Home » Ebooks, Kobo, Non-US » How Kobo overcame great odds & showed maverick thinking to grow into a global leader

How Kobo overcame great odds & showed maverick thinking to grow into a global leader

17 June 2016

From Kobo via Medium:

The Economist’s Canada Summit attracted a jam-packed lineup of business luminaries and big name politicians (including the Prime Minister of Canada Justin Trudeau) to discuss the future of the Canadian economy — and how disruption is a necessary exercise in the quest for global success.

As the leader of one of Canada’s startup success stories, Rakuten Kobo CEO Michael Tamblyn was invited to weigh in. He was billed as a “Big-bang disruptor”, a business leader with the potential to shape the future of Canadian business.

. . . .

They say when you’re starting a new business, you should look for the white space, be first to market, go where your competitors are not. Or there is another option. You can do the exact opposite. In 2009, starting here in Toronto with a handful of people, we picked a fight with the largest ecommerce company in the world, with the most successful hardware company ever, with the world’s largest book retail chain, and the most profitable search engine in history. Seven years later, 27 million users, 20 countries, millions of devices, tens of millions of ebooks and a $315M acquisition later, I get to tell you why that worked, why being Canadian mattered, and why sometimes the best revolutions don’t look like revolutions at all.

Kobo was born to disrupt. More than that, it was an exercise in intentional self-disruption. We were incubated inside Indigo, Canada’s largest book chain, in 2009 in answer to the strategic question: “What happens if many of the Canadians who are currently buying and reading print, start reading digitally?” Kindle had just launched in the US, Sony had ereaders in market, the iPhone was just released. Change was coming: The only question was: was someone was going to do it to us, or would we do it to ourselves.

. . . .

 Today, about 1 in 5 books sold in Canada is an ebook, in some categories it’s 1 in 3 or higher and Kobo is, when last I checked, the largest retailer of ebooks in Canada and one of the largest in the world and the second-largest manufacturer of eReading devices globally.

. . . .

 We could tell that building a great ereading service was going to be a big, capital-intensive project — and that not only was Canada not a big enough market to sustain it, almost no most national book market was big enough to sustain the level of investment that would be required to compete with Amazon or Apple or Google. Go big, because you can’t stay home. We were leaving the era where each country has a dominant book retailer or two and entering a new era where only a few global players would have the scale to compete. The good news was that it meant that the challenge that Indigo was facing — protecting their customers in the face of digital onslaught — was a challenge that every retailer who sold books anywhere in the world was going to face.

. . . .

The second thing we did right was to let go of the gravitational pull of the US. in our first couple of years, we could already see that the US, the richest market for ebooks in the world, was about to become a battleground. It was the home turf of Amazon, Apple, Google, and Barnes & Noble, and everyone wants to win at home. So while our competitors were all engaged in a very expensive fight for control of the US market, we quickly and quietly expanded into every other single country that looked like a candidate for digital growth, places where we could get in early, start building brand and market share. And we gained months, sometimes years of breathing room as competitors later struggled to internationalize systems that had been built to serve the US market alone. As those markets have grown, we have been able to grow with them. So now we find ourselves with the majority of our revenue coming from outside of Canada, with active retail presence in 20 countries, delivering ebooks to another 170.

. . . .

 Publishers and retailers in France are particularly cautious about working with foreign retailers, especially related to ebooks, but our membership in La Francaphonie and sensitivity to France’s tradition of cultural protection helped to get us a partnership with France’s largest retailer FNAC and a very significant French business. Our history as a Commonwealth country who had forged our own distinct English literature helped our partnerships in Australia and New Zealand. In Belgium and Switzerland, we understood multilingual politics, with all of its richness and complexity. In Mexico, we shared with both publishers and retailers the struggle of fighting to keep a distinct national culture while living right next to a neighbour who casts a very long media shadow.

Link to the rest at Medium

Ebooks, Kobo, Non-US

15 Comments to “How Kobo overcame great odds & showed maverick thinking to grow into a global leader”

  1. Umm, the fact that they’re a wholly owned subsidiary of a Japanese e-commerce company isn’t worth mentioning somewhere or other? I have no idea how laissez-faire the home office is, but the one thing we can say is that everything is ultimately decided in Tokyo, not Toronto.

  2. Boy, my timing is really something. I just delisted all the books I had at Kobo yesterday because…well, besides they’re off for the weekends and bank holidays and sugar shack day, and the poutine celebration festival, I have made in my entire time there less than I make in 1 month at Amazon.

    Today I find out they’re marketing geniuses.

    • the Other Diana

      My books are still on Kobo and I’m wondering why.

      I too am surprised that they are called “marketing geniuses”.

      On Kboards, an author was selected for one of their promos, was featured on the first page and IIRC, he didn’t get a single sale.

      Marketing genius? Compared to whom? The village idiot?

      I want to stay wide, but KOBO and BN are making it hard to do so.

      • You’re still at BN? I’ve been BN-free for over a year now and it feels great.

        I don’t even have the intention of putting all my books in Select, it’s just the annoyance of these other woebegones I don’t want in my life.

    • “From Kobo via Medium:” says it all …

      Boucher’s Observation: He who blows his own horn always plays the music several octaves higher than originally written.

    • Rakuten has different ideas about Kobo:

      For one, they haven’t exactly showered Kobo with support.
      (Try looking for them at the Rakuten website.)

      They think so highly of Kobo that after two years they sent their inhouse turnaround specialist over.
      A year later, they bought Overdrive.
      A year after that they took a goodwill write-down on Kobo.

      When Rakuten bought Kobo they had “high single digit” market share in the US. Last I saw I think they were at half that.

      Now, unlike Apple and Google, it’s not for lack of trying. They do try very hard.
      But the results…

      The best you can say is they are popular with techies and hobbyists which means they are players in those markets where ebook sales are dominated by techies and hobbyists, the way the US was before Kindle. In fact, the lower the ebook market penetration, the better they do.

      No, I’m not impressed by their “marketing genius” in letting local B&M booksellers do all the promotional heavy lifting at retail. Seems to me relying on partners with a vested interest against your product isn’t necessarily a good long term strategy, especially when your primary suppliers are actively working to suppress sale of your product.

  3. Don’t make me laugh! This company is a joke. If they can’t even get something as simple as their categories right, how on earth can they be marketing geniuses?

    I wish these stores would all just go away already, and hand over what little market share they have left to Amazon. They’re wasting everyone’s time. (And this is coming from someone who is and always has been wide, doesn’t trust Amazon, and makes more than half her income outside of Amazon).

  4. They’re doing something right – Kobo has been my best non-Amazon market for 10 of the last 12 months.

    • Interesting. Apple is my best non-Amazon market, providing a steady trickle of sales every month. Kobo and B&N do very little for me. (Although I think some of my paperback sales may come from B&N via the CS expanded distribution option.)

      • In France, Kobo does much better than Apple for me. Still behing KDP and Createspace (except one month last year). Much more though than I would make on KU, if my tests results are to be believed.

        But one thing has to be said : their supplier support service is even worse than KDP’s — and that’s something ! At least in this aspect they have distinguished themselves.

      • That was my experience. Apple did better than B&N and KOBO combined

  5. I was informed by the Kobo rep at RT that they had no plans to change the search engine to account for keywords. Her explanation was that their customers don’t search by keywords: they know what they want and search by title and author.

    Shopping at Kobo teaches you that’s the only way you can search, and this alone accounts for why their sales are microscopic compared to the bookstore where you can browse. You can’t find anything you don’t already know about.

    • It’s very likely true.

      One, because their primary customer base are ebook enthusiasts and firm believers in interoperable epub: techies and hobbyists, not mainstream book buyers. Very different shopping strategies. Me, I never search for keywords at Amazon. Nor do I bother with the new releases list or rankings. I enter the author’s name and see what’s available that I don’t have or, if it’s a recommendation, go straight to the recommended book. Of course, any business looking to survive off my kind of buyer is headed for a fast crash: I’m a minority within the minority of my genre’s reader base.

      Second, they may not realize they’re filtering their potential customer base. If a liquor store only stocks white wine, word will quickly get around and beer drinkers and red wine drinkers will quickly get the message that they’re not welcome and take their business elsewhere.

      They may be so focused on the behavior of their existing customers they don’t even know other types exist.

      Being a niche player within a minority sector (generic epub) of a larger market (ebooks) is not conducive to fast growth in that larger market, even if they succeed in cornering the market within that niche.

      Their strategy actually reminds me of Palm Technologies’ response to Microsoft’s pocketPCs. They swore they would defend their market share at all costs and did so by effectively cornering the market for low cost connected organizers. None of the PocketPC vendors ever got much traction in the sub-$200, b&w organizer business. On the other hand, they made tons of money selling pocket computers to the corporate world and upscale consumers which turned out to be the only profitable side of the business. (And only until smartphones subsumed that functionality into *their* business.)

      Sometimes businesses stick a little too tightly to their knitting and end up the dominant player in a backwater when the bigger market moves on. Things rarely end well for them.

      I don’t doubt that Kobo’s strategies have made them the top player in interoperable epub. Unfortunately, the real money is going to the walled gardens.

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