Barnes & Noble's (BKS) chairman Len Riggio and his executive team are shrewdly taking advantage of two things that could earn them a bigger slice of the book selling market. With Borders (BGP) on the brink of declaring bankruptcy and Amazon's (AMZN) threat to drop affiliate sellers, B&N is poised to pounce and grab both bricks and clicks.
According to B&N's "open letter," Amazon.com is threatening to terminate its affiliate program in states that may enact an e-fairness legislation. That would require Amazon to collect sales tax due on purchases by residents in those states.
That's OK, says B&N, just hop on board with us:
Know that you are welcome to join the Barnes & Noble affiliate family. If Amazon doesn't want you, we do! And, we will take care of collecting and remitting all sales taxes due on BN.com sales to its customers so you and our customers don't have to worry about being hassled or prosecuted by state tax auditors.
With over 700 retail locations, B&N has nexus in all states. This was the sticking point for Amazon. The e-commerce giant recently canceled plans to open a warehouse in Texas because that state's comptroller sued Amazon to pay about $269 million in uncollected sales tax. The decision by the comptroller pissed off Gov. Rick Perry, who declared that without a store front Amazon does not have nexus in the state, even if it did build a warehouse. Score: B&N 1- Amazon 0.
But even with its brick and mortar advantage, B&N isn't relying on its physical stores to boost business. Now that Borders is inching closer to bankruptcy -- which could trigger the closure of over 200 of its stores -- B&N's lying in wait to make a play for its e-commerce, too.
It's no secret that Borders made a big mistake when it turned its e-tail business over to Amazon in 1998. By the time it reclaimed Borders.com in 2008, the damage was done and customers were already cozy with Amazon. If Borders operations shut down completely, B&N could gain about a $1 billion in sales according to a WSJ report.
Meanwhile B&N isn't sitting back and letting customers get lazy. It's putting the press on promotions in the form of daily emails loaded with deals (40 percent off new titles!) that also flog books signed by favorite authors, selections hand-picked by the Review team, and the Nook Color e-reader.
In stores, the shrine to Nook shines brightly just in the entrance, shelf signs shout discounts, and tables are laden with all manner of toys, games and gift items -- for those who prefer not to just browse books but buy other merchandise.
Each tactic has all the subtlety of a big stick (not that B&N is even pretending to speak softly). But as the book selling landscape evolves, the grab for market share is the only thing that keeps the retailer going -- at least for the next few years.