The Book on Co-opetition

Nice to see that Victoria’s Abebooks has finalized a sale to Amazon.com , and at the same time validated a 21st Century business model that is only going to gain strength in future. Abebooks, which began in 1995 as Advance Book Exchange, grew into the world’s largest online marketplace for new, used and rare books, largely by hitching itself to Amazon’s revolutionary business model of selling books online. Amazon has now morphed into one of the world’s biggest general retailers, and in the process changed the retail distribution system forever. But retailing isn’t the the only business process disrupted by the alliance and the Internet. Less obvious, but probably more significant, was the disappearance of traditional – and often stupid — competition. Traditionally, booksellers and many other retailers would be fighting tooth and claw over sales channels because they only saw themselves through one lens – as retailers. But Amazon realized it wasn’t just a bookseller. Its real business was distribution, at first of books and later of many other things. When Amazon started, Abebooks said how about we use your distribution system to sell our books as well. Why not, thought Amazon, we distribute new books, so you’re not really competing with us. And if you can sell used ones cheaper through our channel, we still make something on it. And so a business model was born. It’s called by various titles like alliancing, partnering, etc., but really it just means co-operating with ancillary operations instead of trying to hog everything yourself. By combining differing aspects of a particular field, you both get bigger. It’s “co-opetition” — a communal, sharing, view that says instead of fighting for pieces of a single pie, why don’t we grow the pie as a group. Contrast this with the lone ranger belief of the last half of the 20th century that held you never talk to your “competitors” because they might steal your ideas, or move into your market space. Obviously, this concept worked in Abebooks’ case. It climbed from 0 to a $100 million sale in a little over 10 years. Not a bad entrepreneurial growth story.