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Look Out Amazon and Apple, Barnes & Noble Has 7 Steps to E-Rule

Book retailer giant Barnes & Noble (BKS) is up for sale. The changing reality of book selling has hammered both the company's long-standing business strategy and stock price, so the board of directors is exploring its options -- otherwise known as getting ready to bail. But sold or not, the chain will still have the challenge of how to deal with the shift to electronic media. Ironically, B&N's physical locations, combined with its existing moves on the electronic front, could give it significant competitive advantages.

Granted that the company has heavy business pressures from major retailers, such as Walmart and Target, which have moved into traditional books over the years, as well as the online behemoth, Amazon (AMZN). However, the biggest challenge is turning out to be ebooks. Electronic media has opened the doors to new competitors like Apple (AAPL), and everyone wants to lock audience in with proprietary devices and tied-in sales. Here are seven steps that the chain could take to leverage the compelling combination of electronic media and real world presence:

  • Create ebook browsing opportunities -- Readers love to browse. Not only is it the equivalent of window shopping, but it's also an intrinsic step in deciding what title to get. Yes, people have been purchasing ebooks from Amazon and Apple, but much of that happens sight unseen. B&N could let people do the electronic equivalent of flipping through titles, both on kiosks and Wi-Fi-based sampling services in the stores, much as consumers can listen to CDs as part of the purchasing process. People go shopping for more than goods. They like the experience and social aspect of seeing and being seen. Amazon doesn't have retail locations and Apple's stores simply aren't designed to allow schmoozing.
  • Pair paper with pixels -- I still wonder why sellers haven't been doing this. Offer a combined paper book and ebook of the same title. People could sit with a regular book at home or take the ebook on a reader, tablet, or smartphone when out and about. Not everyone will want it, but many will enjoy having the advantages of both formats. (For example, ever try to search for specific text in the paper version of a non-fiction book?) This becomes the fries-with-that sale, so both B&N and publisher effectively get more money for the same sale, significantly boosting margin dollars.
  • Make cafes device-friendly -- B&N wants people to bring devices of all sorts into its stores and their cafes. Why else finally offer free Wi-Fi? But too many of the stores either have inadequate seating area or, if they have cafes, skimp on electrical outlets. The lack of power options alone will drive people to other locations, which means the store has zero chance of getting a sale.
  • Add instant book printing -- The electronic revolution isn't limited to ebooks. Instant printing systems can allow stores to create paper copies of books in a matter of minutes. Add that to an extension of the electronic browsing I mentioned, and suddenly each location effectively expands its inventory by orders of magnitude. Also, it would make sense to let consumers choose a title online and schedule a pick-up at the store -- with the fulfillment counter in the center or even in the back to use the retailing trick of forcing someone past other purchase opportunities. Integrate the system with in-store inventory, and B&N could deliver the book with a printout of related titles that might be of interest and that are on-hand.
  • Free coffee for ebook reader owners -- With stores that are designed to serve the combination of paper and pixel reading, make them inviting to prospects, no matter whose equipment they have. So offer free coffee to bring people in. It's a cheap giveaway and gets people to spend time. As any retailer knows, increase the length of stay, and you increase the average spend. Given that B&N wants to sell to everyone, don't discriminate. So long as people have devices that can use ebooks, offer the java. Those whose readers won't run titles from other systems might feel guilty and buy something in paper -- or even reconsider their preferred brands the next time they are ready to purchase a device.
  • Partner with Starbucks for ebook kiosk ubiquity -- There are only so many locations that B&N can afford to keep open. I'd argue that it may have too many stores in some cities, resulting in higher-than-necessary costs and lower overall profits. So leverage others ability to be everywhere. Starbucks would be a natural, with the right type of crowd, and it would allow the coffee company a new area of expansion without it becoming a competitor on its own.
  • Rethink the Nook's interface -- I was at a Barnes & Noble last week and tried a Nook on display. Awful. The interface is clumsy, non-intuitive, and off-putting. I was surprised at how quickly I felt pushed away, and I've been doing much of my reading on screens for decades. Get some serious user interface and industrial design help and create a true reading-centric device that lets people find and read what they want with ease.
By embracing the dual worlds of paper and ebooks (and electronic magazines and newspapers as well), Barnes & Noble could provide a complete experience that none of its competitors, other than Borders (BGP), perhaps, could come close to matching. That spells differentiation, competitive advantage, and unique selling proposition, which will mean success.


Coffee image: Flickr user House Of Sims, CC 2.0. Nook image: Barnes & Noble. Photo editing: Erik Sherman.