Customer Insight Group Loyalty Blog

Fresh Ideas for Building Profitable Customer Relationships
  • Hot Topics

    Hot Topics

The Next Chapter for Bookstores

[The Wall Street Journal 1/6/2012] and [Wave – 12 January 2011]

The internet has changed the business of bookstores in many ways. The industry has evolved to gear more towards the e-reader market and online shopping. With this shift, many bookstores are going out of business. The following discussion is presented of how one book selling company is managing keep up with changes in the internet and technology to stay in business.

Barnes & Noble Booksellers has a plan to “reinvent itself for a digital future.” The whole company is now worth less than nearly $700 million. With regards to its new plan, it has been spending on very high advertising expenses on the digital market side. With this in mind, the company is now trying to split the business into two parts: as a bookseller as well as a digital business. This digital business would be an internet based business. It would act as an online store for e-books and devices.

How would this part of the company operate – solely as an internet based store? Barnes & Noble will continue to effectively utilize social media. By using its popular Facebook page, with over 1.1 million fans, much of the social media content was promoting its e-book reader, the NOOK and the e-book content available to buy from the online store. A study conducted by WaveMetrix found that customers mainly discuss the online store and e-book readers:

With this split of the company, Barnes & Noble may stand a better chance at staying in business. The bookstore business has already been declining – which is bad news for Barnes & Noble. Because of this, the company is really pushing for it’s new product – the Nook. By introducing this product, the company entered later into the business after its competitors: Amazon’s Kindle and Apple’s iPad tablet. It has been very expensive for the company to support this product against its competitors. Barnes & Noble has ultimately been spending more money to promote the Nook, thus the earnings loss is going to be wider for this year’s outlook. By splitting the company, it is believed that the e-reader market will be likely to succeed in the future. This will allow the company to focus specifically on the digital market and its high advertising costs. There is a positive outlook for the product, with nearly 27% in market share; the nation’s largest bookstore is really pushing for this new plan to work. With closing bookstores still on the rise, the decline of the bookseller industry will have no choice but to make adjustments for the evolution of technology.