Home » Amazon, Bestsellers, Big Publishing, Bookstores, Disruptive Innovation, Indie Bookstores, Mike Shatzkin, Nook » Barnes and Noble results and the latest news from Perseus

Barnes and Noble results and the latest news from Perseus

15 September 2015

From Mike Shatzkin

The most recent Barnes & Noble financial results — which appear to have discouraged Wall Street investors — aren’t good news for the book business. They show that the sale of books through their stores is flat at best, as is the shelf space assigned to books. And it would take a particularly optimistic view of their NOOK results to see anything but an accelerating slide to oblivion for what was, for a time a few years ago, the surging challenger to Kindle.

***

The real failure we see at B&N, which almost certainly affected the NOOK business as well as the stores, was that the customer knowledge within the dot com and NOOK operations apparently has never been used on behalf of the store business. This might be blamed on organizational silos that ran these three components as separate businesses. The failure is otherwise hard to explain. How hard can it be, really, to dig up email addresses of people who bought a book by a particular author to let them know s/he’ll be autographing books near where they live sometime soon?

Or, putting that in terms Barnes & Noble should relate to, might you not be able to charge the publishers a promotional fee for doing that? (AND you’d drive more traffic and sell more books!)

***

The people who own and run B&N are plenty smart. Before the game changed and was complicated by the online option, they had organized their supply chain to give them real competitive advantage over Borders and all other book retailers. But they were tripped up by a combination of Amazon’s longer-term view as an upstart in the 1990s and early 2000s when B&N was an established and profitable company. This was a classic “innovator’s dilemma”, failing to employ a new technology to maximum advantage because a legacy position was being defended.

Amazon was willing to lose money for many years to build its customer base. That was how they could build their stock price. B&N was a profitable company at the top of their category. Profits were how they grew their stock price. This not only discouraged deep investment in the early years of online bookselling, it discouraged the kind of discounting from their online store that Amazon did. Both of them knew that discounted books online put competitive pressure on the brick-and-mortar business. That was fine with Amazon. It was not appealing to Barnes & Noble.

***

When B&N decided to go after the ebook market with the NOOK, organizationally they did it with a dedicated and largely independent effort, not an integrated one. That might have been necessary. But it also might have been B&N’s last chance to build on its one distinctive advantage: having a strong store base and a real dot com business. (Borders never had the latter and Amazon, of course, doesn’t have the former.)

***

But the time B&N has to change the reality that they can’t seem to grow their market share continues to shorten. The one big advantage they are likely to retain over their competitors in Seattle — who are certainly growing theirs! — will be a cooperative attitude from the publishers, who live in fear of Amazon’s growing power. But even that advantage has its limits.

Link to the rest here.

As a long time reader of Mikes blog I have to say this is one of his better posts. Some of this will no doubt be read by many here as information they already had, but the break-down is spot-on.

As for the changing landscape of B&N and its effect on the Big Five Randall views it as self-fulfilling. The dwindling shelf space at B&N will eventually lead to only the bestsellers being available. This will reduce the mid-list titles to an even smaller portion and effectively lock the Big Five into the blockbuster model for the remainder of their existence.

However, if you find yourself in sudden need of a birthday card, stuffed animal, calendar, scented candle and cup of coffee, B&N is your place for one-stop shopping. 

Amazon, Bestsellers, Big Publishing, Bookstores, Disruptive Innovation, Indie Bookstores, Mike Shatzkin, Nook

20 Comments to “Barnes and Noble results and the latest news from Perseus”

  1. It all sort of ignores the fact that B&N has proved to be absolutely abysmal at customer service. It’s HARD to acquire customers, and once you’ve got one, you want to do whatever it takes to hold onto them. Attitudes towards customer service start at the top and permeate the organization. When it comes to this, Amazon vs B&N is a study in contrasts.

  2. Wow, that didn’t even read like on of Mike’s pieces — like PG, is he off the clock and someone else filling in?

    Yes, Amazon is eating B&N’s lunch, but just because they’re doing a better job — no ‘evil’ needed — it’s just business …

  3. To me it read like a post-mortem.
    (Or 60’s british SF. 😉 )

    All hope is lost, the last champion is fallen…

  4. “The people who own and run B&N are plenty smart.”

    When did Shatzkin start doing stand up?

    • I think of them as the Sheldon Cooper of the publishing world.

      Smart? Yes. Totally clueless? Also a yes.

      • Smart would’ve been to spinoff/IPO NOOK after the MS and Pearson investments when it was valued at $2B and people thought they controlled a quarter of a growing ebook market.

      • @ Randall

        “Smart? Yes. Totally clueless? Also a yes.”

        LOL. Yeah. Smart. As in “Maxwell Smart”. And clueless, too. Just like Max! 🙂

        …and the Nook has turned out to be like a shoe phone!

        • I’m thinking it’s more of a cone of silence when all is said and done.
          After all, the shoe phone was weird, but it worked. And its cellular tech was decades ahead of its time. 🙂

  5. Hey! You have to call him ‘veteran publishing consultant Mike Shatzkin’ on tPV or it’s all wrong…

    • Ooh, excellent point, Lexi. Sometimes we vacation bloggers have a hard time keeping the rules straight. Might have to sacrifice a chicken now…(in my case a 100% soy-based fowl)

  6. “They show that the sale of books through their stores is flat at best, as is the shelf space.”

    I LOLed. It’s been a long day.

  7. I’m just really sad they didn’t go all-out and top-flight with the Nook projects and make the stores more “futuristic”–which they could have done. And SP friendly. They could have done so many cool things to make the bookstores really exciting. And the Nook well-supported and fun.

    Too bad.
    RIP

  8. The albatross around B&N’s neck is the Big 5. They are so irrevocably tied to co-op and paper that they could never seriously go after the ebook market. There was a short time, in my local B&N, where the Nook stand was displayed front and center as you walked in the door. Right where the hardback best seller table had been. You can imagine the frowns and chagrin from Big 5 execs at that. Since that time, the Nook displays have crept farther and farther back into the store, where it is more of an afterthought now. “Oh, yeah, and we also have this new-fangled ‘electronic reader’.”

    • This.
      You cannot serve two masters.
      Amazon chose consumers; B&N chose the BPHs. They bet on the wrong horse.

  9. “However, if you find yourself in sudden need of a birthday card, stuffed animal, calendar, scented candle and cup of coffee, B&N is your place for one-stop shopping.”

    Actually, I can get all that stuff at my local grocery store. And since I’m going there anyway… 🙂

    Dan

    Plus, that grocery store has books, too.

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