I just read two articles on the business perils of Barnes & Noble, one at Forbes and another from Business Week. Both make suggestions about what B&N could do to make their brand as a whole and NOOK in particular more competitive with Amazon.
I did not realize that Barnes and Noble has been losing money for years developing and marketing the NOOK e-reader. Based on the success of Amazon’s Kindle and Apple’s iPad, someday the tables were supposed to turn and NOOK would save them. B&N is the largest brick-and-mortar book retailer possibly in the world but that entire industry has been shrinking for years. B&N has been putting all theirs eggs in the NOOK basket for years in order to adapt and take advantage of a changing industry. Seems like a plan… but in 2012 e-reader sales declined for the first time since e-readers took off. Oops.
Here’s one example that Business Week gave to illustrate NOOK’s sales problem. You can buy the Kindle edition of The Goldfinch by Donna Tart for $7.50. The same title for NOOK runs $14.99. It’s a well established fact in the market place that Amazon has better prices. Jeremy Greenfield (writer of the Forbes piece) suggests that NOOK lower all prices across the board and keep them that way until customers agree that NOOK always has the lowest prices.
Let me give you a different example. I haven’t started pushing my new book on this blog yet (there is a link in the right-hand sidebar) but one might imagine I would get around to it sooner or later. When God is Near comes out on both Kindle and NOOK in a few weeks the price will be $4.99 on both platforms but Amazon offers a higher rate on royalties (70% verses 65). In order to net the same amount in royalty payments I would have to charge a higher price on the NOOK version. Retail customers and authors get a better deal from Amazon. Barnes and Noble has to be aware of this.
Grocery stores can’t compete with Walmart on price – which is why I buy all our groceries at Walmart. To compete with low price giants, in any industry, competitors may brag about better customer service or offer services that are unique. NOOK doesn’t do that either. If you offer fewer services at higher prices, and know that you are losing customers, how long do you sit around and hope things change? Barnes and Nobles’ answer to that question will determine if they stay around or not.
*NOTE: The Businessweek article places blame for B&N’s decline on Amazon and the Department of Justice which I disagree with. I like the Forbes’ list of 3 suggestions, check them out and see if you agree.