Wednesday, February 24, 2010

What Amazon needs to do to keep the Kindle #1

The Ipad, the Nook, Sony E-reader, the list of competitors goes on and on.  Feature comparisons are helpful but currently Amazon has a hole in their strategy that no one is talking about.  It's so obvious that I frankly can't understand why it isn't being discussed more.

I understand why Amazon is reluctant to change their strategy as it has ramifications to their overall business model as well as their profit margins.  It would also require them to create alliances with competitors.  Yet, it is something I think they need to do to stay #1.  If they don't, they are violating one of the basic business rules of all times.  Distribution.

Think about where people buy books.  Sure, many of us buy our books online but those are the planned purchases.  It's the impulse buy that I see as a big threat to Amazon.  People buy books at many retailers including retailers in the mall.  All the other e-readers have no problem including their product at most any retailer including bookstores in the airport.  But not amazon.  So I can' touch, feel or play with the Kindle like I can with the Nook, e-reader or eventually the overhyped IPAD.

Amazon needs to partner with some retailers and allow them to sell the Kindle in retail stores including stores in the airport.  In fact, I think a kiosk in the airport may be the smartest move Amazon can make.  Instead of me picking up a new book at the airport, I pick up a new Kindle as well as the new book.  Impulse buys are so important to retail and especially to books. People pay full price for books in the airport and would be happy to recognize their ability to save money overtime and their ability to download books anywhere and anytime (except on the plane!).

And that is where the Kindle does seem to still excel.  It's distribution model once you have the actual Kindle is quite good. 

Amazon has done and is doing a great job, but putting Kiosks in the airport and partnering with select retailers to carry the Kindle will go a long way towards keeping the Kindle #1 as the competition heats up.  If they don't, there is a strong chance that the rule of distribution will cause it to lose the leadership position.