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May 12, 2020, 12:19 p.m.
Business Models

Bookshop, a new startup, is offering publications bigger kickbacks than Amazon (and the thrill of battling Bezos)

The pitch is simple. “They get to feel good about themselves. They get to diversify the revenue. And they don’t have to take a financial hit because we’re able to deliver the sales that they want.”

The Rebel Alliance to Amazon’s Empire. A David taking on Goliath. Any way you want to put it, the new ecommerce site Bookshop has attracted a lot of attention for challenging Amazon on its original turf. (What, did you forget Amazon launched as “Earth’s biggest bookstore”?)

Bookshop, which was founded to support independent bookstores, distributes earnings through a pooled fund and provides digital storefronts that let local stores keep the profits on any sales they generate. Launched in late January, Bookshop has served as a lifeline for indie booksellers during a pandemic that has forced many of them to shut up shop. Here in Massachusetts, for example, local favorites like Harvard Book Store, Brookline Booksmith, and Porter Square Books — not considered “essential businesses” — have closed and suspended curbside pickup. This could change after May 18, but until then, online orders are keeping them afloat.

There’s something in it for publications that cover books, too.

If a publication refers a sale to Bookshop, the site will kick back 10 percent of the book’s price. That’s more than twice the going rate — 4.5 percent for physical books — through Amazon’s affiliate program.

News organizations have seen ecommerce as an attractive way to diversify their revenue streams for a while now. The concept is straightforward (even if the ethical questions aren’t): An outlet publishes an affiliate link — in a review or gift guide, maybe — and earns a small percentage of any sales.

Back in 2016, The New York Times paid more than $30 million for the product review site Wirecutter, a major investment that now seems like a bargain. (The Times doesn’t break out affiliate revenue in its financial reports, but we noted a 20.9 percent increase in “other revenue” back in 2017 that was largely credited to referral revenue. That category has grown in the years since, though the latest earnings report credited revenue from The Weekly and Facebook licensing.) Wirecutter often points readers toward Amazon, which runs the largest, best-known affiliate revenue program. But, as the book publishing industry learned early on, it’s not smart to be overly dependent on the whims of a tech giant. Just last month, Amazon cut commission rates across several categories, which can’t have been welcome news for digital publications like BuzzFeed and New York magazine that regularly publish shopping guides to drive affiliate revenue. The company is also delaying shipping on some items — including books.

By providing an alternative, Bookshop offers an opportunity for publications that rely on ecommerce to diversify at least part of their payouts.

For all the galaxy-sized metaphors in the press, Bookshop isn’t trying to beat Amazon at its own game — just loosen its vice-like grip on bookselling. (More than 90 percent of ebook and audiobooks sales and about 42 to 45 percent of print book sales happen on Amazon, according to industry tracker BookStat.) Part of the solution, concluded Bookshop CEO Andy Hunter, was developing an affiliate program that worked for publishers but supported many independent stores instead of one trillion-dollar company.

“I want book coverage to exist and I want it to be supportable,” said Hunter, who is also the force behind the book-centric sites Electric Literature, Literary Hub, and Catapult. “But it’s a problem when every link is pointed to Amazon because it’s fueling this huge growth that is ultimately going to devastate the ecosystem around books by turning it into a one-player game.”

Bookshop overcame some of the most obvious challenges — like a small bookstore trying to compete with an inventory like Amazon’s — by partnering with a large wholesaler that will store, pack, and ship the books.

In just a few short months, a number of publishers have come aboard. The New Republic, BuzzFeed News, Vox, New York magazine, Outside, and Longreads, among others, now feature Bookshop links. The New York Times is including a link to buy from Bookshop — alongside a host of other sites, including Amazon — on some reviews and its bestseller lists. Hunter said Hearst, Meredith, and Condé Nast have all expressed interest and, pending some back-and-forth with their corporate legal departments, will be sending readers to Bookshop by June.

Convincing publishers to switch their affiliate links from Amazon to Bookshop became easier as sales increased and its conversion rate — which was 3 percent at launch — improved to a competitive 8 percent, Hunter said.

“We were relying on their social conscience to try to get them to link. We were totally unproven,” Hunter said. “In February, we sold $50,000 worth of books. We raised $10,000 for local bookstores. We thought that was a success — but that’s not going to mean a lot to a big company like Condé Nast. But now we’re selling almost $5 million worth of books a month.”

“That’s when it starts to become a really easy conversation because they don’t have to sacrifice revenue by linking to us,” Hunter said. “They get to feel good about themselves. They get to diversify the revenue. And they don’t have to take a financial hit because we’re able to deliver the sales that they want.”

Bookshop’s affiliate program is open to all — whether you’re a “Bookstagrammer” with a dozen followers or a magazine with a national audience. Hunter says the set-up is simple and that out of 5,000 affiliates, only around 100 have asked Bookshop for help with the process.

In addition to linking on their own sites, publishers can create “storefronts” to show recommended titles from across their coverage. BuzzFeed’s shop has its book club selections, reader favorites, and editors’ picks. Talking Points Memo features a social distancing reading list and books selected by opinion contributors. Electric Literature’s lists include the top novels of 2019, books about refugees, and books with “glamorous messes.”

“It’s a great way to earn extra revenue while curating a shop based on your editorial identity, giving your longtime readers and fans a way to support you and discover great books to read at the same time,” Hunter said.

POSTED     May 12, 2020, 12:19 p.m.
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