Booksellers and Co-opetition

Co-opetition: Cooperative competition. Practice where competitors work with each other on project-to-project, joint venture, or co-marketing basis.

Historically, most independent bookstores have viewed Amazon and Barnes & Noble not only as direct competitors, but as enemies.  Which is certainly understandable.  

Barnes & Noble has long been a dominant force in retail bookselling.  B & N gets better business terms than small stores, is able to publish its own books, and now, of course, like Amazon, has major advantages over independent stores in selling ebooks and print books online.

And for so many bookstores, Amazon appears to be its most dangerous and predatory competitor - its discounting has always been impossible for any land based store to match, it doesn’t charge sales tax (in most states), and it is open 24 hours a day 365 days a year.  Its proprietary Kindle e-readers more or less established and then dominated the ebook market, because of Amazon’s unmatched ability to offer instant gratification, broad selection and low prices integrated with its low-priced device.

Demonizing your competitors is of course an emotional response when your livelihood is threatened.  But Amazon, Barnes & Noble, and for that matter, Apple, are all rational actors in the business stage.  It make good business sense for Barnes & Noble to have its own e-reader and to not carry Amazon published print books in their stores. They are competing with Amazon head-to-head and can use their market share and national bricks-and-mortar presence to battle with Amazon on a number of fronts.

It does not make sense, however, for independent bookstores to marginalize their own businesses by boycotting the entire digital reader business, when their own customers are happily, if in some cases, guiltily patronizing their competitors.

Kindles, Nooks, and iPads are increasingly owned by many hard core readers.  Who are or should be any booksellers’ best customers.  All these devices are being sold by plenty of retailers beyond their manufacturers’ own retail outlets.  These days you can buy Nooks, Kobos, Sony Readers and Kindles at Staples, Office Depot, Best Buy and many others, literally in hundreds of retail outlets and websites.

Why should independent booksellers forego these revenue streams and lose contact with their customers as ebooks and digital reading devices continue to grow and print reading declines?  Certainly some will argue that they will lose their independence this way.  I think not.  Bookstores sell the same print books as their competitors.  Why should they enable their customers to decide that independent bookstores are unnecessary or irrelevant?

There are solid business reasons for independent booksellers to practice co-opetition and join the device selling market.

1. Profit.  Someone is going to sell these devices to your customers.  Why shouldn’t it be you?
2. Long term customer value.  Sure, once a customers owns the reader, there is a good chance she will buy books from your competitors.  But if you sell  the reader to a customer, and show her how to use it, you have a far better chance to get her to buy books for it from your IndieBound portal rathern than from B&N or Amazon.  And you again offer personalized service, which is what your business is based on, right?  
3. Again, profit.  Become an affiliate of Amazon and Barnes & Noble.  Even your customers go from your website to either of these big retailers to buy their ebooks, you still capture some revenue that otherwise you would never see.  And people who buy e-readers buy more print and ebooks.  From you, instead of from the other guys.
4. Knowledge=power.  If you are seen as expert in e-reading technology, as well as in the books that you traditionally are known for, you will have more people coming to your store or website for news and information about this growing universe.  Ebooks are not going away.  Don’t be marginalized.
5. Who cares about how and where people acquire their books?  You are a community based business.  Amazon can’t bring live writers anywhere.  B&N stores are still chain store experiences.  If you become essential to your customers, you will always win more of their business.  Give customers another reason to buy from you and not the other guy. 
6. Take advantage of the millions of dollars that Amazon, Apple and Barnes & Noble have already invested in devices and advertising.  Let them pay for sales you make.
7. Broaden your business.  In late February, there were reports that Google e-books may not be available through all independent booksellers anymore.  True or not, if Google changes course one day in the future, independent booksellers will need more options.  Becoming broad based retailers of all available e-reading devices will give you a better chance of helping to shape the digital reading future.

Up to now I have not promoted Kobo or Sony Reader.  I do think that booksellers should sell as many ebook devices as they can.  Both Kobo and Sony devices are not exclusive to any national retailer.  They both utilize industry standard epub file formats which booksellers offer through Google ebooks powered IndieBound.  I know the profit margins on e-readers are slim for retailers, so if you don’t want to sell Kindles and Nooks, why not at least sell both of these devices in your stores in order to compete with Amazon, Apple and Barnes & Noble? In fact, selling a range of devices gives customers a range of choices they cannot get from either Amazon or Barnes & Noble. 

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 reseller and for that matter, maybe Amazon would not allow indies to sell their devices directly, forcing booksellers to buy their products from wholesalers instead at lower margins.  But why not try?  

Barnes & Noble will soon be providing Nooks and ebooks to the Waterstones chain in England.  Why not to independent booksellers in the US too?  

Granted, e-reading devices and ebook delivery platforms require significant investment. Maybe booksellers will need to form a marketing co-op (ala the national hardware brands like Ace) and use their combined buying power to build and support a deal with Kobo or B&N.  Or all devices, as I have suggested here.  Selling just through Google e-books without devices just may not satisfy customers or provide bookstores with enough clout in the emerging digital landscape.  In the end, bookstores need to become alot 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.

David Wilk
February 28, 2012

(thanks to Phil Turner for editorial input)