First and foremost, I like amazon.com… as far as I can tell, they have zero politics and will attempt to get anything they possibly can. With the zAuction shops you can even find some titles that are out of print that people are willing to unload. I think that’s sweet.
It doesn’t work for everything, though. When I’m looking for a programming book (I’m self-teaching and pretty beginner-ish) all the reviews in the world won’t help me, I have to look at the book itself. Going by amazon reviews, I’d have purchased (for example) C++ Primer Plus a while ago, but when I was at Borders looking it over I saw that it didn’t immediately offer me more than I already had in two other works. That’s $50 that Borders saved me by having the title in stock.
It seems to me that the issues people touched on here are all quite valid. A large chain gets better prices from publishers and other distributors, where the small guy really doesn’t. But the small guy is only limited by his own capacity to keep the store running; I don’t believe larger booksellers’ managers necessarily have the options available to stock the shelves the way they might like to (frankly, I don’t know, but I doubt they have all the choices available that an indie has). This means independent booksellers might be more niche markets than chains, which is what we would expect. Movie theaters have gone this route, for sure. There’s a shop, I believe it is in San Diego area, that caters pretty much exclusively to the horror and sci-fi crowd. You won’t find anything by Sartre there, but if you need any Heinlen or Matheson you won’t miss a thing.
The problem is, there is a nearly universal demand for books, but to support niche markets the population center has to be pretty large. The alternative is for chains to allow much more flexibility in profit margins and things to stock, but this starts to cut into what makes them such a valuable resource in the first place: their large buying power.
So in short, I don’t think large chains can cut down indie booksellers where there is a desire for indie booksellers and niche markets. Niche markets is likely where indie booksellers will need to shift to in order to remain viable, provided there is a large enough base. No one can be everything to everyone, so they need to recognize what their strengths are and stick to that.
Amazon can’t put Borders out of business, and I don’t think Borders can put indie bookstores out of business, assuming all parties recognize the market they can serve and reamin viable.
This debate is not dissimilar to the cry I recall hearing when chain convenient stores starting taking over towns, or when Wal Mart or K Mart would come in and decimate local businesses. The perception was that these giants were crushing juggernauts. But I still see many indie convenient stores.
I think the mantra here is “No one can be all things to all people in a given market”.