From Shelf Awareness:
“At the end of the day, bookshops needn’t fear Amazon,” James Daunt, managing director of Waterstones, said during a keynote speech last week at the Australian Booksellers Association’s annual conference in Melbourne.
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“If the bookshops are good enough, if the relationship with your customers is truly there, if your booksellers are enjoying themselves and you’ve trained them and you’ve respected them and you’ve allowed them to develop their skills… then our customers truly will remain loyal to us.”
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Starting when Amazon opened operations in the U.K. in 2000, the behemoth “slowly ate away at the High Street [downtown] market,” he said, and now has about 60% of the market, including 95% of the e-book market. The casualties have been extensive: most chains, including Borders, Ottakar’s, Dillons, Hammicks and James Thin, have disappeared. Indie bookstores declined from about 1,550 in 2005 to about 600 last year. Indies now account for about 5% of the market, and Waterstones about 16%. “Amazon virtually destroyed us,” Daunt said.
But “all is not doom and gloom,” he said. Amazon is known for doing a few things very well, particularly offering customers low prices on books and shipping quickly. As Daunt put it, Amazon is “alluring for one reason only: they’re cheaper.”
As a result, there is much that bricks-and-mortar stores do that Amazon can’t, from putting on events even “in the smallest of shops” to more generally “giving people a sense of excitement about books,” making books relevant, and keeping books “in the forefront.” He added, “We as booksellers have a duty to create excitement about books. If we do so, we’ll continue to have customers come through the doors.”
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In one of the most striking changes at Waterstones, the company reduced its return rate to 3% from 20%. In part this came about from better buying but also from forgoing substantial promotion co-op from publishers, to the tune of £27 million (around $35 million at current exchange rates). The “wholly destructive cycle” involved publishers “paying us to take particular books.” Besides abrogating buying decisions to publishers, the program also made Waterstones stores less distinctive from one another as well as from their competitors. The change, he added, was painful, like “coming off heroin,” but it had “massive benefits.” Besides improving returns, it “stopped us filling up our shops with books customers didn’t want to buy” and improved working capital by tying up less money. Eventually stock came down 20% and title count rose 20%. The company has also gone from two to five stock turns. He noted that with stock turns below five, “a lot of books are sitting there getting dusty, getting unattractive.”
Cost cutting included reducing head office costs by 60%, cutting costs in the centralized warehouse by 16%, and cutting store payroll by 16%.
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The emphasis on selling and being on the sales floor, also “brought energy into the shop. If you’re literally running around and don’t stop, customers feel that energy.”
Even though Waterstones staff has been cut, Daunt said he’s increased pay for the remaining employees. At Daunt Books, booksellers are paid a salary rather than by the hour. Waterstones pays by the hour but is starting to pay salaries. “We need to pay booksellers more and make it so people see this as a career,” he commented.
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When it named The Essex Serpent by Sarah Perry its Book of the Year for 2016, the title, which before then had sold under 1,000 copies, became a bestseller. Waterstones’ “books of the month” promotions have also increased sales “dramatically” for each title.
He noted that Amazon doesn’t have any impact on these titles, and called it an “urban myth” that people come into stores saying they can get titles at 50% off on Amazon. To the contrary, there is a sense, he said, that “a book bought from a bookshop is a better book…. When a book comes through a letter box or when a book is bought in a supermarket, it’s not vested with the authority and the excitement that comes from buying it in a bookshop.”
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“Price is irrelevant if the customer likes the shop,” he commented. “The book is never an expensive item,” particularly for the many customers who “we know are quite happy to go into a café and spend dramatically more on a cup of coffee.”
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The Waterstones website “doesn’t produce any sales for us,” accounting for less than 3% of the company’s revenue, Daunt said. But targeted e-mails lead to increased sales in shops, and social media is “an opportunity” for local bookshops to communicate with customers.
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Waterstones sells “a lot more things that aren’t books,” with children’s the most successful area, and has done so in “careful and measured ways,” so as not to “compromise ourselves as a bookshop.”
Link to the rest at Shelf Awareness
While he read this, a phrase floated into PG’s mind from an unknown source, “the myths and fables we tell ourselves”.
Traditional Publishing Myth #1: Consumers don’t feel any emotional attachment with Amazon like they do with a local bookstore.
Does anyone who regularly purchases from Amazon not feel a little buzz when a package appears at their door? It’s an event which is followed by an unboxing experience. (If you don’t think unboxing is an experience search YouTube for unboxing. Millions of people watch videos of perfect strangers unboxing their Amazon purchases.)
In survey after survey, Amazon is ranked as one of the most admired and respected companies in the world, usually fighting with Apple for first place. PG has never seen Barnes & Noble or Waterstones on any of those lists.
Amazon has a superb reputation and that reputation carries over to all its product areas, including books. Amazon reviews, sales rankings, etc., are a gold standard for many book purchasers. PG doesn’t discount the existence of phony reviews, but he thinks most Amazon regulars aren’t fooled by such reviews, particularly when a book has dozens of reviews.
When it comes to spending his money PG would certainly give more credibility to a few dozen Amazon reviews about a book than he would to recommendations from a minimum-wage bookstore clerk who will soon be moving to McDonalds because the pay is better.
If a book doesn’t meet expectations, Amazon makes it simple to return it for a full refund. With an ebook, the return process is almost instantaneous.
Locating his receipt and trekking back to a bookstore to return a book is something PG is almost certainly never going to do. The book remains somewhere in Casa PG, reminding PG of his bad purchase choice whenever he sees it.
Traditional Publishing Myth #2: Ebooks are a fad and printed books are making a comeback.
Everybody carries a cell phone and almost everybody consults it on a regular basis. Sometimes, they look at illustrations and photos and cute puppy GIFS, but most of the time, they’re reading text. Actual text messages, email, the latest celebrity gossip, Facebook, The Wall Street Journal, Google search results, Wikipedia, etc., etc.
As of the second quarter of 2015, US consumers began spending more time in mobile apps than watching television (and that includes times when the TV is on in the background and no one is watching it). As TV viewing stagnates, the time spent with mobile apps has increased every quarter since then.
The idea that people who spend hours each day receiving information and entertainment from a screen will prefer switching to a printed book on a regular basis is delusional.
PG would probably be labeled as a frequent reader under most systems for categorizing readership. He reads from books every day. He has purchased hundreds and hundreds of physical books, many of which still populate his bookshelves. The same could be said for Mrs. PG.
PG is not a teenager and hasn’t been for some time. He remembers being a teenager, but suspects many of those memories have been smoothed and brightened during the intervening years.
But he’s on his fourth iPhone.
Over the last couple of years, PG has purchased some physical books, usually through Amazon and always when the title doesn’t offer an ebook version. He always regrets these purchases because they sit on a TBR pile that never grows smaller.
He starts to read each book, but when he puts it down, he never picks it back up again. It’s just not a satisfactory experience for him any more. He just won’t read any long-form text document unless it’s an ebook on his Kindle Paperwhite.
PG has run out of time before he has run out of Traditional Publishing Myths to debunk. Perhaps he’ll return to the topic in a future post, but don’t count on it. Feel free to add your own myths in the comments.