Waterstone's closes book on Amazon

Bookseller Waterstone's has won approval from observers for ending its arrangement with e-commerce giant Amazon.

The HMV-owned book chain has used Amazon as its online channel since 2001, which meant it was effectively redirecting potential customers to Amazon. It has now decided to go its own way after the online share of the bookselling market exceeded its expectations.

"The market was very undeveloped [five years ago]," said HMV Group spokesman Paul Barker on Wednesday.

"Internet book retailing was only five percent of total book sales in the UK, and it looked at that time as though the market would probably grow to 10 percent in total, and we took the view at that time that it was a subset more appropriate for a national monopoly such as Amazon," Barker told ZDNet UK.

"It’s now around 11 to 12 percent, a level where we should take control ourselves of our own destiny online."

Barker denied regretting the Amazon association, saying it was the right decision at the time. He admitted the move would put Waterstone's in direct competition with its erstwhile partner, but expressed confidence that the chain would be able to effectively transfer its reputation as a specialist bookseller online.

Barker would not give details of the upcoming Waterstone's site, other than to say that "some of the functionality will be based around creating a genuinely new community for booklovers and readers".

Joel Rickett of industry publication The Bookseller called the move "long-anticipated" and "absolutely logical".

"In terms of share of the book market, Amazon has grown spectacularly in the last few years and a lot of that’s come from the high street, and shops like Waterstone's," Rickett told ZDNet UK on Wednesday.

"Waterstone's earned a very small commission from Amazon on the site. It really was an Amazon brand. Waterstones now need to have a distinctive presence online."

Although it will be tough for Waterstone's to make inroads into Amazon’s market share, Rickett said there will be "more space" in the market as people grow comfortable with online buying.

Amazon’s diversification into a multitude of other services would also mean "there probably is room for the leading specialist book brand to develop a site that’s completely devoted to books," he said.