Barnes & Noble e-division sinks but bricks and mortar in better shape

Following up on yesterday’s news about Barnes & Noble getting out of the tablet business, Yahoo Finance had a story looking at what this might mean for the business. There were a few interesting tidbits here.

One bemusing fact that seems counterintuitive ins this new digital age is that, while the e-book business is tanking (17% drop in Nook revenues, $475 million loss for the device division in 2013), the chain’s bookstores are actually performing better. It had declining revenues but actually increased earnings by 16%. Of course, the reason for that is that Amazon is eating everyone else’s lunch digitally, but doesn’t have B&N’s physical presence. And with Borders out of the picture, B&N is the only truly major chain bookstore left in the game.

Plenty of people, including Leonard Riggio the 71-year-old chairman and founder of Barnes & Noble, think the stores would make a good freestanding business in their own right. In February Riggio suggested he would attempt to cleave the stores from the digital branch of the company. Riggio hasn’t made his bid yet but analysts value the chain at anywhere from $500 million to $1 billion.

B&N has really not been doing too well in recent years, and it seems to me that they’re missing a few opportunities. As I noted in a comment to yesterday’s story, they could be doing a lot more with the synergy between their brick-and-mortar stores and their web/e-reader store than they are.

As I noticed when I tried taking a trial order up through the web site’s checkout, there is no option to ship goods from BN.com to a brick-and-mortar store, the way you can if you order from Best Buy or Wal-Mart’s web sites. This is an area where Amazon definitely falls flat; it’s trying out automated locker banks to serve people who don’t have any other good way of receiving packages, but hasn’t managed to roll those out to a wide area yet. But there are B&N stores in most large towns. And if someone goes to the store to pick up a package, they might very well browse around and buy some stuff physically (or place another BN order) too.

And given that people are going to “showroom” bookstores anyway, why not give them incentive to “showroom” to BN.com rather than Amazon? Offer some kind of discount, or at least price-matching, if people order from BN (or buy it right there from the store) rather than somewhere else like Amazon. And make it so they can have it delivered to the store, so they come back to pick it up, as above. They might lose a little bit of money on the transaction, but they would make it up a lot in gained customer loyalty.

As an example, Best Buy isn’t exactly in the best financial shape either these days (it recently cut its 30-day-after-purchase return period back to 15 days), but it’s committed to matching prices at time of purchase not only from local competitors but also from Amazon.com, Apple.com, Bhphotovideo.com, Buy.com, Crutchfield.com, Dell.com, Frys.com, hhgregg.com, HP.com, HomeDepot.com, Lowes.com, Newegg.com, OfficeDepot.com, OfficeMax.com, Sears.com, Staples.com, Target.com, TigerDirect.com and Walmart.com in order to try to head off showrooming in its store. (Of course, they still have to charge sales tax, but then you don’t have to wait for a delivery either.)

B&N has done a few things to try to synergize brick and mortar with web in the past, such as selling its readers in its stores, or offering codes for free e-book downloads if people come in to the store to get them. But it’s nowhere near what it could be doing.

Of course, even if it did get in the game, it’s probably too little too late at this point. But it could at least try.

(Found via Slashdot.)

9 Comments on Barnes & Noble e-division sinks but bricks and mortar in better shape

  1. They would have been much better served sticking to e-ink and serving their core audience of book lovers rather than trying to go head to head with Amazon on LCD multipurpose tablets. They also could have benefitted from a partnership with Sony, whose ebook store is worse even than BN.com. They could have created a Sony branded “skin” of the BN store and given Sony affiliate payments. Sony could slash infrastructure costs associated with maintaining an online store and focus on hardware R&D while still earning “gravy” from e-book sales.

  2. What is it with people starting sentences (even paragraphs) with the word “and” or “but”? Your English teacher would be ashamed of you!

  3. Except that B&N didn’t “try to go head to head” with Amazon in the tablet game. Their first tablet, the Nook Color, was out a year before the Kindle Fire was! Amazon was the one who decided to go head to head, and it turned out they had the harder head, too. Just goes to show, the first mover advantage isn’t everything.

  4. But that’s just how people write these days!

    (Couldn’t resist. :)

  5. I think BN should stick to books, because there are still a lot of readers out their who refuse to buy a tablet to read books (such as myself). They should stick to what they know and what their customers want from them.

  6. As your Momma probably said, “If your friend decided to jump off a bridge, would you jump too?” Using “and” and “but” at the beginning for effect is one thing, but anything else is just lazy writing. :(

  7. To pick at a small point: “the chain’s bookstores … had declining revenues” may be slightly misleading. Much of the decline in revenues was from poor sales of NOOKs. A bit more of the decline was from the closure of underperforming stores. According to B&N’s press release:

    “Core comparable bookstore sales, which exclude sales of NOOK products, … were essentially flat for the full year.”

    I’m inclined to ignore the reduced revenue due to the closure of under-performing stores. Such closures are simply good business practice in a sector that’s in secular decline. In my ignorant opinion, what matters is that the other bookstores had essentially the same sales in FY2013 as in FY2012 — except for NOOK sales.

  8. Susan Lulgjuraj // June 26, 2013 at 7:16 pm //

    I use ‘and’ or ‘but’ to start sentences. I don’t have an issue with it, and neither do any of the English teachers I ever had. They’re proud of where my writing has taken me.

  9. MarylandBill // June 27, 2013 at 1:01 pm //

    I am not surprised to see B&N get out of the tablet game. Kind of disappointed because their tablets were cool, but it is the smart move. The media resources that Amazon can bring to the Kindle Fire just can’t be matched by B&N. Better if B&N sticks to apps for tablets and concentrates on e-Ink nooks and on ebooks. I will continue to buy books from them (And if the ergonomics of their ebook readers stay as good as the current nook, I will continue to buy ereaders from them as well).

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