3 Strategies to Help Bookstores Survive Amazon.com


For some time now, I have been hearing about how bookstores are struggling to stay in business, not only the small, local bookstores, but also the big chains, such as Borders. My perception is that Amazon.com’s success is partly responsible for these struggles. I like Amazon.com, and I also like “bricks and mortar” bookstores. Amazon.com’s future seems pretty secure at the moment, so I propose three strategies bookstores can use to remain in business and survive Amazon.com.

bookstoreTHE NEW MARKET ENVIRONMENT

Once upon a time, if you wanted to buy a book, you bought it from a bookstore. Book buying possibilities have changed. Now you can pay to download a book to an e-book reader or buy it from an online source (e.g., the author’s or publisher’s website, Amazon.com). Book buying behaviors have changed, but bookstores seem to be trying to maintain the way they do business. Other than adding a coffee shop, bookstores now look much like I remember them before Amazon.com made online book shopping practical.

In my opinion, one of the advantages Amazon offers book buyers that bookstores don’t is the breadth of selection. Amazon has a wider selection of books than bookstores. The second advantage is cost. The price to purchase a book online is often lower than the cost bookstores offer. Amazon doesn’t have to pay for store furniture, decorations, floor walkers, fancy buildings, etc. With lower operating costs per book and greater volume, Amazon can keep prices down. As my Aunt Irene used to say, “Ain’t pretty, but it works.” To attract book buyers, bookstores are going in the opposite direction. This doesn’t seem to be working.

Sure, I can buy books directly from bookstore’s websites. I can go to the Borders site, for example, look up some books, and buy them. However, if I’m going to buy books online, I’ll probably buy them from Amazon.com. Bookstores offer a very different experience than online shopping, and I want bookstores to succeed. Thus, the advice I have is for getting more people to buy books in bookstores.

RECOMMENDATIONS TO BOOKSTORES

1. Employ e-book and web-based technologies.
Bookstores need to use the new technologies, not resist them. I’m specifically referring to e-book readers. When I was at a Borders bookstore earlier this week, I checked out the Sony e-book readers they had for sale. I was pretty impressed. The sample models were preloaded with long excerpts from about 15 books. They were firmly attached to the counter, so I couldn’t pick them up, much less walk around with them. While playing with them, I glanced around the store. Against nearly every wall and in every corner, I saw people sitting in comfy chairs reading books. They could browse the shelves, pick up a book, carry it to a chair, and read. I couldn’t do any of that with the e-book readers being displayed. That got me thinking about sales possibilities and buyer behavior.

People in bookstores like to browse books, pull out a selected title, and read a few pages. If they like what they read, they will buy the book. Unfortunately, they are limited to the books on the shelves, which might not be what people want. For example, I wanted to look at books on building tree houses. None were available on the shelves. (I was referred to the local hardware store!) I wanted to flip through the 2009 Writer Watchdog. I couldn’t do it. I wanted to read a few pages of Blonde by Joyce Carol Oates. Not available. Maybe I could look at Interpreter of Maladies, the first book by Jhumpa Lahiri. Same problem.

I understand that bookstores cannot stock every possible book in their databases. That’s a given. But shouldn’t I be able to look at them anyway, whether or not they are on the shelves? This is where e-book technologies can play an important role.

Here’s the scenario I envision. I check out an e-book reader (for free, of course) from the service counter. The e-book reader is connected wirelessly to the bookstore’s network. I walk over to the computer at the end of a bookshelf or the touch screen panel situated in a book rack. I search titles, check out authors, look at covers, and find a book that seems interesting. I punch in the number of the e-book reader I’m carrying, and the first 40 or 50 pages of the book are downloaded to the reader. I take the e-book reader to a soft chair, hook one leg over the armrest, and read. Maybe I find 10 books that look interesting. I download the excerpt from each.

(Why didn’t I just browse through the e-book reader? E-book readers are black and white—currently. I want to see color covers, so I use the color computer monitor or panel.)

Two of these titles are sufficiently interesting that I want to buy them. I pull up the menu on the reader and add them to my shopping cart. When I’m done browsing, I hit the purchase button. According to the displayed information, one of the books is in the store and will be waiting for me at the main counter. The other book isn’t available in the store, but it is in the warehouse. I can get it for a 10% discount. Would I like to buy it and have it mailed directly to me? Sure, I would!

(Why the 10% discount? First, if it’s not in the store, then the corporate office has determined that it is not a book that is likely to have high volume. It’s going to take up inventory space in the warehouse, and keeping inventory costs money. The discount encourages me to get it off their hands. Second, the discount helps justify the delay caused by shipping. Third, the discount also helps the store compete with Amazon.com prices. If I’m going to wait anyway, then the cost should be competitive. Otherwise, I will just buy it from Amazon.)

I can enter my credit card information and buy the two books through the e-book reader. If I don’t want to enter my payment information through the reader, or if I want to pay cash, I take the e-book reader to the sales counter. The clerk scans the number of the reader and pulls up my purchase details. The first book is, indeed, waiting there for me. The clerk confirms that I want the other book, too. I do. I make my payment, get the first book, drop off the reader, and I’m done. I’m another happy bookstore customer.

Update on this post: In-store printing technologies exist, and they are fast and efficient. Check out the Espresso Book Machine 2.0.

My vision:

Here’s what happens: I go to buy the book that I have sampled on the e-Book reader, and the clerks says, “Oh, that book? It’s not available right now, but we can print it in softcover for you. It will only take about 10 minutes.” I agree and buy the book. Maybe the clerk has a sample book they printed so I can see the quality. The clerk continues, “Why not get yourself a coffee? We’ll bring the book to you as soon as it’s printed.” “Gosh,” I say, “that’s great!” I’m another happy bookstore customer.

2. Improve book searching at bookstores.
I’m referring to new semantic mapping technologies. When I enter a book title or author name, I should not only get specific search results, but also I should get a list of books that are related. (This is similar to how Pandora.com creates online music stations for users based on the user’s musical selections.) If I am interested in a particular book or author, then the search engine should also recommend other selections. This will need to be far more in-depth than simple category searching currently available.

For example, if I enter the term “Sherlock Holmes,” I should see titles of other books in the Sherlock Holmes series, other titles by Sir Arthur Conan Doyle, other mysteries with a lead male detective, books written in the same style, and books written around the same period. Instead of just books about Sherlock Holmes, I can browse a broad selection of books that are related by a comprehensive set of identifiers. I can hit the “more like this” or “not like this” buttons to further refine my search.

Eventually I get to Frankenstein; or, The Modern Prometheus by Mary Wollstonecraft Shelley. I have never thought of reading this book, but it fits my interests; I just didn’t know it. “Ok,” I think, “I’ll check it out.” I download it to my e-book reader, read 10 or 15 pages, and find that it does, indeed, interest me. I buy a book that otherwise I would never have thought to buy. I’m another happy bookstore customer.

3. Use print-on-demand (POD) technologies.
Print on demand can increase available selections while decreasing inventory costs. As my former managerial accounting professor said, “Inventory is bad.” In the perfect world, a bookstore has no inventory. Exactly the right numbers of books are available, all the time, to meet customer demand. Of course, this is impossible. However, reducing warehouse inventory is possible by using POD.

Instead of warehousing 1,000 copies of a book in a central repository (or 25 copies for an independent bookstore), a bookstore only keeps enough books to meet expected demand for the next short period. This may be only 10 or 20 books if expected demand is low or unknown. The bookstore company (e.g., Borders) uses POD technologies to produce additional books as needed. Using POD technologies, short runs of books can be produced very quickly. Even 1 book can be economically produced using POD.

For large runs of books, over 1,000, for example, offset (i.e., traditional) printing is usually more cost effective. A new book by Stephen King should be printed with offset printing. The books will be on bookstore shelves, not in inventory, and will sell fairly rapidly. Inventory costs are not the same problem as they will be for less well-known authors or less popular topics. By using POD, bookstores can maintain a very small inventory (or none) of most books and have the books printed when they are demanded. Through POD, a book can be produced overnight.

Think about the first scenario above. I find a book I want, but it is not in the store. I can buy it and have it shipped to me. What I don’t know is that the book isn’t in inventory, either. All I know, all I need to know, is that the book will be shipped to me tomorrow. When I buy the book, the order is submitted, the book is printed that evening, and the next day it is shipped.

Bookstore companies can go about this process two ways. First, the bookstore company can license the right to print the books at its own facilities. The book will be the exact same book that the publisher would have printed: same ISBN, same cover, same everything. The bookstore is not the publisher—only the printer. This may be costly at first, but it will allow the bookstore to sell books efficiently without having to put in a buy order to the publisher or deal with “middle-man” costs and inefficiencies. The major costs will be incurred by the purchase and set-up of the printing technologies, as well as personnel to operate and manage the process.

The second way to do this is less expensive but also less efficient. Major bookstores can give preferential treatment to those publishers that employ POD, thus encouraging publishers to create this possibility. The corporate book buyer can then send an order to the publisher requesting 5 copies of a book. Normally, the publisher would laugh at such a request because it uses offset printing. However, a publisher that uses POD can do it, and the books will be ready tomorrow.

If the bookstore wants to keep books in inventory to reduce order and delivery costs, it can use a kanban system in conjunction with POD to keep books available while keeping inventory costs at a minimum. A kanban system uses a “pull” process to initiate the creation or purchase of a product. When only a specific number of books remain in inventory, an order is placed, and more books are printed. Here’s how this works.

Let’s say the bookstore anticipates selling 7 copies of a book per week, or approximately 1 per day. Some days, 2 copies are sold, but never more than 9 books in any week and never more than 4 books in 3 days. Let’s also say that books can be printed and delivered in 3 days, which is nearly impossible with traditional printing but simple with POD. Then, using the kanban system, when only 4 books are in inventory (the maximum that will be sold between the time of the order and the time of the delivery), the company places an order for another 9 books. This way, just when the inventory has no more books from the previous order, the next order arrives.

A bookstore can order 1,000 copies of a book. Some will be sold right away, but others will sit in inventory for a long time. Using print on demand publishing and a kanban system, many small orders are placed. Inventory is kept at a minimum, costs are reduced, and the books are always available when demanded. As the book shopper, I get the book I want, either right now or in a few days. I’m another happy bookstore customer.

LOOKING AHEAD

That’s it. Those are my recommendations for keeping bookstores alive and valuable to book buyers. My hope is that when I’m 80 years old, I won’t be heard saying, “When I was younger, we could go to an actual place where books were sold. It was called a bookstore. Gosh, I miss those days.”


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5 Comments

Filed under Businesses, Other musings

5 responses to “3 Strategies to Help Bookstores Survive Amazon.com

  1. Interesting blog, I’ll try and spread the word.

  2. Update on this post: In-store printing technologies exist, and they are fast and efficient. Check out the Espresso Book Machine 2.0.

    My vision:

    Here’s what happens: I go to buy the book that I have sampled on the e-Book reader, and the clerks says, “Oh, that book? We can print it in softcover for you. It will only take about 10 minutes.” I agree and buy the book. Maybe the clerk has a sample book they printed so I can see the quality. The clerk continues, “Why not get yourself a coffee? We’ll bring the book to you as soon as it’s printed.” “Gosh,” I say, “that’s great!” I’m another happy bookstore customer.

  3. Mark

    I lament the passing of bookstores. I would spend hours a week browsing and my bookshelves at home are overflowing with the things I’d stumble across when I went in with no intention of buying.

    I once loved Borders – their ‘mega’ stores were packed to the gills with books and music. Their regular circulation of email coupons to members rarely left me in the lurch – and the membership is free as well.

    I quit going to Borders when their stock dwindled to a third of what it used to be. I explained my frustration to the local manager, who told me the new goal is not to stock the shelves, but to place orders for people. I can think of no faster way to kill a bookstore.

    As to your notion on e-readers.. I’m not convinced. I’ve bought a couple of pdf’s online, but I don’t use them – even on my incredibly high resolution color graphics workstation.

    I’m in it for the tactile bookstore sensation. The adventure of finding something new every visit. Now the local Barnes and Noble, once a near equal to Borders in it’s heyday, has seriously dwindling shelves too. I’ve lost all desire to go in. The first thing that greets you is the big kiosk for their own proprietary e-reader. If e-readers succeed, brick and mortar bookstores will fail.

    Ah well.. time changes everything. Just not necessarily for the best…

  4. Mark,

    I agree about the tactile experience with “real” books. What I would like to see bookstores do is 1) use eBook technologies to provide samples of books, and then 2) use in-store print-on-demand technologies to print those books.

    Currently, bookstores simply don’t have enough books–for many reasons. I think you’re right about the negative correlation between eBook sales and print book sales. This is my solution to that problem. Stores can stock fewer books while letting potential buyers browse a greater number of books than currently possible. Then they print the books readers want to buy.

    The bookstores of the future are going to be very different than bookstores now, but I would hate to see them disappear altogether–for all the reasons you described.

  5. jamie

    I think from this point forward it has to be about the experience. Things (i.e., books, food, clothes, homes, even potential mates) are available fast, in bulk, and cheap online and in box chain stores. I believe that for the traditional book store to last, they have to provide an experience that you can not get elsewhere. Whether it’s events, creating and hosting book clubs, story time for kids, etc., the person-to-person connection is the only thing that can trump the desire for effeciency and penny-pinching.
    Jamie

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