Jag Venugopal's Blog

September 22, 2010

Barnes and Noble: The long, hard road to irrelevance

Filed under: Project Management — Jag @ 1:00 am

When I was new to the USA, one of my favorite destinations was the large Barnes and Noble in Boston’s Downtown Crossing. They used to have an entire wall lined up with the latest books in computer programming, and I could get lost among them for many hours. I would spend a lot more on (nearly) full-price purchases from them than my meager student income justified. I’d take the train to Kenmore Square just so I could spend time at the BU bookstore (which was also owned by B&N).

Alas, today, Barnes and Noble stands out as an example of a company that could not manage the Internet wave, and has had its business model swept out from underneath. The company first came under assault in the mid-nineties from Amazon’s then-new Internet based bookstore. Eventually, B&N managed to cobble together its own bookstore, but it was too little, too late. I remember trying to access their bookstore around 1997, and found it woefully slow compared to Amazon. Besides, Amazon had made the best use of its first mover advantage, and had already become the go-to place to read book reviews. B&N continued with their practice of full-priced book sales at large bookstores, while Amazon’s discounting, free shipping and Amazon Prime initiatives continued to steal customers. Target and Wal-Mart continue to undercut B&N in the books-and-mortar world with huge discounts on the most popular bestsellers.

The company could have stolen a march over Amazon on eReaders, having introduced its first version in the early 2000’s. However even that was not to be. Amazon came on the market and quickly moved through two generations of the market, again locking in customers, while B&N struggled to bring an eReader to market. When they finally did so, it was again a case of too little, too late. Amazon had beaten them out the starting gate by a couple years. When finally, B&N tried to shake things up with a huge price cut on eReaders, Amazon responded within hours, with an even larger price cut and a next-generation device that left the Nook out in the cold.

B&N is now grasping at the straws for relevance, with cockamamie ideas like providing free eReading in its bookstore locations for owners of its Nook eReader. Well hello, the appeal of the eReader is that people don’t need to go into a store to buy books. Why would they waste their time driving to B&N? And once there, what would B&N try to sell them other than coffee and scones? If fewer people buy books at stores, it is not clear how B&N can continue to pay for pricey real estate in strip malls, or how it can continue to carry large inventories.

So, bear with me while I shed a tear for an old friend, and turn the page on my Kindle.

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