Amazon Local is coming! More daily deals but at what cost?

21 Ice Cream Cones

I’ve been trying to find information about Amazon Local since last week when a sales person in the US phoned me, as director of writingclasses.co.uk (my online international creative writing school), and offered me the chance to promote the school via Amazon Local. Basically, Amazon Local promotes discounted products to local consumers. It’s in the US and  it’s coming to the UK. I found this description of it on a site on the net called Business Insider 

“At first, it looks like a straight daily deals site by Amazon in the mould of Groupon: the deal today is 50% off ice cream and shakes at a local store.”

Ice Cream Cones

It sounds like a blend of Gumtree and Groupon. What’s wrong with that? This could mean big discounts for consumers. Great!  But let me tell you what the cost would be to me, should I want to promote our courses on Amazon Local* –  by the way, all our courses are online, which means we have students from around the world and  being local isn’t an issue, which is just as well because the US sales person on the phone thought Edinburgh was in London!  I digress … if we want to promote our courses via Amazon Local, we would  have to offer our courses at half price. Some products are even discounted by 75%. Yikes!

There IS A Free Lunch!

Okay. Most of our courses cost £175. This means we’d have to offer them at £87.50. From this price Amazon Local takes its cut  … and this is where it gets murky: I thought  the sales woman said AL’s percentage was 25% , my partner said he thought their cut was 50% – the sales woman was very obscure. (Anyone know?) This would leave us with £65.62 (or, worse case scenario, £43.75) to cover the cost of running a ten week course. There are three main costs in running an online writing course: an admin cost; a license fee cost for the conference programme; and the cost of the tutor. The tutor cost  is the greatest cost by far but our tutors are worth every penny. They are one of the reasons our courses are so successful and why we get so much praise, that and the fact our courses are such great value for money.  If we promoted our  courses via Amazon Local, our finances would look as in the chart below. Scary stuff!

Not Good

So, no, we won’t be using Amazon Local, not if our aim is to keep offering students the best writing courses around, which it is. But bigger companies and organisations, wanting to take advantage of the huge Amazon customer base, who can afford big losses, may well do.

Please, don’t get me wrong, I like a bargain as much as the next person, but these parasitical titans like Groupon and Amazon Local don’t actually produce anything. They make their money on the backs of real businesses and if we’re not careful, or canny, little by little we smaller businesses are going to be pushed out. Only the giant businesses will be left, dictating what we buy as well as at what price we pay for it. It’s a very high price to pay for daily deals.

Parasite Brain

What do you think?  Do you agree or disagree with me, or not care? Have you taken advantage of a daily deal before? Was it worth it? I know I have but will be thinking twice about it from now on!  I’d love to hear from you. And to show how much I appreciate your comments, at the end of the month I’ll put the names of those who have been in touch in a hat and one lucky winner will win a copy of my book The Blue Suitcase!

*The deal actually comes from LivingSocial, which counts Amazon among its big investors, and it seems that what Amazon Local is doing is actually aggregating deals from other companies. Right now it’s just LivingSocial but there’s no reason why it wouldn’t include other players. There’s also a sweetener for using Amazon Local in the form of Visa reward points.”

Free Lunch!

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12 Responses to Amazon Local is coming! More daily deals but at what cost?

  1. Louisa says:

    Sounds like a scam to me! The fact that they don’t quite know the percentages they’d be taking, etc… is dodgy in itself. Why won’t Amazon leave well enough alone? They already have the market cornered on so many things!

  2. Marianne Wheelaghan says:

    Hi Louisa – i think the sales woman was genuine enough, she just didn’t explain herself very well – and no wonder!. Have found out more about Amazon Local since writing the post. It seems they want to use Daily Deals to tempt/bribe people to the site, which will be more like e-bay (who will be their main rival). Their thing is to offer people same day deliver in their local area. Here in the UK we have Tesco Local and Sainsbury Local – ie: the bigger supermarkets having smaller shops, competing directly with the corner shops. Amazon Local will be doing the same for all non-food stuffs (at a cost, cause same day delivery is not cheap). The new link I found about it is below. If we’re not careful we’re going to turn into nations of blobbies, glued to our vibrating chairs, doing nothing, going nowhere and buying everything via remote control, just like in the film Wall-E! It’s a worry!
    http://www.netmagazine.com/news/amazon-s-ambitions-threaten-local-business-122078

  3. Katrina says:

    Hi Marianne

    It sounds like a scam, but then it’s like with so many smaller businesses they get pushed out by deals or larger companies it’s a real shame really because a lot of smaller businesses really care about what they do, and some lose big too larger companies. I think as long as people can find you on line you don’t need the extra marketing from amazon or other. Deals are one thing, but deals that put businesses financial hell ain’t worth it.

    Hope your well

    • Marianne Wheelaghan says:

      Hear! Hear!! It’s worrying, though, isn’t it? It’s not dissimilar in book publishing, where the big publishers (including Amazon) dictate what we read and at what price. I find Amazon’s approach the most disturbing though, because as I understand it (or at least one of its big guns said this on the radio), Amazon discount their books to virtually nothing in order to get people to use the site for all the other stuff they sell. So “books” are the sweeteners (or bribes) and very much Amazon’s loss leaders – authors/publishers pay the price for the slashed prices. Amazon has a hugely loyal fan base in the UK (although its not nearly so popular in the US, funnily enough) so it looks like the policy has been working. All that said, developments in digital and print technology and the rise of social media and ebooks etc have revolutionised the book publishing industry and now there are lots of small publishers opening up and flourishing, and the public have more choices than ever if they want to look, so it’s not all doom and gloom ;o) Thanks for comment, Katrina, hope you well too 😉

      • Katrina says:

        Hi Marianne

        I agree it is definatly scary when big compiny swoop in and take all the goodness out of the small one. Its always horrable when small shops close down because the bigger one take all the busness too.

        I think its a hard one because amazion is such a huge site. But hopeful small caring busness will not fall into there deal trap and just keep good there on way.

        I am okay thankyou. 🙂

  4. That sounds like a very parasitic business arrangement, I wonder how successful it will be? Scary when big corporations try to suck the life blood out of local companies

    • Marianne Wheelaghan says:

      It’s very scary. Yes, it’ll be interesting to see what happens. What may seem like a bargain today may not feel like in the future – if you see what I mean! There’s a price to pay for everything one way or another! Thanks for comment 🙂

  5. Thanks for your post. I no longer trust Amazon on any level. I have titles on Amazon US, Japan, Germany, UK, etc. Country to country, customer to customer, Amazon has been brokering deals from unscrupulous printers who over printed my books, selling them for half price through their websites. The publisher gets his cut; Amazon gets their cut, but me? Nope, not a dime, no royalties paid ‘round the world!!! Despite hundreds of fans from many countries, my books are floundering because all those fans also bought books through these printers, NOT through Amazon. Who wouldn’t? Who do you know that would intentionally turn her/his back on a great deal? That’s right, few if any, for any reason, especially in this economy. Amazon received their bucks, euros and yen, while I still struggle to get a nickel. So, this new development in sales for Amazon does NOT surprise me a bit! And, Barnes & Noble? Are they any better? NOT a chance! If you support indie authors and small presses, try buying titles directly from authors—it’s worth a try. I’m game, at least, might even throw in the postage fees for the US… And, don’t get me started on ebooks… Rock-on Marianne!

    • Marianne Wheelaghan says:

      Hi Michael, great to hear from you and thanks for letting us know what’s happened/is happening with the sales of your books! I know you are not alone in experiencing this and it is SHOCKING that such sharp practice is legal – I’m not really sure why Amazon and companies like them are allowed to get away with it? Pilrig Press sell through Amazon but with a half-and-half deal where we keep control but boy, oh boy, does Amazon put pressure on us to give them full control. They say the book is out of stock when it is not, they don’t list the book with others – you know, in that section when it says “when someone bought this book they also bought/like at these books” bit (although they do have books listed under The Blue Suitcase in that section). And because they slash the prices of books at the drop of a hat, it means there’s huge pressure for us to cut our prices: who wants to buy a book at £8.99 when you can buy one for £1.99? We tried to last out as long as possible but then had to cut the price of The Blue Suitcase. So, now for every paperback book sold on Amazon, once they take off all their costs (for storage and handling etc), we’re left with pennies, but at least we are getting pennies! The cost of asll this, and new ventures (like Amamzon Local) to the consumer/reader, may not be apparent at first, and as I said I love a bargain as much as the next person, but this is exploitation and manipulation at its most ruthless. It’s time for a revolution – and to buy, as you say, directly from Indie authors and small publishers. Onwards!! Thanks again for comment! 🙂

  6. Gill James says:

    Interestingly, I’m beginning to shun the very cheap. I’ve started thinking “It must be good. It’s more expensive.”
    They can’t expect anybody to survive in business if we have to cut the prices too much. Without the businesses there they wouldn’t be in business either so it also seems a little foolish on their part.
    This is entirely different form you giving a small discount to a returning customer or putting on a promotional offer. Yet even that raises questions: you and your tutors still need to live. That gap has to be paid for.
    Does this gap come into the way thing are priced? A charity book I’ve been involved with makes anything form 10p to £5.50 per copy depending on how it is sold. So, pricing seems to reflect the need to discount.
    Such a pity we can’t just be straightforward with all of this.
    For the record, your prices seem very fair to me.

    • Marianne Wheelaghan says:

      Hi Gill, great to hear from you and thanks for comment. I too shun silly cheap offers and buying from Amazon – I say this, even though we sell my book through Amazon and will continue to do so (and the new one), it’s an outlet we can’t afford to ignore and we do get some income from the sales, albeit not a lot. If you publish through Amazon, though, or give them the full rights to sell your book ( which we don’t) you can end up getting paid absolutely nothing in royalties. Amazon is a mean, money munching machine. And it’s not just Amazon. I know a writer whose publisher managed to get her book into Tescos.She sold thousands of copies of the book, but only got 1 penny per book sold.

      Interestingly, I was at the World Writer’s Conference yesterday and the theme was ‘the future of the novel’. A lot of the talk centred around censoring (or not) the sharing of novels – you know, in the same way music and films are shared though the internet via a shareware programme – and how writers can get enough money to live off. Robert Burns had a day job, as did Sir Walter Scott, I have a day job, and so do most writers, it does seem that not much has changed when it comes to getting a fair price for what we do.

      With regards the course prices, we try to give good value for money. We could advertise third parties on our website/the blog (we get asked routinely to put up banners etc) and use that income to help reduce the cost of the courses and/or pay our tutors more, or make more money for ourselves, but we’re pretty much against advertising, so we don’t. Hopefully, we’ll continue survive without it! Thanks again 🙂

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