Co-opetition: Cooperative competition. Practice where competitors work with each other on project-to-project, joint venture, or co-marketing basis.
When Amazon announced its new Source program, giving independent booksellers the opportunity to sell Kindle devices and ebooks in return for a small bounty, the news was not greeted with any great enthusiasm by the booksellers.
Independent bookstores have long viewed Amazon and before that Barnes & Noble not only as direct competitors but as mortal enemies. Such views are understandable, but sometimes have led to irrational economic behavior.
Before Jeff Bezos and Amazon became the big bad wolf, Len Riggio and Barnes & Noble played that role for independent booksellers. Their ire was not altogether misplaced. B&N gets better business terms from publishers than smaller independent stores, is able to publish its own books for greater margin, and, like Amazon, has significant advantages over independent stores in selling both print and ebooks online.
The independents that survived the rise of the chain booksellers learned to operate very good bookstores; they are smart business people who clearly have learned how to compete. But online bookselling took a meaningful percentage of sales away from almost every bricks-and-mortar store, and has been the final straw for a number of hitherto successful bookstores.
For independents, Amazon is indeed a most dangerous competitor — its discounting has always been impossible for any land-based store to match, it doesn’t charge sales tax (in most states), and is open for business 24 hours a day, 365 days a year. And Amazon has encouraged “showrooming,” where customers find books they want at bricks-and-mortar stores, but order them from Amazon, sometimes while standing in the store aisles!
Kindle e-readers more or less established and now dominate the ebook market — likely because of Amazon’s unmatched ability to offer instant gratification, broad selection and low prices integrated with low-priced and reasonably well-designed devices. Not even well-funded Apple has been able to beat Amazon in selling ebooks.
Demonizing competitors is a natural emotional response when one’s livelihood is threatened. But Amazon, Barnes & Noble and, for that matter, Apple are all rational actors on the business stage. It makes good business sense for Barnes & Noble to have created its own branded line of e-readers and tablets, and not to carry Amazon published print books in their stores. Barnes & Noble competes with Amazon head-to-head and can use its national bricks-and-mortar presence to battle with Amazon in both print and digital and on many other products aside from books.
It does not make sense, however, for much smaller and weaker independent bookstores to marginalize their own businesses by boycotting the biggest part of the digital reader business, when their own customers are happily, if in some cases guiltily patronizing their competitors. Independents have taken baby steps into digital reading, at first joining an ill-fated alliance with Google Books and now, through a deal made by their trade association, the American Booksellers Association, many independent stores are selling Kobo readers and Kobo-supplied ebooks.
As it happens, Kobo has the smallest share of the U.S. ebook market of any of the top devices (except the almost invisible Sony eReader). Many independent booksellers report miniscule device and ebook sales. Meanwhile, Kindles especially, Nooks, and sometimes even iPads are increasingly owned by many hard-core readers, who are or should be any bookseller’s best customers. E-readers and tablets are sold in significant numbers by many non-book retailers, including Staples, Best Buy and others, ultimately at the expense of independent booksellers.
Why then should booksellers limit themselves to selling Kobo devices? For the little guy, does making a deal with a virtually unknown brand help you keep your customers? It’s almost certain that many independent bookstore customers already own Kindles or iPads, so why not serve their needs?
Bookstores and their supporters can argue all day that customers “should” support them by not supporting Amazon. Those kinds of moral arguments don’t seem to win very often in the marketplace.
Why shouldn’t independent bookstores make the “Source” deal with Amazon and start selling their devices? Some will argue that they will lose their independence this way and that they will give their own customers away to the giant in Seattle. Amazon certainly has benefited from its associates program, whereby websites get a small percentage of any sale they send to Amazon; through this program Amazon has gained millions of long term customers at a relatively insignificant cost.
On its face, the initial Amazon Source offer does not provide small retailers a big enough bounty to make it worth their while to send business to their competition. Perhaps the American Booksellers Association ought to be negotiating with Amazon for a better deal for its members, not dismissing the Source program out of hand. Booksellers should not allow themselves to be marginalized in the only part of the book business that is growing.
There are solid business reasons for independent booksellers to practice co-opetition and join the device selling market.
Learn more about how Amazon is shaping the publishing industry with nearly a half-day of programming devoted to the topic at Digital Book World 2014. Register today!
Eight Reasons for Independents to Become Digital Retailers
1. Profit. Someone is going to sell these devices to their customers. Why shouldn’t it be them?
2. Long term customer value. Sure, once a customer owns the reader, there is a good chance she will buy her books from Amazon. But if a store sells that e-reader to a customer and shows her how to use it, the store can more easily encourage her to buy books for it from its IndieBound portal rather than from B&N or Amazon. And if the store staff provides personalized service, on which its business is based, that loyalty will carry over to long term buying behavior.
3. Again, profit. Become an affiliate of Amazon and Barnes & Noble to profit every time a customer buys an e-book. It’s clear that many customers already shop independent stores or website and then buy their ebooks from Amazon. If it’s in the Source program, a store will capture some revenue that otherwise it would never see. And people who buy e-readers overall buy more print and e-books – why not from “Source” participating independent bookstores, rather than from Amazon?
4. Knowledge is power. If independents are the experts in e-reading technology, as well as in the books they are traditionally known for, they will have more people coming to their stores or website for news and information about this growing universe. E-books are not going away. Why be marginalized?
5. Who cares about how and where people acquire their books? Bookstores are community-based businesses. Amazon can’t bring live writers to communities. B&N stores are still chain store experiences. When a store is essential to its customers, it will always win more of their business. Selling e-readers and ebooks gives customers another reason to buy locally and not from Amazon.
6. Bookstores can take advantage of the millions of dollars that Amazon, Apple and Barnes & Noble invest in devices and advertising. Why not let them pay for sales the independents make?
7. Broadening the business base is protection against change. Indies started selling e-books with Google, which did not last, and are now allied with relatively tiny Kobo. B&N has already shown signs of stress from competing with Amazon and Apple. Will Kobo always be around? Becoming broad based retailers of all available e-reading devices gives booksellers a better chance of participating in the digital reading future.
8. Selling devices and ebooks enables booksellers to offer a unique customer proposition. In fact, selling a wide range of devices, including Kobo, Sony, Kindle, Samsung and even Nook gives customers a range of choices they cannot get from either Amazon or Barnes & Noble. Adding iPads and iPods to their offerings would enable independent booksellers to become digital boutiques in a way no other retailer can. Instead of rejecting ebooks and technology (to “save the book?”) booksellers should embrace digital technology and the benefits it offers, while celebrating the advantages print books sold by hand provide.
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If a bookstore is a center for reading, why not carry as many different types of readers as possible? Some may be difficult for small retailers to carry. It’s not easy to become an Apple or Samsung reseller and maybe Barnes & Noble would not allow indies to sell its devices directly, forcing booksellers to buy their products from wholesalers at lower margins. But why not try? Bookstores need to be in the reading business. Print books are one delivery system, ebooks are another, and bookstores should be promoting them on a much larger scale. All reading should be viewed as good reading if you’re in the reading business.
Granted, e-reading devices and ebook delivery platforms require significant investment. Maybe booksellers will need to form a marketing co-op (as hardware stores have done) and use their combined buying power to build and support this new retailing endeavor. That would be a meaningful role for the ABA.
Bookstores need to become more digital friendly, and it’s almost past time for this to happen. Most readers want a healthy book marketplace, with a variety of buying choices. Co-opetition is one way for independent booksellers to secure their future. Embracing a broader view of the retail digital marketplace and contributing to its shape may be the only way for independents to retain a meaningful role as community based bookstores.
Learn more about how Amazon is shaping the publishing industry with nearly a half-day of programming devoted to the topic at Digital Book World 2014. Register today!