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Can This Bookstore Be Saved? Borders Group (including many former Waldenbooks While publishers fretted that readers would be recon- rebranded as Borders Express) liquidated its assets and ditioned to devalue the worth of the printed word and closed all of its locations in the second half of 2011. The that offline stores would be strained to their limits previous year had already seen the demise of B. Dalton, discounting print books to compete, B&N scrambled. It a Barnes & Noble subsidiary since 1987. Since 1991, took until July 2009 (two months after the Fictionwise eleven major U.S. bookstore chains have been whittled purchase) to finally unveil B&N's e-bookstore. Its Nook down to six, and nearly 3300 stores to just over 2200 in e-reader was released in October, again more than two 2011. years behind Amazon. Ironically, as early as 1998, B&N Still in the lead after over 20 years of domination, had partnered with software companies such as Nuvo Barnes & Noble was often painted as the bully, driving Media to develop a prototype e-reader called the Rocket, both regional chains and small independent bookstores but it had nixed the project in 2003 because there didn't out of business with its aggressive pricing tactics and appear to be any money in it. Now it had to hustle to unbeatable inventory. Before e-commerce reshaped the refashion itself as a seller of e-books, e-readers, and apps landscape, its superstores forced smaller rivals into to enhance the reading experience. "most titles offered" wars. As smaller chains struggled Critically well-received the Nook began to scrape to keep pace, support from publishers was not forth- market share from the Kindle when it sparked a price coming This short-term, bottom-line strategy would war a year later. Dropping the price from $259 to $199 come back to haunt publishers. and releasing a WiFi-only model for $149, B&N took B&N kicked around the idea of selling books online, aim at the giant. Amazon quickly countered by slashing experimenting with Trintex, a 1980s Web-retail proto- the Kindle to $189 eight hours later and releasing the type, selling books on CompuServ in the mid-1990s, and WiFi-enabled 3G Kindle within a month, aguin at $10 opening an online shop on AOL. However, it was not below the Nook until 1997, fully two years after the arrival of Amazon. With titans such as Apple (iPad) and Google (origi- that it launched its first Web site. Data from numerous nally with the River Story and in 2012 with the Nexus emerging e-commerce markets now verifies that books 7) providing additional competition, the tables had been are an ideal initial product to draw first-time buyers. turned on the former bookstore baron. Will B&N be able B&N was already behind the curve. to survive against these tech guants? Amazon, launched initially as an online bookstore, The answer remains to be seen, B&N was the only upended the titles war. While B&N might be able to bookseller with the resources to complete the consider offer over 200,000 titles in its bricks-and-mortar stores, able task of developing an e-reader, marketing it, and Amazon offered an inventory limited only by publisher setting up manufacturing and retail operations for the availability. Shrewd financial moves, including selling device. Its closest competitors were already succumbing 50% of its Internet operation to German giant Bertels- to the contraction of the chain bookstore market, victims mann in 1998, kept B&N in the game. Il established a of both B&N and the e-commerce revolution. Books-A- new industry standard of 750,000 titles on-hand and Million, with approximately 250 stores compared to bragged that it could procure over 8 million new, out-of- 1,363 (689 retail and 674 college) for B&N, is its closest print, and rare books for customers from suppliers. remaining competitor However, Amazon continued to trump B&N on innowa While B&N still depends on its physical, brick and Bodies online musicstorin mortat stores to drive its business, the e-book market is a availability, Shrewd financial moves, including selling device. Its closest competitors already 50% of its Internet operation to German giant Bertels- to the contraction of the chain bookstore market, victims mann in 1998, kept B&N in the game. It established a of both B&N and the e-commerce revolution. Books-A- new industry standard of 750,000 titles on-hand and Million, with approximately 250 stores compared to bragged that it could procure over 8 million new, out-of- 1,363 (689 retail and 674 college) for B&N, is its closest print, and rare books for customers from suppliers. remaining competitor However, Amazon continued to trump B&N on innova- While B&N still depends on its physical, brick-and- tion. When B&N launched its online music store in mortar stores to drive its business, the e-book market is 1999, several months after taking barnesandnoble.com a horse of a different color. The economics of e-book public and refurbishing its cash reserves, it was again sales are very different from traditional book sales. playing catch-up with Amazon, which had pioneered the Customers who visit B&N's Web site buy three digital concept a year earlier books for every one physical book, but booksellers still In early 2009, when B&N purchased Fictionwise, one make more money on print books than e-books. And of the biggest electronic book proprietors in North while having a competitive e-reader seemed essential to America, it was again behind the technology curve. successfully vying for market share, it came at a steep Amazon had already unveiled its kindle e-reader sixteen cost. Moreover, it is not the pivotal factor in controlling months earlier. What's more, Amazon would offer New the e-book market. Content is. York Times bestsellers and other popular e-books for Since the price war, the reality is that in order to less than $10. compete with Amazon, e reader hardware must sell at or Part I: Information Systems in the Digital Age 106 near cost, with profits derived from the sale of digital content, including e-books, music, videos, apps, and games. Once Amazon had wrung all the profit it could from Kindle hardware, it quickly maneuvered into adding apps and app features and aggressively pursuing a cross-platform strategy. It began marketing its e-books for tablets, smartphones, and PCs using Android, Windows, and OS X operating systems. Moreover, Amazon, along with Apple, and another competitor, Kobo, are global competitors, B&N is not Despite spending hundreds of millions of dollars to compete with Amazon.com Inc. and Apple Inc. in the market for tablets and e-readers, B&N continued to lose money on the Nook, as well as e-book market share. Analysts estimated in 2011 that B&N controlled approxi- and audio books, bring traffic into malls, and serve as social gathering places. The more visibility a book has, the more likely readers will want to purchase it. With the demise of B. Dalton, Crown Books, and Borders, B&N is the only retailer offering an extensive inventory of phys- ical books. Book publishers need a physical presence Without B&N, the likely candidate to fill the void is Amazon, and publishers are not cager for that to happen. Amazon's goal for e-books is to cut out the publishers and publish books directly, selling books at an extremely steep discount to drive sales of its kindle devices. Editors, publicists, and other entities within the publishing busi ness view Amazon as an enemy, Selling books at Amazon's discounted prices is not a tenable business model for publishers in the long-term IBAN is to suryiyo it must sapitalize on its profitable ut Analysts estimated in 2011 that B&N controlled approxi- model for publishers in the long-term. mately 27% of the U.S. digital book market while If B&N is to survive it must capitalize on its profitable Amazon led with 60%. Since then, Amazon has held retail stores, develop small, local community-based shops, steady, and B&N has steadily ceded ground to Apple. expand digital content, lead the digital education market, B&N's digital book market share has dropped to 25%, and and develop marketing techniques to drive e-book readers is still falling to purchase print books. B&N has been experimenting On June 25, 2013 B&N announced that losses at its with ways to drive traffic to its physical stores. For Nook digital business more than doubled in the quarter example, if you connect to a Wi-Fi network in a B&N ending April 27, 2013, wiping out profits generated at its store with your Nook, you can get free extras in many bookstores. As a result, the company decided to stop apps and games like Angry Birds, where you can unlock a producing its own color tablets in favor of co-branded bonus character that normally costs a dollar. B&N has devices made by third-party manufacturers. Barnes & also expanded its store space for toys and games, which Noble will continue to design and make its own black have higher profit margins, while reducing the range of and-white Nook e-readers, which account for the book titles it stocks. There are also plans to experiment majority of its e-book sales. But with e-reader sales with slightly smaller stores in malls. Although that declining, it is unclear how competitive Barnes & Noble strategy is boosting the company's bottom line, publishers can be long term without its own presence in the tablet worry it may also drive book lovers to Amazon.com Inc., market, which is forecast to keep growing, which says its physical book sales are still growing B&N retail store closings continued to outpuce new store What will the future hold? Will B&N be able to openings as had been the case since 2009. CEO Michael succeed as a digital company and is there a future for its Klipper projected a net reduction of one-third of B&N's brick-and-mortar stores? Is there a way for e-books to help stores over the next decade, reducing the total by about 20 sell print books, just as print books have stimulated stores per year until between 450 and 500 remain demand for their digital versions? Although B&N has While B&N has its back against the wall, it does have a made a spirited effort to revamp its business and go toe- multipronged strategy for survival. It faces a principal to-toe with several tech titans, it's possible that it might be opponent with an estimated value 121 times higher than too tall an order for the storied bookseller. its own (B&N has a market capitalization of $1.062 billion: Amazon's is $121.5 billion.). But it also has allies. Source: Jeffrey Trachtenberg. How to Rescue Barnes & Noble? Here are de from Five Experts, Wall Street Journal, July 1, 2013. Lee Kuhan, Publishing companies have a vested interest in B&N'S Noble Rethinks is Strategy for the Nool. New York Times, Fehrary 23, 2013: Tom survival. Physical book retailers are indispensable for Gara, Barnes & Noble Stores At Bad, But E-Books Are Worne Wall Stre Journal, February 28, 2013, Jeffrey A. Tractionary. "BAN Alma Te White effectively marketing and selling books. Bookstores spur Store For Years." Wall Street Journal, Jay 28, 2013. Horace Dedes, Apple publisher sales with the "browsing effect." Surveys show Book 245 Worldwide hock Market Share One Analyst Thinks so i Book World, February 28, 2018 Michel De La Merced and wille Bom that just one-third of bookstore visitors who make a Microsoft Deal Aceto Balslever look. The New York, May 2012 purchase walked in with a specific book in mind. Shin Ovile andy A Trachtenberg, Mic locat Nook, The Wit According to Madeline McIntosh, Random House presi- Ser Journal May 1, 2017 The Bookstore The New Yo Thu, January 23, 2012: Paul Vina, Books, Apple, Amo The Deadly dent of sales, operations, and digital, a bookstore's display Hallows for Publisher: The New York Times. April 11. 2012. das X On space is one of the most valuable places that exists for "Names Norte User Apps to use foto See You communicating to the consumer that a book is a big deal. Luary 27, 2012. Aller. Alexandra, losing Up the Book There Journal, January 20, 2012. um Milli Taki 20 Years of books Brick-and-mortar retail stores are not only essential for WA 36.207: and Jefrey A. Tract Manders selling physical books, but also stimulate sales of e-books Hur and Noble The Next Chapter Wallstreet, may 2011 Chain