The Biggest Reason Amazon.com, Inc. (AMZN)’s Goodreads Acquisition is Good Business

So, it’s easy to see the benefits of being the premier book retailer on a website like Goodreads. For a long time, Amazon was the exclusive retailer linked to by Goodreads. The website previously used Amazon’s API to gather book data and images. Goodreads overhauled its website ditching Amazon’s API last January, however, resulting in prominent positioning for links to Barnes & Noble.

Since then, Goodreads’ user base has more than doubled and the websites influence on book purchases has certainly increased. The potential for Goodreads’ American user base to expand is likely capped by the 20% of adults (44 million) making 79% of book purchase, but that means it can still triple its user base before looking to expand abroad.

Amazon has the infrastructure to expand this website relatively quickly, which will help accelerate its dominance in book and eReader sales, much to Barnes & Noble’s chagrin. In Codex’s most recent survey, 5% of frequent book purchasers had visited Goodreads in the previous week. Yet, book-centric social networks accounted for as much book discovery as search engines and social sharing sites like Pinterest combined. Amazon will likely be able to improve the stickiness of the website as well, which will further increase its influence.

The big wins

With the Goodreads acquisition, Amazon is going after the customers that can provide them with the most sales. It can use Goodreads brand to market its books and eReaders to the people most likely to buy them. While the rest of the media is focused on what I believe are ancillary benefits, the big wins lay in the hands of the 20% of the population most likely to use Goodreads and make 80% of book purchases on Amazon.

The article The Biggest Reason Amazon’s Goodreads Acquisition is Good Business originally appeared on Fool.com and is written by Adam Levy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.