nightmare scenario for booksellers, the physical bookstore is becoming a showroom for the online shopper. After casually browsing the tomes in comfort, people will use their smartphone or tablet to buy their choices online at a much lower price. While most booksellers can do little more than fume, Barnes & Noble is not just meeting the threat head on, it’s embracing the change.In what has long been a
William Lynch, chief executive of the New York-based company, told Fortune magazine Tuesday that he planned to have near-field communication installed in Nook e-readers as early as this year. The technology would make it possible for browsers to touch books in the store with Nooks to get more information, such as reviews, and then purchase titles in whatever format they want.
The company declined to discuss its strategy Wednesday. “We haven’t announced anything further,” a spokeswoman said in an email.
The success of Lynch’s idea depends on convincing publishers that it’s in their best interest to embed into their books information-storing chips that the Nook could read. If they agree, then Lynch would move a step closer to merging the physical and virtual words.
Barnes & Noble is in a unique position in having physical stores, an online store and an e-reader. “[The stores] remain a very important advantage for the company – the only retail player in the category with integrated three-channel distribution under one brand,” said Peter Hildick-Smith, president of the Codex Group, a book market research and consulting company.
Even Amazon, which has about 60% of the U.S. e-book market to Barnes & Noble’s 30%, understands the importance of having physical stores. The online retailer has been selling its Kindle e-reader through retailers since at least 2010 and is currently in chains such as Target, Best Buy and Staples (although Target announced Wednesday that it plans to stop selling Kindles).
Balancing Physical, Online Sales is Key to Success
Getting the right combination of the physical and online sales channel is key to survival. For example, Borders sold e-readers from Sony and Rakuten, maker of the Kobo, and had Amazon run its online store. With no connection to the online customer, Borders didn’t have enough to survive. The bookseller went out of business last year.
Barnes & Noble has not made the same mistakes as its one-time rival, and its current strategy actually plays into the habits of book readers. Codex has found that people who own e-readers also buy physical books. “They’re not just pure-play e-readers; they are living in the print world, as well,” Hildick-Smith said.
In a February survey, Codex found that only 2% of book buyers bought only digital books. In general, people read nonfiction on e-readers and fiction in physical books, Hildick-Smith said.
Of course, Barnes & Noble still faces a number of hurdles in its online business. Nearly all Nook sales originate from the company’s 691 stores, which are only in the U.S. The company needs to reach the international markets, which is why Barnes & Noble partnered last month with Microsoft. The software maker agreed to invest $300 million in a new subsidiary comprising Barnes & Noble’s Nook and college bookstore businesses.
Under the deal, Microsoft will develop a Nook application for Windows 8, which is expected to ship this year, Lynch told the financial news agency Bloomberg. The app will take Barnes & Noble’s digital books to consumers in Europe, Asia and Latin America, according to Lynch. Along with selling e-books, Barnes & Noble will also have to sell Nooks, which it hopes to place on the shelves of retailers in other countries.
If successful, Barnes & Noble could become a stronger competitor to Amazon, which has a tremendous head start. The online retailer sells its Kindle e-reader in stores in the U.K., Germany, France, Canada and Australia, and through its website in 175 countries. Amazon also sells books in seven languages.
Despite being the underdog, Barnes & Noble seems committed to putting up a fight by proving that the physical and virtual can coexist and prosper.
In return for promoting offers from American Express and retailers on Twitter, cardholders get steep discounts. In some cases, American Express will seek out influential users in certain space.
For example, if a cardholder with a linked account uses the hashtag #AmexMcDonalds and then uses their American Express card at a McDonald’s restaurant, they’ll get a $5 credit on their next statement. American Express is tweeting the various deals on its own Twitter page, giving users an incentive to follow the account.
Among the deals announced so far, with their corresponding hashtags:
- $20 off a $75 purchase from Whole Foods #AmexWholefoods
- $10 off a purchase of $75 or more at Zappos.com #AmexZappos
- $10 off an online purchase of $50 or more from 1-800-Flowers #Amex1800flowers
- $10 off an online purchase of $50 or at H&M #AmexHM
- $5 off a Gulf Oil purchase of $25 or more #AmexGulfOil
- $10 off a $50 purchase from Century 21 Stores #AmexC21stores
- $10 off a $25 online purchase from Seamless #AmexSeamless10
- 10% off airfare on Virgin America (limited quantity) #AmexVirginAmer
- $5 off $20 in-store purchase from FedEx #AmexFedEx
- $10 off $50 purchase at the Cheesecake Factory #AmexCheesecake
- $15 off a $50 online purchase from FTD Flowers #AmexFTDflowers
- $10 off a $100 purchase from Best Buy #AmexBestBuy
- $100 off a $599 online purchase from Dell #AmexDell
You only have to tweet the hash tag, meaning users are allowed to say what they want about the company, promotion or purchase, or say nothing at all.
Ed Gilligan, vice chairman at American Express, told the New York Times American Express is not sharing user data but it will give participating retailers overall stats on the promotion, including average spending.
“We are trying to bring more value to our card members, and we are also trying to help merchants with their digital marketing,” he said.
Google TV is supposed to be Android’s entrance into your living room, the pioneering cusp of the “smart TV” revolution. It appears that it has been anything but. Since its release last year, only about 4,793,000 Google TV apps have been downloaded, according to Xyologic. While nearly five million downloads may seem like a success, six of those apps come pre-installed on Google TV devices, making up 92% of the ecosystem. Only 352,000 dedicated Android apps for Google TV have been downloaded.
While the idea of the smart TV is intriguing, consumers are still warming up to adoption. We expect that to change this year as more avenues for Internet-connected televisions become available and prices begin to fall. Google TV is just a small segment of the ecosystem with Apple TV, Roku, Boxee and Samsung all coming with solutions to connecting your living room to the Web.
As of now, actual smart televisions are not in high demand. So far there is only one actual Google TV set on the market, the Sony Internet TV that comes in 40-inch and 46-inch varieties, starting at $599.99 from Best Buy. There are also two set-top boxes: the Sony Blu-Ray Player (at $229.99) and Logitech Revue.
Google TV works on an app-centric approach, with native Android apps designed specifically for the large screen form factor. The Android apps, which include staples like Flixster, Google Music, IMDb, Plex and Twitter, are not well rated on the Android Market. Xyologic points out users find most Google TV Android apps underwhelming with only two apps with higher than a 4.0 (our of five) rating in the top 10 most downloaded apps.
The surprise winner for all Google TV apps is Napster. That may be the only list that the once-powerful music service tops these days. It comes pre-installed on Google TV devices and is likely a product of the fact that most devices are sold through Best Buy, which bought Napster several years ago.
For comparison, the Roku set-top box had 15 million channel downloads as of May 2011, ahead of the release of the Roku 2. Roku’s channels are not like Android apps and are not designed from a mobile platform perspective. Most Roku channel downloads are done manually (not pre-loaded) and has a robust selection. Roku acts more as an intermediary than Google TV and allows the company to make partnerships with a variety of players from Hulu Plus, Amazon On Demand, Netflix, HBO Go and others.
While apps designed specifically for Google TV may not fair well, companies like Myriad are working to lower the barrier for all Android apps to appear on TV sets. Myriad Alien Vue brings any Android app (not just Google TV) to the living room and may be a more attractive option to service providers looking to gain traction in the smart TV market. As opposed to funneling content through the over-the-top market that Apple TV, Roku and Google TV represent, service providers can just create a dedicated Android app and connect to the TV through Myriad.
This may be another case of the open Android ecosystem coming back to bite Google. Instead of pushing dedicated Google TV apps, Myriad and others can cut Google TV out of the mix and go straight to the service providers with Android apps for Internet connected televisions.
Are you planning on purchasing a smart TV this year? Will it be a set top box like a Roku or an integrated system like something offered by Samsung? Let us know in the comments.