Is Amazon ripping me off?

It can be frustrating selling books on Amazon.

These 12 FAQs address misunderstandings about retailing, the book business in general, and the fact that Amazon is the market leader.

Is Amazon Ripping Me Off

Is Amazon Ripping Me Off?

12 FAQs about the business of selling and promoting independently published books on Amazon

Amazon is so synonymous with books in the mind of the public that many see them as a public utility when it comes to bookselling. It is the first, and sometimes only book retailing outlet new publishers and self-publishing authors use to sell books and Kindle eBooks.

So when it comes to the business of selling and promoting books, many indie publishers are aghast at what they consider “unfair” or “usury” Amazon business practices. The reality is that many of these policies and practices can be found throughout retailing and publishing.

Granted, in some cases us publishers are subjected to policies and practices that go outside what we consider the bounds of fairness. Amazon does have a stranglehold on book selling and they are not shy about using that market power (see #5 below). But in an effort to clear up misunderstandings, misinformation and manage expectations, here is a list of 12 frequently asked doing-business-with-Amazon questions I receive from individuals new to selling books on Amazon.

1. How do I stop Amazon from discounting my book?

Like any other retailer, and absent of an agreement to the contrary, Amazon can charge what they want. At the same time, you are paid your royalty based on the retail price you set. Some publishers can set their own prices but these are typically very large publishers. The discount does not come out of your pocket. (Also keep in mind that if you offer your book at a lower price elsewhere, Amazon has the right to price match it and this could impact your royalty.)

2. Why does Amazon Advantage take 55% of my book’s retail price? It’s outrageous!

Welcome to the publishing industry. The standard discount you will need to give a bookstore to stock your book is at least 40%. Wholesalers take an additional 15%. In this case Amazon simply says they are acting as the retailer and wholesaler so they will take 55%, thank you very much. If you want to sell books to bookstores, be prepared to give up 55%.

3. Why is my royalty so low for my CreateSpace book?

Think of CreateSpace as the printer, and Amazon (who owns CreateSpace) as the retailer. Subtract 40% from the retail price as the sales commission for selling on Amazon (no wholesaler commission in this case). Then subtract the printing costs.

4. How do I stop Amazon from selling used copies of my book?

Similar to Ebay or any number of used bookstores, Amazon provides a marketplace for anyone to sell used books. As long as your physical book has an ISBN, anyone can sell it on Amazon.

5. Why does Amazon charge me a fee to deliver Kindle eBooks to customers? No one else does this.

Okay, this one cannot be explained other than to say “because they can”. I believe it is rooted in the origins of the Kindle ecosystem when the early devices included free 3G wireless book delivery, a revolutionary concept at the time. There is definite cost to deliver books this way so Amazon simply passed that cost on to the publisher. Btw, some publishers have arrangements that do not include delivery charges. (Section C here regarding delivery costs.)

6. Why do they give away such a large sample of my Kindle eBook? (How do I reduce it?)

Research and experience has shown that providing samples is an important promotional tool. This is an example of trying to duplicate the experience of a physical retail store where you could conceivably read the entire book without buying it. Amazon’s 10% sample is in line with other stores.

7. Why won’t Amazon tell me who buys my books?

Like any other retailer, the person that buys the book is Amazon’s customer. If you want to build a customer list you will need to become the retailer of your own books.

8. Why doesn’t Amazon promote my book?

The short answer is that like any retailer, Amazon promotes stuff that sells, or if they have been paid to promote it. The trick for indie publishers is to create enough activity and purchases so that the Amazon algorithms—the software programs that look for such things—show your book to shoppers. Promotions can include best seller lists, hot new releases, email newsletters, additional categories, and so on. For Kindle publishers you can also join KDP Select which has three self-service promotional options, two free book promotions and an advertising program. The more you sell on Amazon, the more help you’ll get.

(At the same time, if you funnel customers to your own website where you enjoy a higher margin, you may sell less on Amazon. That means a lower sales rank, which means the Amazon search engine won’t show your book to as many shoppers. Consider this carefully.)

9. I paid to print a bunch of books and now Amazon Advantage only wants a few at a time. Why won’t they take them all?

Advantage is a consignment program so they stock only enough books to satisfy demand. The more books you sell, the more they order. Conversely, they return books that don’t sell (a potentially expensive proposition!).

10. How do I get my book to show up at the top of the search results when someone types in the title or keyword?

Several factors influence the Amazon search engine (A9) with regard to where books show up in search results. The first big assumption is that you have optimized your keywords, categories and 6 other search fields for words people actually search for. With that as the starting point, your book’s ranking depends on how well it is selling at any given point in time, and how many other books are competing for the same search terms (book title, subtitle, keywords, etc.). As you see to the right, there are literally millions of books on Amazon, and the number grows every hour.

Number of books on Amazon as of October 29 2015

11. Why is there such a big difference in Kindle royalties? (70% vs. 35%)

Indeed, I and many others consider this unfair for some books. It’s another example (IMHO) of Amazon using their market dominance (like charging delivery fees, see #5) to encourage sales and build market share by incentivizing self-publishers to price books between a certain range ($2.99 and $9.99). I suppose we can take solace in the fact that customers never own our books and cannot resell them, thereby eliminating the used market. More here.

12. How can I instruct Amazon to sell one of my books at a discount if someone bought one of my other books?

I actually got this question from a self-publisher and he refused to believe that he couldn’t tell Amazon how to sell his books. Perhaps large publishers can make this kind of an arrangement but unless Amazon has implemented an online tool to support it, promotional tools are limited to what you can do in the self-service portals like KDP and Advantage.

As I said at the beginning, Amazon has done a good job of convincing us they are the Internet’s official retailer. Nowhere is this more true than it is in book retailing. So when it comes time for us peeps to be a seller rather than a buyer, we forget for a minute that they are no different than any other retailer in America.

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