What small business can learn from Amazon’s acquisition of GoodReads

Amazon Goodreads


GoodReads is a social media site focused on sharing books. It is based on a wide network of people coming together to review their favorite books, and help others discover new books to read. GoodReads is now the largest and fastest growing book sharing site. Amazon’s core business is selling books, so Amazon has a vested interest in what people are talking about. There are some people who think this will hurt the growth of GoodReads because there has been a history of people going onto Amazon and posting false reviews. GoodReads users are worried that this will happen and devalue the content that is posted to the site, but this should not be a problem because GoodReads staff is staying on, and Amazon plans on letting the two businesses stay independent.  I’m not going to touch on the whether or not I think it is good or bad for the book industry. For more background information click here.  I am going to focus on what small business owners can learn from this acquisition; customer prioritization, Customer engagement, keeping up with trends, and tracking what’s important.

Customer Prioritization

The Pareto Principle or 80/20 rule applies very heavily to business in a couple of ways. First, 80% of the problems come from 20% of the customers. Get rid of those customers, and you will get rid of almost all of your problems. Next, 20% of your customers contribute 80% of your revenue (these are guidelines, not hard and fast rules). This is what Amazon is focusing on right now because not that many people actually read, but the ones that do read a ton. Actually 19% of our population does 79% of all the reading (sound familiar?). Most people that read a ton frequent GoodReads. They contribute reviews, feedback, and socialize. With this acquisition Amazon has officially targeted the best 19% of the population. Good idea? You bet.

Small business tip #1:

Find where your best customers hang out and target them.

Better engagement for customers

Engagement is the new buzzword, and there is a good reason for it. As we have discussed, traditional advertising is dying, so businesses have to find a way to get people interested in the brand. The way to do that is to provide something of value to your customers so that they want to spend time with your brand. Some companies do this through blogs, some try to post on social media, and others spend millions of dollars to own their own social network (Amazon, google, Justin Timberlake). The point is you have to find a way to add value to your customers’ lives before they actually purchase anything. As an added bonus Amazon will have better tracking and monitoring of what customers care about. This is where some people may have ethical concerns about the integrity of the content that will now be available on GoodReads, but as of now we may as well give Amazon the benefit of the doubt.

Small business tip #2

Add value to your customers’ lives and find a way to get them engaged in the business.

Keeping up with Trends

A couple years ago people found books by walking into a bookstore and looking at the displays. Today that trend is changing, and in store displays at bookstores don’t drive sales like they used to. Now people look online for information, and eReaders have made the transition from stores to online move exponentially faster. Amazon sees this transition so they are positioning themselves to be where the consumers are. GoodReads is Amazon’s display at the front of the store.

Another trend is that word-of-mouth is starting to take over. Social media is responsible for this, and it is really simple to understand why it is happening. For example, what do you trust more: an advertisement or someone with no ties to the company? GoodReads drives word-of-mouth and now Amazon is in the driver seat.

Small business tip #3:

Look at where your industry is going, and position yourself to weather the storm.

Track what’s important

Amazon found a section of the population that genuinely cares about books and reading. This is their core business and a segment that they want to dominate, and this acquisition will help do that. Basically Amazon can now listen to what their best customers are saying, and if they know what their customers want, Amazon can keep them happy. This is really the most important thing to know about business – keep your customers happy. With all of the technology we have these days, this should be fairly easy to do but it isn’t. Why? There is too much information. Paralysis by analysis. We’ve discussed how the Pareto Principle applies to customers; well it also applies to information. Technology can do great things for your business, but only if you use it effectively.

Small business tip #4:

Find the information that is important to your business, and track this information. Do not get bogged down in the minutiae.


Obviously small businesses do not have the resources to execute a deal like this, but we can all learn from the reasoning behind it.  We have to target the right people, engage our customers, keep up with the trends in our industry, and track what is important. Find small ways to accomplish these tasks and watch your business grow.

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