Monday, March 30, 2009

Amazon demands an extra 2 percent for early payment

As Amazon close 3 of their US based distribution centres, with the possible loss of over 200 jobs, in the UK they seem intent on introducing new terms that as usual, from where independent publishers are sitting, seem to benefit no one other than themselves.

Catherine Neilan reports that is offering publishers who participate in the Advantage programme an "early payment" option of 15 days, in exchange for an extra 2 percent discount. (I must make a mental note to find the name of their bankers, since I am not aware of anyone who pays such a high rate of interest - my own bank certainly doesn't). The only alternative is for publishers to trade with Amazon on "standard terms" of payment within 60 days. What this effectively means is that a publisher who sells a book through Amazon for arguments sake today, will not be paid until the end of May, as opposed to on the revised 15 day terms, the middle of April.

Publishers have understandably hit out at these new terms. One said this early payment option, which becomes effective from 1st April (sadly this is not an April Fool), is "more or less what they pay us on now". He added: "At the moment, if you sell in February, you get the report at the start of March and payment at the end—which is in effect what they are saying will happen here (not quite, as it depends upon when in February you actually sell the books - if sold at the beginning of the month you are still waiting almost 60 days). If you don’t give the extra discount, payment would be sometime in April." He continued: "[Amazon is] trying to take an extra month . . . In these tough times, it’s absolutely outrageous picking on small guys." In business, this seems to be par for the course.

At the moment, Amazon Advantage Members pay a yearly fee of £23.50 and offer a 60% discount in return for the retailer keeping copies of their books "in stock". They are in effect a retailer asking for wholesaler terms. No wonder the bricks and mortar stores cannot compete.

Predictably Amazon responded by stating that they are constantly looking at different ways in which they can lower prices and increase selection for the benefit of their customers.

The problem is that most bricks and mortar stores either cannot or will not stock many of the books published by the independent and small presses. It may be that they are niche titles with limited demand, it may be that they are local interest books, or it may be that the publishers are unable to offer the deep discounts and contribution for "marketing costs" and many of the chains at least demand. Either way, they have little option but to play ball and give in to Amazon's demands, if they want their books to be available in the market place.

According to one book seller whose comments can be seen on The Bookseller website, what the article doesn't state is that Amazon payments have been gradually getting later and later, so that in many cases, publishers are already on the "new" payment model. This seems to me a bit like the old British Rail. In the dim and distant past when I used to get the train to work, I observed it coming later and later each day until it settled into a routine of being 10 minutes late each day. BR then announced a new timetable ...
On the other hand, is 60 days unreasonable? Wholesaler terms are as far as I am aware, a standard 90 days, and I have been waiting well over 60 days to be paid by a certain "new age" shop in London, despite my making it clear to them that my own terms are 28 days. It is such a small amount that it does not seem worth making a big fuss over, but that is not the point, they have had my book since May of last year. Like I say though, it is par for the course. I won't be supplying them again, and in future, they can order from the aforementioned wholesaler.

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