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How the Book Market Shift Could Hurt Amazon

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Aug. 17 2017, Updated 6:35 a.m. ET

Sales of e-books down 18.7%

Amazon (AMZN) has responded to the declining interest in e-books and the rising interest in printed books by opening physical bookstores in several US (SPY) cities. Amazon says that customers can visit its bookstores to “discover their next great read, and to learn about and explore Amazon devices.”

According to the UK’s (EWU) Publishers Association, consumer e-book sales in the country declined 17% in 2016, yet sales of printed books and journals rose 7%. The same trend played out in the US, where the Association of American Publishers said e-book sales plunged 18.7% in the first nine months of 2016. However, printed book sales rose 7.5% in the same period.

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Risk of weakening e-reader demand

However, Amazon’s bookstore move may not protect it from all the pain arising from consumers turning from e-books to traditional print books. In a thriving e-book market, Amazon also gains from the sales of e-readers. Amazon sells a variety of Kindle e-readers.

As consumers return to printed books, demand for e-readers is sliding. According to Euromonitor International, a consumer research group, e-reader sales plunged more than 40% between 2011 and 2016.

The rise of tablets and print books

The rise of tablets triggered the initial wave of the e-reader decline. The return to printed books seems to have contributed to decline of the e-reader market.

Interestingly, tablets are also facing a threat from the rise of large smartphones, or phablets. Apple (AAPL), Samsung (SSNLF), and Alphabet’s (GOOGL) Google are all producing large smartphones to take advantage of the strong demand for phablets.

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