The French Senate has unanimously approved a law that prohibits online booksellers to combine a 5 % discount with free shipping. That is a blow for Amazon, which dominates the French online book market with a market share of 80 %.
Amazon dominates too much?
Minister of Culture Aurélie Filippetti has kept her word: she vowed to protect traditional book stores from the dumping tactics used by the Amazons of the world. It took fifteen years for the internet to become France’s third largest book sales channel, with a market share that now reaches 17 %. Traditional book stores are still first, with supermarkets (both specialists like Fnac and classic supermarkets like Leclerc and Carrefour) coming in second.
French publishers can decide the fixed book price since 1981, but that principle got weakened throughout the years and a 5 % discount on that fixed price was allowed. Amazon is now not only offering that 5 % discount all the time, but also offers free shipping.
The result is that Amazon now dominates online book sales with 80 % of the market, strangling all competition. Other online parties (like Fnac.com, which has had to follow suit and see costs rise) suffered, but traditional book stores fared the worst. The profitability of an average French traditional book store is between 0.6 and 2 % of the total turnover.
"Fair competition "
The new law now prohibits the combination of free shipping and the 5 % discount: “This law is not intended to hamper online book sales, but to ensure fair competition. This is one of the elements to support the book sector”, Minister Filippetti emphasizes.
Amazon obviously disagrees: “Every measure that increases the price of books online,first and foremost punishes the French consumer, undermining their purchase power.” Traditional retailers also had to admit their victory was only symbolic, as Amazon is still free to ask just 1 cent for shipping costs.
“This is a symbol, but an important one when you realize Amazon’s and Fnac.com’s entire communication is based on that free shipping”, Guillaume Husson of the “Syndicat de la Librairie française” stated: “It will be more difficult for them to communication about cents... From now on, a book will always be cheaper in stores than online.”
The trade union has accused Amazon of “dumping practices” for a while now. The American giant “sells with a loss to kill off competition and gain a monopoly in the book market. After that, they can raise prices, which will not benefit readers”, Guillaume Husson believes.
(Translated by Gary Peeters)