Barnes & Noble, Amazon, Independents: Who’s Disrupting Whom?

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From Forbes blogs:

No doubt big-box stores in any industry are disrupters. Walmart, Sam’s Club, The Home Depot, Lowe’s, Costco and many others have disrupted the retail industry as we knew it. At one point, when Walmart stores would come into small towns, retail experts would conduct workshops for local competitors on how to stay in business alongside stores that focused on low prices and large selections.

The same thing happened in the book industry. Arthur Hinds & Company was founded in 1886 in New York City, and recent Harvard grad Gilbert Clifford Noble got a job there as a clerk. By 1894, Noble became a partner and the new store was called Hinds & Noble. In 1917, Noble bought out Hinds and formed a partnership with William Barnes, and the name of the business was changed to Barnes & Noble. At its peak in 2008, Barnes & Noble had 726 stores, as well as a chain of 674 college bookstores. In April 2017, a corporate report said the number of stores was at 632.

. . . .

But even with Amazon and Barnes & Noble gobbling up most of the market share, some independent bookstores have been able to survive, or even thrive, in the competitively-priced landscape of the industry by offering not only the latest books, but also hard-to-find older books, many of them used. Local authors play an important role in the success of independent bookstores. Now, some indie bookstores, such as Powell’s in Portland, Oregon, are as big, if not bigger, than some Barnes & Nobles, while others like Left Bank Books in St. Louis, Missouri, have a smaller footprint.

. . . .

[A] recent RetailWire article reported that Barnes & Noble, once an indie killer, is struggling to compete against some of the independent, Mom-and-Pop stores. I’m not sure that’s accurate.

. . . .

Was the recent shift to online retail in the book industry a surprise to Barnes & Noble? No, it figured out years ago that the retail landscape was changing. It recognized that its own Goliath was Amazon.

. . . .

While the headline in RetailWire said that Barnes & Noble was losing out to Mom-and-Pop retailers, I’m not sure I’m in agreement. Yes, the independents are doing well, but the entire retail book industry is evolving. The smaller stores that have survived and thrived are seeing the retail landscape favor them a bit.

Link to the rest at Forbes blogs and thanks to Dave for the tip.

Contra to the OP, PG suggests that Barnes & Noble did not understand that Amazon was a serious, even deadly, competitor until way, way too late to do anything about it.

BN’s online efforts were ridiculously bad, but it was a serious error in judgment not to move online far earlier when it would have been easier to compete toe-to-toe with Amazon.

Barnes & Noble also made a classic error in declining to be price-competitive with Amazon. Online, books are fungible commodities – the same no matter where you buy them – and Barnes & Noble never did anything effective to persuade readers it was a better place to shop than Amazon was.

PG also believes that Amazon’s early and continuing embrace of self-published books was and is a huge competitive advantage over Barnes & Noble and everybody else. With Amazon’s incentives to sell indie ebooks on an exclusive basis, it had an inventory advantage that no one else could match.

PG hasn’t seen any serious acknowledgment from traditional news and publishing sources that indie ebooks are one of Amazon’s most important competitive advantages over other online retailers. PG suggests it’s similar to a blind spot on the part of the same people with respect to the importance and value of romance titles.

The blindness to the advantage Amazon’s own publishing imprints gives the company is also inadequately acknowledged by the traditional industry and its hangers-on.

PG just checked and five of Amazon’s top ten fiction bestsellers (print plus ebook) were from Amazon’s house publishers.

 

 

12 thoughts on “Barnes & Noble, Amazon, Independents: Who’s Disrupting Whom?”

  1. “PG hasn’t seen any serious acknowledgment from traditional news and publishing sources that indie ebooks are one of Amazon’s most important competitive advantages over other online retailers. PG suggests it’s similar to a blind spot on the part of the same people with respect to the importance and value of romance titles.”

    This is a Forbes blog, they don’t admit to anything that they can’t suggest you buy stocks in. (Which is why they can’t get an angle on this – it’s outside their little ways of thinking.)

  2. The OP might be right.
    Maybe B&N did recognize the existential threat of online and simply failed to execute. After all, they have never shown any great competence in technical matters this century:

    – at its peak, Nook controlled over a quarter of the US ebook market yet Nook lost (by their accounting) some $260M that year and by their accounting they have never turned a profit selling ebooks.

    – back in 2010 they tried to undercut Amazon on ereader pricing, seemingly unaware that the build cost of the Kindle2 was significantly lower than the Nook. Amazon promptly matched and undercut B&N. The whole “price war” was over in four hours.

    – they gave the Nook the ability to open generic ADOBE DRM ebooks sold by competitors while simultaneously refusing to sell ebooks in that format. Or to sell their own ebooks beyond US borders. When they moved the ereader market to near-cost pricing, this made the Nook extremely attractive to buyers of generic ADOBE ebooks the world over. So they sold a lot of ereaders that never generated a single ebook sale for them. This also made it easier for Nook store ebook customers to migrate their libraries to non-Nook hardware once the Nook’s viability became questionable.

    – they released several electronic gadgets without (apparently) checking to see what existing patents they might need to license and when the patent holder came calling, they refused to deal and forced a legal showdown where there defense was to accuse Microsoft of bullying. When it turned out they couldn’t actually pay to license the patents, Microsoft offered a cash infusion in return for a Nook app for Windows 8 and a piece of the revenues generated by the app. And then B&N failed to meet all deadlines for the, failed to fix bugs, and forced MS to fix their app. In the end they had to return what remained of the MS cash infusion.

    – they released a line of tablets that could only run games and videos from the Nook appstore without doing much to actually provide games and media. The hardware was good, the support system awful. They ended up with a massive write-off on unsold tablets.

    – at a point tablet sales were clearly leveling off and sales moving to cheap models (Fire Tablets) they committed to selling a million high-priced Samsung tablets. They fell about 800,000 units short.

    – over the years they have spent more time and effort limiting what Nook owners can do with their readers than fixing bugs.

    And that’s just a sampling of their hardware failings. No need to go into their ebookstore failings, like the downlisting of Indie romance titles, their catfight with DC over a handful of graphic novels, and their lead in assembling a B&M boycott of APub titles that has (almost certainly) led to the creation of AmazonBooks.

    Let’s face it, it really doesn’t matter if they saw the challenges coming since they failed miserably at each and every one.

  3. PG hasn’t seen any serious acknowledgment from traditional news and publishing sources that indie ebooks are one of Amazon’s most important competitive advantages over other online retailers.

    I haven’t seen it either, but I do observe news stories are managed everyday to further the agenda favored by the news outlets. When they don’t like an outcome, they don’t report it.

    We see one article after another ignoring independents when sales are tallied up. It’s not ignorance. Its intentional.

  4. For myself, the opportunity to buy used books that were out of print and very hard to find at either independents or the big box sellers was what initially drove me to Amazon. Once I got used to that, it was an easy step to buying new books there. And then to buying camping gear…and clothes…and computer kit…and housewares…and groceries…

  5. I disagree with PG. Online books from B&N and Amazon weren’t fungible. A book from Amazon actually shipped when they said it would .A book from B&N that the site said would ship in 2 days used to regularly not ship for weeks – and the website never updated to reflect a slower shipping estimate. I gave up on B&N online very quickly after a few experiences like that.

  6. The importance of Amazon’s self-publishing platform and its own imprints is difficult to overstate. An Amazon dependant on traditional publishing for the supply of all of its books would be a very different company in a very different industry. Had the Big 5 been less moribund and had just a touch of vision they may well now still dominate the market. We probably all have our own ideas about what they could have done to best counter the threat of Amazon had they recognised it in time. Instead, Amazon has its own huge supply of new books and authors and a revenue stream of at least 30% of each sale into the indefinite future. And it is leveraging this supply of books to take an ever increasing share of the overall market at the expense of the Big 5. The Big 5’s attempts to differentiate their books on the basis of quality and the value of their curatorship have largely failed. Because so many Big 5 books are sold through Amazon, Amazon has a huge influence over the discovery process which is now so important, and Big 5 titles are mixed in with Amazon’s own books and prominent KDP titles on Amazon’s web pages. The once much prized prominent placement in Brick and Mortar bookstores and the associated payola is now far less important and continues to decline. Whilst placement on traditional best seller lists is still important, Amazon has established its own far more accurate and more transparent bestseller lists which I expect will slowly gain ground. And, of course, Amazon is expanding its own brick and mortar stores which showcase Amazon hardware as well as APub and KDP titles. In fact, I can see many readers being attracted to Amazon physical stores just to see different titles to the same tradpub ones carried in more traditional book stores. I look forward to them opening such stores in Australia.

    Much of this stems from Amazon’s timely establishment of KDP.

    • About the credibility of bestseller lists: at the recent NYT stockholders meeting, an activist stockholder brought up the matter of anti-conservative bias in the “bestseller” list, demanding an audit of the list’s process and data on the basis of discrepancies between the rankings of high-selling conservative books on the NYT list and at Amazon with the assumed accuracy of the Amazon numbers as the proof of bias.

      With Amazon moving such a big portion of all tradpub books their rankings are increasingly being seen as representative of the market as a whole. This benchmark role used to be filled by B&N.

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