A lesson from tech history points to a thriving future role for bookshops

In a recent American study by book data specialist Bowker, bookstores were second only to favourite authors as the most important source of new book discovery. Few booksellers would find this surprising.

What perhaps is surprising is that bookstores achieved this ranking with just 19% of book buyers nominating them. Bowker’s study identified 44 sources influencing where readers discover new books.

If we wound the clock back 10, 20 or even 50 years, the picture would be quite different – fewer sources and a bigger role for bookshops in new book discovery. Conventional wisdom says if we look ahead 10, 20, or 50 years, the picture will show more fragmentation – and bookshops sinking even further.

This picture looks even worse as we watch the unseemly haste with which publishers scramble to replace bookshops with new online methods of ‘discoverability’.

But is the trend inevitable? Or is there something booksellers can do to reverse it? Part of the answer might lie in adopting a tactic that invaded the tech industry two decades ago and is now part of its fabric.

How the tech industry was transformed

In their first decade, personal computers mostly stood alone, unconnected to the wider computing world. But by the mid-1980s it was becoming common for them to be networked to each other and to the big mainframes that dominated corporate computing then. The problem in this pre-internet era was that every vendor had its own, incompatible system for networking.

Initially, each vendor tried to use this problem to its advantage, forcing customers to use their solutions alone to guarantee that everything would work together. But the customers rebelled: they wanted to be able to mix and match and to buy from whom they pleased. This forced competing suppliers to cooperate so that their systems would talk to each other. In the early 1990s, networking pioneer Ray Noorda coined the term “co-opetition” to describe the strategy in which it was in each supplier’s self-interest to help competitors reach its customers.

Skip forward a decade and a half. When the so-called Web 2.0 came along – the social web we know today rather than the original one-way, read-only web – some of its earliest users, the bloggers, took sharing to a new level by freely linking to and promoting others’ work, and encouraging other sites to do likewise with theirs. Eventually, even traditional media sites found that opening up and sharing widely, even with competitors, was good for business.

E-commerce sites embraced the same spirit. Amazon has been at the forefront, sharing most of its prime assets with competitors. A competitor can access Amazon’s world-leading physical warehousing and logistics, advertise and sell its competing goods on Amazon’s site, use Amazon’s rich metadata on its own site, and employ Amazon’s massive cloud computing power to run a competing service. Amazon has become the world’s most successful online retailer while (or perhaps because of) opening up almost every aspect of its business for competitors to use.

How a bookseller applies the lessons

In the world of bricks and mortar business, however, we often view competition quite differently. A recent example was the negative industry reaction to top UK bookselling chain Waterstones when it agreed to promote Amazon’s Kindle in-store. Waterstones isn’t just selling the Kindle devices. It also welcomes and openly encourages shoppers to download Kindle ebooks while in-store (for which it receives a cut), effectively turning its 300 high street locations into an Amazon showroom.

Looked at in conventional business terms, Waterstones’ move looks little short of suicidal. ‘Amazon is inviting Waterstones to top itself,’ screamed one headline in The Telegraph newspaper. But looked at in the light of how successful tech and online businesses operate in inter-connected markets, this move makes sense.

As the Bowker data on book discovery shows, bookshops are already operating in a world where readers have lots of choices for new book discovery with bookshops just a small part of their repertoire. In this world, the idea that a store in some way ‘owns’ a customer who is disloyal if they stray elsewhere to buy seems quaint. Waterstones can’t lock its shoppers into doing business with them, any more than those early computer companies could stop users building networks with their competitors.

So a better strategy than closed walls might be a welcoming and respectful openness.

In the UK market where Amazon accounts for three out of every four ebook purchases, Waterstones’ decision to ‘hand over their customers’ might be a coup rather than a capitulation. If you’re going to help customers to buy books in any format they want them, it makes sense to work with your biggest competitor rather than a tiny rival.

And Waterstones’ gains won’t just come from slender commissions on Kindles and Kindle ebooks. By making its customers’ reading lives simpler, it stands to boost its print market share, especially if its partnership with Amazon leads to cross-promotions, bundling deals and the like. Waterstones might enjoy other benefits, too, if publishers and authors see how its influence in selling books extends well beyond just those sold through its stores.

An opportunity for the industry

For the wider bookselling industry, there’s a lesson and an opportunity. The lesson from co-opetition is that when barriers come down and markets open up, your best strategy might be to work with competitors in ways that make your customers’ lives easier.

One of the biggest beneficiaries of co-opetition in the tech world was, ironically, the company that had dominated the industry for decades by locking in its customers and shutting out rivals: IBM. Once the walls started to crumble, IBM like most of the old guard hit trouble and looked doomed. Instead, it’s now America’s fourth largest corporation. Inspired new leadership opened up its technology, helped rivals sell to its customers, and rebuilt the company around being the best partner for users in a complex new environment.

Booksellers, at both a store-level and as an industry, face a similar challenge and similar choices. Ultimately, the best choice is to be visible and useful in as many places as your customers are. The worst choice is to be invisible and unhelpful. The more book discoveries you prompt, the more you’ll sell – even if your competitors capture many of the sales.

My guess is that influence – amplified through partnerships, online media and other channels – rather than location, price or convenience might be the currency of the leading bookstores of the future. At an industry level,  that influence – whether or not the purchase happens in bricks and mortar stores – is the best antidote to the too-common view of an industry in terminal decline. Getting in bed with friend and foe alike might be the best route to achieving it.

This article was published in the November 2012 issue of  News on Bookselling, the journal of the Australian Booksellers Association.

See my online courses in digital publishing and digital marketing for ebooks at DigitalPublishing101.com.



Comments (5)

  1. Len Feldman

    I live in the U.S., so I can’t speak for conditions in either the Australian or New Zealand markets. However, since most of the examples in this article are drawn from the U.S., I can speak to them. In the early days of the PC business, most of them were sold through small brick & mortar stores, both “mom & pop” stores and chains such as Radio Shack. Over time, most of the small stores died out and larger PC-centric chains emerged, such as Businessland and CompUSA. Then, the big PC chains started failing–Businessland went bankrupt, and its original headquarters location in Northern California was converted into a Barnes & Noble bookstore many years ago. CompUSA also went bankrupt, and it’s now nothing more than a brand name.

    There are still plenty of brick & mortar locations in the U.S. from which to buy PCs–Best Buy, Walmart, Target, Frys, office supply stores, etc.–but PCs represent a small portion of revenues for all of them. With the exception of Apple Stores, the PCs specialists are back to small “mom & pop” stores–and there aren’t very many of them left.

    There might be an “Apple Store” strategy for bookstores, but its not obvious. Far more likely is that most people will buy their books online, at downsized Barnes & Noble stores, mass merchandisers such as Walmart and Target, or the handful of local bookstores that survive.

  2. Martin Taylor (Post author)

    Good points, Len, and an interesting parallel. Re: the “Apple Store” strategy for bookstores, there probably is one already and unfortunately for many current booksellers, it’s the Amazon strategy: Own the supply chain from from design and manufacture (publishing as well as devices) to retail. In emerging and smaller markets, though, they’ll partner rather than open stores and even when they do open stores, they’ll need other partners.

    That said, one of the brightest lights on the ‘new opportunities’ horizon is publishing/selling to vertical communities which is likely to be very much this Apple Store approach. The needs of online marketing will drive this since it’s harder to build an audience online if it’s too general. The big, broad-based publishers (and bookseller chains) will find this, if they haven’t already. One of things that gave me a chuckle about the Random Penguin merger was the argument that the greater scale would help them compete in emerging digital markets. In fact, the opposite is true for digital, for now at least, opening the way for new entrants since big players almost invariably find it hard to organise along these many vertical lines.

  3. Booksforever

    I understand the concept of the article, and it does make sense as the future technology dictates what vehicle information will be delivered to the Customer, to keep onside with the big competitors, and ride the new wave with them. If you are a large online store and trying to please as many Customers as many ways as possible, going with the flow does make sense I am sure.

    But there is another option, which isn’t going against or with, step aside and let the big stores compete and combine to offer all the very latest versions of reading, and stay a specialty store. You sells books, so sell them. If the Customer wants a digital version, you don’t get that sale, but you may not have anyway, especially if you are only offering a small % (or token range) of ebooks anyway.
    I prefer to stay in the field i started, and that is paper books, the one’s you can touch and hold, and place on a shelf for future reading or collecting, or passing down if rare or for sentimental reasons. I don’t want to lose focus of why i started, and i am sure other bookstores/online/off feel the same. I love books (the paper kind), and i am here for those Customer who do also, and want to keep it that way, even if as the years pass, the old paper book do get a little less loved over the digital version.

    I know this reply may not follow the exact flow of the article, but sometimes you have to remember why you started selling books, and ensure your love of that is not taken away in the need to compete on every new level. That counts also.

  4. Martin Taylor (Post author)

    @booksforever, I actually agree with you entirely on this point. Of all the strategies bricks and mortar booksellers can pursue, putting their resources into being the best print outlet is the probably the smartest. I don’t think that book buyers care whether they can buy both print and e from the same store, so you’re not doing them a disservice by not offering ebooks. But they do care if the quality of the print offering slips. The very different requirements, skill sets, and extra investment needed for ebooks can end up reducing the quality and focus on the print offering.

  5. Booksforever

    Hi Martin,

    Agreed, and that is why I felt it best to have 4 online stores, each with a unique specialty in our area of interest (Australian history). To ensure when a Customer lands on one of our sites, they really only see the subject they came for, not forcing them to search around other genres (not a bad thing, but i just prefer to go to specialty sites when i shop, and wanted to offer the same).

    Offer good titles (sometimes being a specialty you can offer books off the mainstream, many big stores don’t bother with). I mix it up with new & used books, and give the best service I can 7 days a week. You can’t give books away for free, but you can give free 5 star service to everyone who helps you, by shopping at your store. I always look at it this way, they could have easily gone somewhere else, and I appreciate every Customer I get for that reason. We help each-other!

    And it is also very true: “The very different requirements, skill sets, and extra investment needed for ebooks can end up reducing the quality and focus on the print offering”.

    Spending money on having a small selection of digital books to be ‘part of the crowd’ could potentially take your capital & time away from being the best bookstore for printed books you could be.

    Thanks for allowing me the space to ramble all the way from Australia!

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