Traditional Booksellers: Time to Evolve or Dissolve
Mary is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Barnes & Noble (NYSE: BKS) is evolving to compete with its digital counterparts. It developed the nook, its digital e-reader, to compete with the likes of the iPad and Amazon's Kindle. Now B&N is entering a partnership with software giant Microsoft (NASDAQ: MSFT). The companies will form a subsidiary, 84% of which is to be held by B&N. One of their first plans for the subsidiary will be a nook application for the Windows 8 operating system. Also, both companies stated that any patent litigation between them had been settled. This new partnership is a great value for Barnes and Noble shareholders. Especially, since the share price has pretty much doubled since the news of this partnership. It seems like there are more good things to come for Barnes and Noble.
Not all traditional booksellers are evolving quite so well, though. Books-A-Million (NASDAQ: BAMM) is one of those companies. They have made no movements to get in line with the digital reading trend and their large retail stores are frequently found empty. As a result, their share price is well below the 52-week high, which keeps them even farther away from their pre-recession range. They are just not recovering at the same speed as their evolving counterparts. I recently ventured into one of their stores for a newspaper. I was the only one in the place except for a few scattered employees. It felt like I had to pass an interrogation just to make a purchase. They wanted me to join their club, sign up for a newsletter, collect my contact information, etc. All of this just to buy a newspaper. Desperation was in the air.
Amazon.com (NASDAQ: AMZN) is not a traditional bookseller. They are, however, the benchmark. They set the standard for online shopping. And their Kindle is considered one of the best e-readers out there. It is also one of the most popular. Their new Kindle Fire is in close competition with the iPad. Traditional bookselling is slowly becoming a thing of the past. People can get any book they want at their fingertips, literally. Apple (NASDAQ: AAPL) is also in direct competition with traditional booksellers. The iTunes bookstore is on the fasttrack. In fact, there are several schools that are using Apple's technology to deliver textbooks electronically, making it more economical for students and educators. The things that set Amazon and Apple apart, however, is that they do not sell only books. They have other, larger sales departments. Books are just a side game for them, but they do it so well. Is is that we are becoming a more impatient economy? We also work more and have less free time. We don't want to go to a different store or set up accounts at different websites for purchases. Specialty stores are declining.
Traditional booksellers do need to act fast. Barnes and Noble has a good thing in the partnership with Microsoft. B&N is also a great place for indie music lovers to pick up music they can't find anywhere else. And its smaller stores appear quicker to navigate. Barnes and Noble seems to be trying to evolve. But will it be enough? Books-A-Million doesn't seem to be making the effort. And their large stores just look like wasted time to most people. Then there is Hastings, who is losing out to RedBox in the physical DVD movie rental department, and isn't even trying to keep up in book sales. Traditional booksellers need to evolve. Look to what Amazon and Apple are doing successfully, then tailor it to what will work best for them. Easy online selling and quick access to your purchase is what these two have to offer. in addition, Amazon does have the best reader reviews in the business, which makes shopping for a great read just that much easier. Traditional booksellers need to keep pace.
MaryPosey has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.