“Champions aren’t made in gyms. Champions are made from something they have deep inside them: a desire, a dream, a vision.” Muhammad Ali
Leverage Used Outside the Bargaining Table
By Marianne Eby
Another company founded in a garage, Amazon.com is the world's largest online retailer, responsible for sales of one third of the books sold in the United States alone. Being that big and powerful doesn't make Amazon.com's negotiations any easier. Looking at the state of negotiations with one of its suppliers, Hachette Book Group, a billion dollar publishing house, we can observe the use of leverage away from the bargaining table to influence negotiations.
Despite Amazon's stock tumbles this year, or because of them, the giant online retailer is flexing its negotiation muscle. There are a variety of book titles that consumers are having trouble getting their hands on while being notified of delayed ship dates and being offered alternative titles from other publishers that can ship quicker. Those titles on the slow boat are owned by Hatchette Book Group, one of the top 5 publishers in the world, and a behemoth in its own right.
For example, if you want Mariano Rivera's memoir, "The Closer" which was published last week, and you go to your Amazon account, you may have to wait 2 to 5 weeks to get the book written by the guy with a 90 mph fastball. Of course you can go to a local bookstore for instant gratification, or order from another online retailer and get it in about 24 hours. But Amazon knows that we want to get it from Amazon, because that's where we get most of our stuff. As reported in the New York Times, Amazon has been down this road before and it gets the deals done.
Hachette Book Group out of France is no small player, as the world's third largest trade and educational publisher. And Hachette isn't taking this sitting down, but is getting the press out, letting everyone know that it's top requested titles are being held up by Amazon, not by Hachette. Does that make you want to go elsewhere to get your favorite Hachette titles? On the surface Hachette is taking the high road, and publically emphasizing the relationship of good will that it has built with Amazon.com, while letting the press have a field day with this turn of events.
Amazon.com probably wants the same trades any online retailer wants from its suppliers -- bigger discounts and longer payment terms, and other favorable treatment as a preferred customer. It can only do so much at the bargaining table. The real leverage is in its business strategy and risk tolerance -- how much of our allegiance is Amazon willing to wager?
There's no silver bullet to negotiating with a customer you can't afford to lose, and Hachette probably can't afford to lose Amazon.com.