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The B&N Conundrum, Part II: Why Didn't Bookstores Own The Net? - The Watchtower of Destruction: The Ferrett's Journal
August 24th, 2010
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The B&N Conundrum, Part II: Why Didn't Bookstores Own The Net?
There was a time when Borders or B&N could have beaten Amazon. Amazon was once a small, upstart company without a lot of funding, just starting to get the wave of press; the big chains were well-funded monoliths with a lot of expertise in inventory and customer service. So why didn't they turn around and smash this competitor?

To understand the first reason, you must comprehend that Borders, like most retail chains, is not a single business; it is a collection of dysfunctional fiefdoms. Each store carries the name "BORDERS" proudly on the front, but the manager of each store lives or dies by the sales that individual store makes. And the reasons why they're falling short don't much matter; the sales targets are set months back, by people they often have little control over, and if something new arises between now and then to kill their sales...

...well, to quote Goodfellas, "Fuck you. Pay me." Miss your targets, your raise is most likely going to suffer.

Worse yet, the individual departments within Borders had to fight it out. It's easy to see why you'd want to track the profits of the coffee shop separately from the bookstore - it helps track expenses, streamline operations, et cetera. But forcing the coffee shop to make a profit on its own ignores the fact that the coffee shop is, to some extent, responsible for the bookstore's profits as a whole.

So where does an Internet operation fall into that?

Borders doped out quickly that an Internet presence was great for special orders - but who got the profit? The stores knew from hard experience that Borders HQ wouldn't cut them any slack if their sales figures fell short, even if those sales were cannibalized by another wing of Borders. And how did you allot profit from an Internet-enabled SPO? Did the store get all the revenue - and if so, how did you track profit in the Internet Borders? Did the store get a cut - and if so, why didn't they get a cut from all orders within a ten-mile radius of the store, since they'd be promoting this competitor incessantly? Who got the money?

Infighting began to drag at Borders' online presence before it even began.

More importantly, Borders Online wasn't profitable right away. There were a lot of startup costs involved, new infrastructure, People pointed out that Amazon wasn't making any money, and wasn't expected to for some time - but it wasn't clear by any means that Amazon was going to make it (remember, this is in the early days), and dropping millions of dollars into a then-untested technology was anathema to a place that expected every individual department to turn its own profit. So Borders (and, I suspect, B&N) touted their new advancement it to the investors while secretly strangling it.

More importantly, though, the bookstores did not realize the importance of "good enough" as a strategy.

Which is to say that bookstores, independent or chain, have always held the record-store style mystique that they're not selling products - they're selling art. There's a reason the snobby record store clerk (or even Comic Book Guy) is an established stereotype; people who work in stores believe that there's something intensely special about knowing their merchandise well enough to recommend it. Both Borders and B&N tended to hire people with more education than the average clerk, spent more time training them how to look up books - and, of course, the people who applied to work in bookstores generally did so because they adored books. That made a culture where books were adored, and a lot of the clerks really believed in trying to provide good recommendations.

There was a lot of discussion about how selling books was very different than selling lettuce, and Amazon would soon learn how difficult this industry was. Borders' management infamously referred to the Amazon model as the "big ball of snot" theory - as though you could just sell whatever you wanted in addition to books! Clearly, trying to sell things in addition to books was a terrible idea (unless, like Borders, it was carefully monitored to ensure that CDs and DVDs had the required level of cultural content).

The management knew about data mining, and the fledgling fields of crowdsourcing. They had seen what the preliminary efforts could do - but in in their love of literature, they just didn't think that Amazon's cold, computerized recommendations could ever compete with the warmth and goodness that a chatty clerk could provide. And in that, they overlooked two facts:

1) Even with all the training in the world, across a large chain there are going to be rude or incompetent clerks - or just clerks who are pressed for time. So the chances that you're going to benefit from those wunderkind clerks are still comparatively rare (though both chains did everything they could to maximize the odds you'd get one).

2) The delta between the best clerk's recommendation and the cold recommendation of Amazon isn't that big.

Which is to say that yes, a bookstore person who knows and loves you can give you far better recommendations than Amazon ever can. Yet how much is that actually worth? If Amazon's recommendations are good but not exceptional, would you pay $50 a year to have access to the super-good clerk on demand?

Probably not. The clerk's fine recommendations are a bonus, but not necessarily a paid service - Amazon's inferior, but it's usually good enough. So what the chains were betting the farm on was that a) customers would run into the super-clerk, b) find the super-clerk worth the additional cash and expense of wandering on down to the shop. And when Amazon instituted the "Browse this book" feature - which many publishers fought tooth and nail against - thus making it easier to virtually flip through a book sight unseen, then the bookstores started to experience trouble with their core assumptions.

(45 shouts of denial | Tell me I'm full of it)

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From:neowolf2
Date:August 24th, 2010 01:26 pm (UTC)
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I don't remember ever getting a useful recommendation from a bookstore employee.

The Amazon "people who bought this also bought this..." links, on the other hand, have already caused me to make several purchases.
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From:andrewducker
Date:August 24th, 2010 01:27 pm (UTC)
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Me either. I don't talk to bookstore employees except to say "Here is my money. Thank you for giving me a receipt." I can't see why I'd want to talk to a stranger about what books I might like.
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From:gomaironin
Date:August 24th, 2010 01:51 pm (UTC)
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Its been years since I've received a useful review from any of the employees in a physical book store. My tastes run towards the stereotypically geeky (sci-fi/fantasy, graphic novles, history, militaria, gaming, etc...) and the most help I've gotten was being directed to the right section. The vast majority of employees I've bumped into seemed to have a slight disdain for all of the above.
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From:soldiergrrrl
Date:August 24th, 2010 02:17 pm (UTC)
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Heh. All the other employees knew to send gamers/sci-fi/fantasy reader my way, if they weren't into those things. It worked pretty well. I'd come away with a recommendation, usually, and since those became my sections and I have a weird memory, I could usually tell people if we had what they wanted without checking inventory.

Edited at 2010-08-24 02:17 pm (UTC)
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From:empress_tigress
Date:August 24th, 2010 02:10 pm (UTC)
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One thing you left out: Having titles come in ON TIME! I can't count the number of times my local B&N has lost my business due to either not having a new manga volume in on the date that it was supposed to come out or having to track down a staff member to bring one out for me because they never never bothered to put it on the shelf.

It's gotten to the point where I don't even bother anymore and just pre-order all my titles from Amazon. I prefer walking into the store and getting it the day it comes out, but if I have to wait a few days to get my fix (as opposed to waiting several WEEKS), then Amazon's going to keep getting my money.
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From:theferrett
Date:August 26th, 2010 12:03 am (UTC)
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That's the problem: your "on time" is B&N's "We have to get it to our warehouse, unpack it, repack it, and then ship it to the stores." It's just not worth it for all but the biggest books.
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From:tsgeisel
Date:August 24th, 2010 02:30 pm (UTC)
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Amazon's big advantage was that it was willing (and expected) to lose money as it figured out the market more. And among the things it figured out are:
1) Books alone aren't enough.
2) If you can get other people to advertise for you, that's huge. This is the basis of the Associates program.
3) Evolve or die. Used books, shipping programs, individual author pages/stores - none of those existed when Amazon first started. And then there's the Kindle...
4) Not everything new makes money immediately.

I think the spoken assumption of "We'll get it right before we go out of business." was the most important part, though.
From:bonerici
Date:August 24th, 2010 02:33 pm (UTC)
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you really know your marketing, so please explain to me why sears never beat amazon online?

Have you ever seen those early 1890's Sears catalogs? Book of Bargains. Cheapest Supply House on Earth. Free rural delivery!

Oh my goodness doesn't that remind you of amazon.com?

What happened? Why didn't sears get its mojo going on the internet and eat amazon's lunch?

How does this tie into the failure of borders? tks.

Growing up on a farm, I've always had a great affection for the sears catalog when I was young, being able to buy city stuff from a catalog and have it shipped right to your farm seemed like magic and they have been doing it for over 100 years, how could they completely miss the boat on the internets?
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From:the_s_guy
Date:August 24th, 2010 02:45 pm (UTC)
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My guess? The catalogs were groundbreaking in their time, but after 100 years the process was so well-established that the catalog department was where old time-servers went to die.

Not to mention that the Sears Catalog was popular, and well-known, and presumably profitable. No-one in senior management would even think about screwing with it - or even implementing anything which might infringe on its advertising territory.
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From:the_s_guy
Date:August 24th, 2010 02:42 pm (UTC)
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A lot of established businesses and industries have had their lunch eaten from beneath - a newcomer who starts out selling the absolute cheapest, largest-volume, mass-market, bare-bones stuff. Then, once their lines of business are established, they start stocking slightly more upmarket stuff, then slightly more, then slightly more again.

All of a sudden, the established businesses only have the tiny top end of the market to rely on, and they discover that (a) it's not profitable enough to sustain them, and (b) they can no longer compete in the middle and lower levels because the newcomer has a distribution and sales system based on this century's technologies and customers, and can run rings around the old fossils.

Being able to deliver 80% of the service (recommendation accuracy) for 5% of the cost (and, in this case, 24/7 accessibility) isn't an indication that someone needs to try harder, it's an indication that they're about to wipe the floor with established names.
From:neowolf2
Date:August 24th, 2010 03:43 pm (UTC)
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Gee, someone should write a book about that.
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From:sylphon
Date:August 24th, 2010 02:51 pm (UTC)
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"Browse this book" did put paid to the last major issue I had with not holding the book physically in my hand. Once I could see some snippets of the text and form a general opinion on the quality of writing and the font used, a lot of my reservations about splurging on random unknowns went by the wayside.

There is still the issue of wysinwyg but that is not unsurmountable and is mostly just a problem for me because I hate a few particular paperback book formats.
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From:mariadkins
Date:August 24th, 2010 04:41 pm (UTC)
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This.

I know I sold a lot more HCH after we got the 'browse' feature enabled than before it went up. (although my Kindle and iPhone sales are way higher than paper right now)
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From:kitlizzy
Date:August 24th, 2010 02:55 pm (UTC)
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The Wall Street Journal has an article relevant to this over here:

http://online.wsj.com/article/SB10001424052748704476104575439723695579664.html
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From:bethzebra
Date:August 24th, 2010 03:34 pm (UTC)
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The main thing I'm going to miss when bookstores go away is the randomness of what I'm going to encounter. Sometimes it's just kind of nice to wander around a real bookstore and get my eye caught by a title in a section that it never would have occurred to me to browse in the online sense. Sometimes even I don't know what I'm interested in, you know?

However, let the tech get a couple of iterations better and maybe even that will be replicable online. Set the holodeck to 'bookstore', wander around browsing titles, and when you've chosen one it's instantly downloaded to whatever the current-generation device is.
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From:terpsichoros
Date:August 25th, 2010 04:14 am (UTC)
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A couple of local independent bookstores put mini-reviews below their featured titles, and have reasonably good (for me) layouts for their new books. The mini-reviews are useful, though sometimes I need to read between the lines to decide if I'm interested.
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From:richlayers
Date:August 24th, 2010 03:48 pm (UTC)
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Speaking of B&N and the internet--what blows me away is that they don't offer free wireless internet. (or didn't, last time I checked.) What they've REALLY got going for them, if they wanna make it, is the "bookstore vibe" where people go in for the feel of being surrounded by coffee and books. They've got overpriced (and many people think bad) coffee, and they charge for the internet. So why go there when so many libraries offer both free internet and, more and more, coffee shops or kiosks?

It seems like offering that fun, vibey environment is what would be their best bet... and once people are in the store, they might as well pick up that latest bestseller they've been meaning to read.
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From:mariadkins
Date:August 24th, 2010 04:42 pm (UTC)
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Our B&N has Starbucks coffee, and it is indeed horrible. lol
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From:gryphart
Date:August 24th, 2010 05:57 pm (UTC)
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Echoing all the people upthread - I can't remember the last time I spoke to a clerk for anything other than "Where is the ____?" Primarily because the last time I asked anything more complicated than that... well, it made me wish I'd just paid to have it shipped to me.

On a side note, are LibraryThing's recommendations generally better than Amazon's? I figure someone here has to have compared the two, and I'm curious.



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From:keyan_bowes
Date:August 24th, 2010 07:10 pm (UTC)
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Agreeing with Gryphart. I recall exactly *one* useful recommendation, and that from a B&N employee who'd never seen me before but gave me a suggestion based on what I bought. This suggestion came at the checkout counter (the first time on any visit that I encounter store personnel) and I probably bought the book months later and somewhere else. Had it come earlier, I might have bought it then. I also go to my neighborhood indie store, but their limited hours and limited stock means that all they really offer is a bookstore within arm's reach of desire. I visit Borders because they're open late, and I usually end up buying too many books there.

But I still do most of my book-purchases online. I find if I'm just browsing and making impulse purchases, Borders is the best; if I know what I want, Amazon is easier by several orders of magnitude. Borders will almost certainly not have it, I'll waste time looking, and end up with a couple of different books, then go home and buy the original book on Amazon anyway.
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From:katranna
Date:August 24th, 2010 11:19 pm (UTC)
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I love bookstores, but I've never encountered a super-clerk. I've encountered decent advice service, you know "I want to try more of Stephen King, but not the novels, and I've read this short-story collection, what would you recommend?" That gets a decent enough answer, but I could get the same if I just googled King's bibliography. If I just read a book I liked and came in saying "I loved this, what else should I read?" they would give me totally wrong info--either books that were so much like my initial love that they felt like a derivative rehash of what I'd just read, or books that... well... I could see how someone else might like both it and my original book, but the things that tied them together were not things that interested me. (Ie, kinda like recommending "Sailor Moon" to me because I liked "Revolutionary Girl Utena"--yeah, they're by the same director and have pink and roses and magical girls, but the first is just a very popular example of the Magical Girl genre, and the second is an intellectually stimulating and philosophically intense deconstruction of the genre. I liked the second but would NOT care for the first.)

Amazon's initial recc's for me were decent but useless--they kept telling me to get books I already owned (but did not buy from them). Now, however? Especially with the data of both the stuff I bought and stuff I browsed? They are much better at recommending me stuff than any clerk I personally have had experience with. And the reviews help me narrow down whether I'd actually want to read it.
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From:rowena742
Date:August 24th, 2010 11:27 pm (UTC)
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The really interesting thing about those core assumptions is that the business cases I've read on Amazon have focused on the "long tail": all those obscure titles you'd have to search a dozen brick-and-mortar stores to find that ultimately add up to more revenue than the top bestsellers. What Amazon and eBay and other successful Internet retailers figured out was that you make less money off people in need of recommendations than you do off the people who know what they want and are fully prepared to buy it: all you need to do is be able to give it to them. And what makes Borders and B&N's failure to grasp that so confusing is that if the super-clerks were what mattered to consumers, then independent bookstores wouldn't have been dying off right and left around them.
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From:rowena742
Date:August 25th, 2010 12:24 am (UTC)
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...In other words, pretty much the stuff you talked about in your last post, which I somehow missed. Sorry 'bout that.
From:(Anonymous)
Date:August 24th, 2010 11:39 pm (UTC)
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To echo what a lot of people have said... When I worked at Barnes & Noble (mid-1990s), I was one of only two people in the store who really knew books. The other person, a friend of mine, knew the genre she liked reasonably well (SFF), but I holed up in the break room over my lunch and read Publisher's Weekly, etc. Even if I hadn't read X book, I could usually recommend other books similar to it. And despite my friend, I was the go-to person everyone pointed at when it came to SFF.

The problem is that a sales clerk is a sales clerk is a sales clerk--someone with those skills can work in a clothing store, a hardware store, or a book store. When I handed in my two-weeks' notice (because I'd gotten a publishing job), my manager said "Well, you're replaceable." I think she was making a joke, but she wasn't a very good manager already and the fact that she didn't see my value made me even happier that I was leaving.

I've had some good experiences with clerks in B&N since then, but I find Borders clerks to be even less helpful. I don't know if that's true across the board. At the same time, I have a friend who managed a Waldenbooks for years, built an incredible staff of knowledgeable, enthusiastic people, and hand-sold books all the time.

Cheers, Dayle
www.cyvarwydd.com
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From:shandra
Date:August 25th, 2010 12:55 am (UTC)
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In my experience super-clerks mainly live in independent stores. And in Canada anyway the independent stores have been slaughters by the big-box stores scooping all the inventory for the Big Bestsellers in the Week of Release, in some cases delivering only a few or NO copies to the independents on the drop date.

So I kind of agree that Amazon's buying system/delivery system impinged on the independents too.

But with a store like B&N I never went there for the clerks; it was more the selection. And Amazon has better selection.
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