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Amazon Becomes First Foreign Owned Book Distributor in Canada

Back on March 9th, we reported here that Amazon was wanting to hire its first ever Canadian employee and ship its first book from a distribution base located on Canadian soil.    Last week, that desire became reality.

The Globe and Mail reports who capably handled the earlier story — Omar El Akkad and Marina Strauss — continued with it on April 12th; choosing a quotation or two wasn’t easy; these are highlighted paragraphs only, you should click here to read the entire article:

Ottawa said it will allow U.S. on-line bookseller Amazon.com Inc. to set up its own distribution centre in Canada, a second major move in recent months by the federal government to effectively override foreign-ownership rules.

The ruling allows the Seattle-based firm to cut its costs significantly, prompting heavy criticism by local booksellers who say it will allow Amazon to price Canadian businesses out of the market…

…“This signals a government of Canada policy change confirming that a company no longer needs to be Canadian-owned to sell books in Canada,” said Heather Reisman, chief executive officer of Indigo Books & Music Inc.

The government’s approval of Amazon’s plans follows a surprise December decision that opened the door for Globalive Wireless Management Corp. to begin operating a wireless network in Canada, overturning a ruling by the Canadian Radio-television and Telecommunications Commission that deemed Globalive to be a foreign company because of its Egyptian financial backing…

…Amazon.ca is a website that has no physical presence in Canada. Had Ottawa rejected Amazon’s shipping centre application, the government would have found itself in the untenable position of saying the company’s business runs afoul of Canadian rules, while at the same time allowing Amazon.ca to operate outside those rules.

Instead, the Conservative government secured a number of “commitments” from Amazon in exchange for approving the distribution centre.

According to Heritage Minister James Moore, those “commitments” include a $20-million investment in Canada…

…However it’s unclear how much of the $20-million investment is new money. In addition, many of Amazon’s commitments are vaguely stated, such as “increased visibility for Canadian books on the Amazon.ca Web page,” “increased availability of French-language Canadian cultural products” and “making more Canadian content available on the Kindle e-reader.” Neither the government nor Amazon supplemented these promises with hard numbers, or indicated when they would begin to take effect…

…Again, you’re encouraged to check out the entire story.

Meanwhile on Saturday, also at The Globe and Mail, columnist James Adams suggests much more is afoot:

…Still, the decision, announced Monday, is important, momentous even. It may be the case that the Conservatives were bowing to the reality that Amazon was already in Canada as an e-tailer (albeit working through a subsidiary of Canada Post, a Crown agency, rather than a retailer with hundreds of physical locations). But some are arguing the decision is nothing less than a reversal of the cultural protection policy that’s been in place since the Trudeau era. For Heather Reisman, CEO of Indigo Books & Music, the situation is pretty clear. This week’s decision “signals . . . a policy change,” she said in an e-mail. “[It confirms] that a company no longer need to be Canadian-owned to sell books in Canada.”

A change in culture policy?

…Heritage Minister James Moore would allow, during Question Period in the House of Commons… “We will create new Canadian jobs in Mississauga.” The same went for Paul Misener, Amazon’s vice-president for global public policy: “We believe that a local fulfilment center will enable us to even better serve our customers in Canada as well as our customers in other countries who seek Canadian books and other cultural products,” he told The Globe and Mail in a statement.

Could there even be more than one facility? In the United States, books are only a small part of Amazon’s retail offerings (a low-margin one at that) – and you don’t earn gross annual revenues of $25.3-billion, as Amazon did last year, by selling Dan Brown’s The Lost Symbol at a 42 per cent discount.

Over the years, Amazon has steadily increased its choice of wares to American consumers to the point that there’s pretty much nothing they can’t order – baby food, toilets, musical instruments, faucets, beauty aids, power drills and, of course, the Kindle e-reader. Asked about future plans to expand their offerings in Canada, an Amazon spokesperson would only say: “We don’t have anything to add at the moment – I’ll let you know should that change.”

Changes might not be too long in coming. Last December, when The New York Times asked Amazon.com chief executive Jeffrey Bezos, “What is your goal, exactly?”, he replied: “We want to have Earth’s biggest selection.”

Continue reading that piece here.

For our industry, Heather Reisman’s concerns are representative.   This is a selling out of Canadian sovereignty over a “cultural industry” and opens the floodgates for Borders, Books-a-Million and Barnes & Noble to look north for expansion; stores which carry a much, much larger percentage of Christian book bestsellers than our own Chapters; not to mention chains like Family Christian Bookstores.

Don’t assume that won’t happen.

  1. May 24, 2010 at 9:31 am

    Amazon is really getting into everything now 🙂

  1. May 13, 2010 at 8:11 pm

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