindle, the predictions begin. How will it fare against its stiffest competitors, the iPad, Nook and Android devices? Prognosticators weigh in: it'll be good for businesses, it'll be a commodity, it can still kill the iPad. Then there's the argument over color screens versus e-ink. But the reality is that it's the content that matters -- not the device or the ecosystem, and not even the much-ballyhooed format. And what about the content matters? Only one thing: the selection.

What does matter: The illusion of limitless inventory
One of Amazon's unsung strengths has been its ability to win in consumers' free-associative process. Every time a consumer has the impulse to buy something, he or she runs through a quick matrix: where is it available? Who has the best prices? Who will send it quickly? Sometimes this is a purposeful, analytical process in which the consumer searches, comparison shops, and executes. Other time's it's almost automatic.

As we buy increasingly mundane items online -- witness Soap.com -- we rely more and more on those automatic, fast-twitch choices. For a lot of consumers, the process happens in a millisecond, and looks something like this:

  1. I need this thing.
  2. Amazon probably has it.
  3. "One-Click" purchase. Done.
This rather brainless "three-step shopping" is, I would argue, the future of e-commerce. (That's why Amazon was smart enough to buy Soap.com several weeks ago. It also bought Woot.com for the shopper that needs nothing, but has the impulse to buy something anyway.)

There are certainly variations on this "three-step" process. For a lot of shoppers, substitute eBay (EBAY) for Amazon in those three steps. For other shoppers, the priorities are speed of delivery, or "green" cred. But the fact remains: as we do more and more shopping online, we have to make quick more choices about who we buy from. And when it comes to "mental autopilot," Amazon wins.

Why not Google? Because Google already used up their "mental autopilot" chits when it won search. It was the best at searching for most things, most of the time; it became a verb synonymous with searching. Sure, there are niche search engines like DuckDuckGo that are better at, say, searching with less spam. But Google has become, for most Web surfers, a good "autopilot" search box.

Amazon owns that status in e-commerce. Because of its enormous wealth of books, music, and practically everything else, it appears to have the biggest "umbrella." If I want to purchase an e-book, it will probably cost about the same whether it's from Google or Amazon. It will look the same whether from Google or Amazon. The only question -- the vital question -- is who actually has it? Whose overwrought publishing partnerships actually include this one little book that I want? The answer is probably Amazon.

That's why the new Kindle Web app, announced today, is such a vital step. It adds a sense of ubiquity to Amazon's existing aura of limitless inventory. The Seattle company is very close to reaching retail's Holy Grail: the impression that they have everything, everywhere. Apocryphal, maybe. More truthiness than truth? Sure. But that's good marketing.

Related: