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Amazon Explains Why It Made It Harder To Buy Many Books

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AMAZON HACHETTE
An employee walks over a logo on the floor of Amazon.com Inc.'s fulfillment centers in Rugeley, U.K., on Monday, Dec. 2, 2013. Online retailers in the U.K. are anticipating their busiest day as shoppers flush with end-of-month pay-checks seek Christmas deals on the Web. Photographer: Simon Dawson/Bloomberg via Getty Images | Bloomberg via Getty Images

Amazon is not backing down in its battle with book publisher Hachette.

The mega-retailer told its customers in a note published late Tuesday that if they want a Hachette book they're better off shopping at a competitor's website.

Because Amazon and Hachette have been unable to negotiate a deal on e-book pricing, Amazon is no longer allowing pre-orders of Hachette books and the retailer is buying fewer print books from the publisher, according to the post.

"Negotiating with suppliers for equitable terms and making stocking and assortment decisions based on those terms is one of a bookseller's, or any retailer's, most important jobs," Amazon writes. "Suppliers get to decide the terms under which they are willing to sell to a retailer." As the supplier, Hachette can decide whether or not it agrees with Amazon's terms. If it doesn't it's out.

The statement is quick to point out that Hachette books make up a small percentage of all Amazon sales. "If you order 1,000 items from Amazon, 989 will be unaffected by this interruption," the post reads.

Books are a surprisingly small part of Amazon's business these days, considering the company's roots as a book seller and its huge disruption of the publishing industry. Books account for less than 20 percent of the company's sales. Its biggest category is actually electronics.

Yet, Amazon is reportedly responsible for one-third of all book sales overall. While Amazon won't suffer without Hachette, Hachette -- the fourth largest bookseller in the world -- will likely suffer without Amazon.

Amazon in its statement says that is negotiating "on behalf of customers." However, the company is "not optimistic that this will be resolved soon."

"It is good to see Amazon acknowledge that its business decisions significantly affect authors' lives," a spokesperson for Hachette said in a statement to The Huffington Post. "By preventing its customers from connecting with these authors' books, Amazon indicates that it considers books to be like any other consumer good. They are not."

Hachette will "spare no effort to resume normal business relations with Amazon."

You can read Amazon's full statement below:

We are currently buying less (print) inventory and "safety stock" on titles from the publisher, Hachette, than we ordinarily do, and are no longer taking pre-orders on titles whose publication dates are in the future. Instead, customers can order new titles when their publication date arrives. For titles with no stock on hand, customers can still place an order at which time we order the inventory from Hachette -- availability on those titles is dependent on how long it takes Hachette to fill the orders we place. Once the inventory arrives, we ship it to the customer promptly. These changes are related to the contract and terms between Hachette and Amazon.

At Amazon, we do business with more than 70,000 suppliers, including thousands of publishers. One of our important suppliers is Hachette, which is part of a $10 billion media conglomerate. Unfortunately, despite much work from both sides, we have been unable to reach mutually-acceptable agreement on terms. Hachette has operated in good faith and we admire the company and its executives. Nevertheless, the two companies have so far failed to find a solution. Even more unfortunate, though we remain hopeful and are working hard to come to a resolution as soon as possible, we are not optimistic that this will be resolved soon.

Negotiating with suppliers for equitable terms and making stocking and assortment decisions based on those terms is one of a bookseller's, or any retailer's, most important jobs. Suppliers get to decide the terms under which they are willing to sell to a retailer. It's reciprocally the right of a retailer to determine whether the terms on offer are acceptable and to stock items accordingly. A retailer can feature a supplier's items in its advertising and promotional circulars, "stack it high" in the front of the store, keep small quantities on hand in the back aisle, or not carry the item at all, and bookstores and other retailers do these every day. When we negotiate with suppliers, we are doing so on behalf of customers. Negotiating for acceptable terms is an essential business practice that is critical to keeping service and value high for customers in the medium and long term.

A word about proportion: this business interruption affects a small percentage of Amazon's demand-weighted units. If you order 1,000 items from Amazon, 989 will be unaffected by this interruption. If you do need one of the affected titles quickly, we regret the inconvenience and encourage you to purchase a new or used version from one of our third-party sellers or from one of our competitors.

We also take seriously the impact it has when, however infrequently, such a business interruption affects authors. We've offered to Hachette to fund 50% of an author pool - to be allocated by Hachette - to mitigate the impact of this dispute on author royalties, if Hachette funds the other 50%. We did this with the publisher Macmillan some years ago. We hope Hachette takes us up on it.

This topic has generated a variety of coverage, presumably in part because the negotiation is with a book publisher instead of a supplier of a different type of product. Some of the coverage has expressed a relatively narrow point of view. Here is one post that offers a wider perspective.

http://www.thecockeyedpessimist.blogspot.com/2014/05/whos-afraid-of-amazoncom.html

Thank you.

Here is Hachette's full statement:

It is good to see Amazon acknowledge that its business decisions significantly affect authors' lives. For reasons of their own, Amazon has limited its customers' ability to buy more than 5,000 Hachette titles.

Authors, with whom we at Hachette have been partners for nearly two centuries, engage in a complex and difficult mission to communicate with readers. In addition to royalties, they are concerned with audience, career, culture, education, art, entertainment, and connection. By preventing its customers from connecting with these authors' books, Amazon indicates that it considers books to be like any other consumer good. They are not.

We will spare no effort to resume normal business relations with Amazon—which has been a great partner for years—but under terms that value appropriately for the years ahead the author's unique role in creating books, and the publisher's role in editing, marketing, and distributing them, at the same time that it recognizes Amazon's importance as a retailer and innovator. Once we have reached such an agreement, we will be happy to discuss with Amazon its ideas about compensating authors for the damage its demand for improved terms may have done them, and to pass along any payments it considers appropriate.

In the meantime, we are extremely grateful for the spontaneous outpouring of support we have received both privately and publicly from authors and agents. We will continue to communicate with them promptly as this situation develops.

This post has been updated with a statement from Hachette.

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