The Bookseller.com

24th July 2008

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Bricks and clicks in the mix

09.05.08 Anna Richardson

Jeff Bezos seems pretty good at predicting the future. Way back in 1997, the Amazon founder told The Bookseller how online book retailing would pan out in the UK: “Over the next year or so, there will be a large number of small players. Then there will come a smaller number of large players, led of course by Amazon.com.”

In the ensuing decade he has proved to be largely right. Amazon brushed aside the early online competition to become the undisputed web-based bookselling king. Amazon’s rise, of course, has put a strain on traditional bookselling on the high street.

However, perhaps it is time to reassess Bezos’ prediction, as the online sector is suddenly getting a lot more crowded. In particular, bricks and mortar booksellers, who were by and large slow to react to the Amazon threat and have struggled to reconcile their high street businesses with online offers, have woken up. Many are plunging headfirst into web sales, harnessing the power of social networking and finally engaging with how to merge bricks with clicks.

A brief history

Early online bookselling history is a bit murky, but industry insiders reckon the first UK book e-tailer was Bookpages, founded in late 1996 and gobbled up by Amazon in April 1998. The Internet Bookshop set up shortly after this; it was snapped up by W H Smith in June 1998 to eventu­ally morph into the high street retailer’s site. A number of other players launched in the mid to late 1990s, including Peak District-based The Country Bookshop and Bertelsmann’s Bol.com.

The market shifted in October 1998 when Amazon.co.uk launched. Before Amazon arrived on the scene, UK internet sales were relatively small, with WHS’ and The Country Bookshop leading the market. Amazon’s emergence drove many players to ground—Bol.com, for example, never fully launched in the UK and exists now as Bertelsmann’s Dutch website. Some retailers took an “if you can’t beat ’em, join ’em” approach. Waterstone’s launched its website in 1999, run from a branch in Bath, but handed over its online operations and fulfilment to Amazon in 2001.

Amazon is clearly the dominant player now, with a seemingly un­assailable hold on the UK online market. Hitwise, the company that monitors internet traffic and online businesses, no longer separates out Amazon’s book figures from the rest of its offer. The last time it did, in 2006, it put Amazon’s market share at a staggering 85%. Analysts suggest that that figure has now fallen to about 80%. Yet with the internet’s share of total UK book sales growing steadily—according to the Book Marketing Limited, the sector grew from 11.5% in 2005 to 16.5% last year—there is still room for others to be successful online.

As a result, online competition has started to heat up in recent years. In 2003 there was only one significant internet retailer, yet new names have since entered the fray, such as the Book Depository, Book People, Play.com and AbeBooks.

“Everybody’s got their act together now, and everybody’s nicked a bit of market share back,” says Ross Beadle, an e-commerce consultant and founder of the Internet Bookshop. Beadle insists that companies should not necessarily focus on taking on Amazon. He says: “You should make use of what you have that Amazon hasn’t. If you chase Amazon, then it’s the recipe to lose a lot of money.”

Bookseller advantage

Where traditional bookshops believe they can flourish, where they can challenge Amazon, is to combine their web offer with high street branding and exploit their booksellers’ expertise. As The Bookseller went to press, Borders UK was on the verge of launching its first transactional site (www.bordersstores.co.uk). The aim, says recently departed commercial director David Kohn, is to “create something which is a little bit different and something that reflects the Borders brand”.

As well as being transactional, the new website will place a lot of emphasis on web 2.0-style community and social networking features, with forums for users, blogs from Borders staff, and news. Borders booksellers will be encouraged to contribute articles and reviews to the site. There will be a link with Borders.tv—a site, shown on tele­visions in Borders’ US stores, that broadcasts streaming videos of book-related tele­vision shows, author interviews and book trailers.

The goal for Borders is to try to replicate what the physical shops have to offer online. Kohn says: “We want to create a meeting place similar to what we think our stores deliver.” Another main focus of the site is to leverage “both off and back into our stores”, something Kohn says that Amazon can’t do. “They can’t put a human face on [bookselling]. We’re trying to make the link as strong as possible between the website and the stores.”
Waterstone’s ended its five-year agreement with Amazon in 2006.

Since then, as with Borders, the chain has tried to build up its site by expanding its online community. Matt Bradbeer, Waterstone’s head of internet operations, says: “We have a rapidly growing community of reviewers and book groups. The whole social networking and community aspect of the online market is one that will become increasingly important.”

Waterstone’s peppers its site with rich content such as publisher widgets and videos. It also tries to match up site content with instore offers and events. “This obviously is not easily achieved if you have no stores,” Bradbeer says.

The retailer has grand plans for its site. It is understood to be gearing up to sell e-book downloads in July, with speculation mounting that it will be timed to coincide with selling the Sony Reader in the UK exclusively. The chain recently announced that it aims to grow website sales to 9% of its overall sales by 2010.

Currently, Waterstone’s is consistently competing at the top of the online book sales market. UK figures for March from Hitwise (with Amazon stripped out), place the website in second place, with 6.27% of the market, behind W H Smith at the top with 7.52%. Hitwise, however, does not track Amazon books sales separately.

Building on niches

Yet it is not just the chains that are entering the fray. According to the Booksellers Association, about 600 of its members have websites—around 45% of its total membership. At the moment, however, the vast majority of these are not transactional, with independent shops in particular struggling with the logistics and stock range that are the base drivers for online sales.

Yet with social networking and community sites becoming more prevalent, there are niches that indies and smaller players are exploiting. In March, small south of England chain Samedaybooks launched its online “social shopping” site BookRabbit.com.

Members can create MySpace-like profiles, complete with “booky” applications such as photos of their bookshelves that they can compare with other users. Internet pioneer the Country Bookshop recently added its Booksconnect feature, a social networking forum. Bath-based Mr B’s Emporium of Reading Delights uses its site to highlight local angles, including its “Reading Spa Treatment” offers.

The cost of hosting a site—a significant barrier to entry for indies—is being reduced. Gardners, for example, is rolling out easyentertainment.co.uk, a webhosting service for bookshops. The distributor provides shops with a website template that they can customise with their own branding—it includes transactional functionality, and titles are distributed, of course, from the Gardners warehouse.

Looking back, Bezos was half right: in terms of sales, there are a smaller number of large players, “led of course by Amazon.com”. Yet smaller players are increasing as well, slowly clawing out their own space.

For bricks and mortar booksellers, this has become a necessity. “Everybody uses the web now,” says Borders’ Kohn. “Even if [customers are] not using it for shopping, they’re using it for reference. If you’re not participating in it, you’re missing out. It’s a massive marketing channel; it’s a potentially big sales channel. You’ve got to be in it.”

For a review of some of the main bricks and clicks players, read the Media Blog here.

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