Publishing business: exploring Amazon

When I returned from years abroad in 1983, I pitched my grub stake into a publishing company. I gained a good idea of the “classic” (prehistoric) book sales and distribution system.

In recent years, I have been experimenting with new systems of publishing, self-publishing, and e-books. I have had an especially interesting experience in the last few days that might be worth sharing. This has to do with that crazy quilt of Amazon prices displayed in a previous post.

A couple of weeks ago, I self-published a nonfiction title under a pseudonym using Amazon’s captive POD company “Createspace.” A few days ago, Createspace showed that the first copy had printed and sold.

I went to Amazon’s main product listing page, and there stood my authorized price of $12.95. Under the heading “More Buying Choices,” there were five vendors offering to sell my book “new” and one offering to sell a “used” copy. Prices ranged from a low of $10.XX to $29.XX.

In summary, if I am the publisher, if CreateSpace manufactures per Amazon orders, then where did these vendors get books to sell “used” and “new”? Especially since the known universe holds exactly one copy of this title? (Today, the situation became even more paradoxical. Some 10 copies are selling new and three used.)

This curiosity can be found all across Amazon? What does it mean?

POD author Aaron Shepard has the answer, if you can stand a few twists and turns.

Shepard says Amazon’s Createspace actually outsources much or all of its printing. The printer they use is LightningSource, a company captive to Ingram distribution. The booksellers in the Amazon Marketplace are ordering the nonexistent books they offer through Ingram or LightningSource in response to your order of their “new” and “used” copies for sale. Because the transaction occurs through Amazon, the sale contributes to an overall Amazon sales ranking. Because LightningSource is printing a CreateSpace title, CreateSpace gets paid and that flows through to the author.

In other words, the booksellers have accounts with wholesaler Ingram and pay a wholesale price for the title which they then mark up to sell through Marketplace. (Anyone reading this blog can open an account with Ingram or rival Baker & Taylor. At least that was the case in 1987, last time I looked.)

So when you order my nonexistent book through a Marketplace seller, you are triggering a chain of events whereby the seller places an order with the wholesaler who orders a print job which is then shipped to the seller who must ship it to you. Convoluted!

And now it gets even more fun. I sell the occasional old or unwanted book or DVD in the Marketplace myself. I have two business days to confirm that my order shipped or Amazon downgrades my seller rating. Based on my experience as an occasional Marketplace seller, there is no way these sellers of my book could receive an order notification from Amazon, order their copy wholesale, await manufacturing, receive delivery, and then ship to the buyer within two days. I checked the number of stars on the mystery sellers of my book and they were (ahem) stellar. So they must be lying to the buyer and to Amazon to maintain that rating.

There is another possibility, however, outside of my personal experience. Sellers can opt to have Amazon stock and ship their merchandise. It seems possible that under that arrangement, the order would come in to Amazon, Amazon would request stock from the seller, and the seller would place an order, attesting to that, and this would be sufficient for Amazon to close the ledger on seller obligations in fulfillment. Not sure.

To try to see what happens in this trail of events, I went to Marketplace and ordered a used copy from one seller and a new copy from another seller.

My used vendor acknowledged the sale within the two day limit, indicated the used copy was in “mint” condition, and gave a delivery range of 7/23-8/7. “Your order is on its way and can no longer be changed.” It was never “used” of course, this is a sales stratagem related to the pricing level marked up from the wholesale cost.

My new vendor sent a shipped notice today, two days beyond the allowable window. The discrepancy in ship dates is interesting. The new guy may have actually waited to get book in hand before claiming a successful mailout. His notice gives me a delivery date range of 8/10-8/23.

Both orders were placed on the same day.

My reality, then, reflects one book sold through CreateSpace on Amazon, two through Marketplace. But right now, the CreateSpace account is showing two sales, not three. This could mean a second “organic’ sale has registered while my self-generated sales still work their way through the system. It may also mean that CreateSpace has not yet received the orders, much less shipped the books.

These are the half-baked stories I tell myself to understand the kinks in this weird Amazon pipeline.

There is still the mystery of wildly overpriced listings competing with my own edition. My best hunch there is that this is a publicly established (high) price to validate a false inventory valuation. Short story: tax scam. Wife’s guess: money laundering.

You want shady, we got shady.

Update 8/1/12: One of the orders came in today - from England!