Thoughts On >> Waterstones & Amazon

I have to say, this notion didn’t once enter my mind when I thought about Waterstones options, not because it’s a bad idea (far from it) but because I never thought Waterstones and its management would even consider it. It’s fairly radical and the implications are pretty dramatic:

UK bookseller Waterstones is to sell Amazons Kindle book-reader and launch other Kindle digital services.Waterstones says the deal will dovetail with its current store refurbishment scheme, which is creating dedicated areas for digital books, free wireless internet and new coffee shops.

via BBC News – Waterstones to sell Amazons Kindle book reader.

If I was to sum it up I would say that it indicates Waterstones does not believe it can compete with Amazon in the digital space and has decided to concentrate on the print market.

Is that a good decision? Or is it making the same mistake as Borders made in allowing Amazon run its website so many years ago?

Alternatively it could be very seen as a sensible decision. It relieves Waterstones of the burden of competing with Amazon on more fronts and crucially reduces the need for a huge capital outlay on technology R&D (the kind B&N has committed itself to). It also enables the management to concentrate on making the stores profitable and on selling print books (still the company’s core product). It makes the decision about selling Amazon’s print books easier (I would think that’s a big one for authors). It probably presents more opportunities than it closes off for Waterstones in other words.

If I was to think of one single reason for the move being a good though I would say it is this, it allows Waterstones to stand still and observe for a little longer. The value of inaction is often underestimated and right now when the ebook retail and distribution space is changing rapidly and requires such a huge investment, this move brings revenue, options but most crucially of all, time to just see what happens while rebuilding the core bookselling business.

Impressed by the cojones if nothing else!
Eoin

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9 comments

  1. Waterstones also had its online bookshop run by Amazon for a while, allowing Amazon to capture the UK market and meaning that Waterstones current offer feels lightyears behind, lacking the social vibrancy and depth of data that Amazon uses so well. Oh, and the sales.

    Likewise, I can’t believe that this decision will benefit Waterstones long-term. Perhaps the Waterstones version of Kindle will be a variant which is branded with the Waterstones logo, defaults to Waterstones website to order Kindle titles, and gives all resulting data to Waterstones HQ… but I find it unlikely.

    Instead I suspect this will help Waterstones generate sales, brand loyalty and customer data for its main competitor.

    I really, truly hope that Daunt’s further announcements prove me wrong.

  2. Gonna have to disagree, it’s a pretty stupid move. Both Target and Borders had reason to regret their partnerships with Amazon and this will prove no different.

    Will be massively unpopular at store level, the picture of sullen booksellers morosely ‘handselling’ Kindles is not a pretty one.

    Waterstones is telegraphing that they are a spent force and publishers would be well advised not to waste too much time on them.

  3. Interesting (and surprising) announcement. Some thoughts:

    1. The deal doesn’t seem to be as comprehensive as you suggest. It appears the Waterstones digital store will continue as is (selling EPUBs) and the deal is limited (for now) to selling devices instore, and selling Kindle ebooks *instore* via a Wifi network Amazon will essentially be paying for.

    2. Daunt is going to have a lot of negative Amazon quotes thrown back at him from the last six months. All those indie booksellers who saw him as some kind of hero will be rapidly revising their opinion (correctly or incorrectly).

    3. I’m still not convinced Daunt “gets” digital. He seems to think this deal will allow him to entice Kindle owners into bookstores to browse and have a coffee and order books instore on their devices (sales for which Waterstones will presumably get a cut). I can’t see that happening in any meaningful volume.

    4. Rumor has it that B&N abruptly called off (the lengthy) negotiations with Waterstones after Microsoft’s investment. Does this mean that Microsoft are calling a halt to the (belated) international roll-out of the Nook? Or do they have their own plans? Either way, any such roll-out will be (again) delayed – not good for B&N. As a contrast, this Amazon deal was said to hae been done very quickly – again showing the natural advantages tech companies have in this sphere against traditional players.

    5. I don’t think it’s akin to the Borders deal. For starters, it’s non-exclusive. Waterstones can still stock competing e-readers and sell EPUBs in their own e-bookstore (and there is no mention of selling Kindle compatible e-books there for now – only some mention of possibly including *a link* to the Kindle Store). Finally, it should be noted that their own e-bookstore has done very little. I don’t know if anyone has figures on what percentage of the UK market they have captured, but I know from one self-publisher that hit the top of the charts there that the volume is miniscule in comparison to Amazon UK.

    There’s more details on all this in these two Bookseller articles:
    http://www.thebookseller.com/news/waterstones-signs-kindle-deal-amazon.html
    http://www.thebookseller.com/news/waterstones-customers-want-Kindle.html

  4. So why Kindle and not Nook? Amazon clearly has the market share, especially in Europe, but a B&N/Waterstones deal would have brought together two highly motivated partners. If B&N wanted to get global the UK would have made a great beachhead, with Waterstones as their partner. Nook will now have to sink or swim in Dixons/PC World, and Waterstones have a partner who is happy to have some retail presence, but just as happy to kill them. Bezos must have offered Daunt a better deal than Nook could. Still, as Eoin says, it’s playing for time, while praying for a better option.

  5. I’m sorry but I see this in an absolutely different light than Eoin.

    Waterstones is a huge multinational street pBook seller. It is facing a transition from paper to digital. Where will Waterstones future lie in 15 years and what is it doing to prepare ?

    Does it think it is still going to be making the same profits from paper in 15 years time ? if so …. they are surely optimists… If they don’t, then where are they going to make money ? and how is selling Amazon Kindles going to make them money ?

    Eoin you talk about ‘time’ and ‘cojones’.

    I suggest this this deal demonstrates that Waterstones don’t grasp what is happening in the market and don’t have the cojones to compete.

    Time ? They have had years of clear warning about what is happening. There is no uncertainty. Digital is the future and print’s future is in the margins. End of. No mystery. The only uncertainty is the time factor.

    Why are they not attacking the market with a hot web site and hot customer support with good prices ? They can easily afford it! for them it is small money ! Why aren’t they getting together with WHSmith and a group of other pBook retailers to develop a joint venture site ? a joint venture app ? a joint venture …. anything ? (and there is NOTHING anti competitive about those actions!) Why are they not offering any innovation in how they sell to digital readers ? promoting DRM free where they can ? generating some positive buzz ?

    The truth is evident from their inaction. They don’t have the nous or the cojones to try. They are just lying back and surrendering to selling a product that a) promotes the acceleration of the digital transition b) alerts its customers to the digital world and tells them it’s good c) attracts it’s customers to the Amazon web site for eBooks and pBooks d) makes more profits for Amazon.

    What is going on in the brains of these CEOs ?

  6. Forget Borders//
    When Target granted floor space and branded kiosks to sell the kindle in their electronics department, unforeseen problems arose. Target retail sales staff lacked the time and training to answer questions to consumers. Customers played with the Kindle, to find other items cheaper on the Amazon site that were for sale in the Target store with an added Bonus (free shipping). Target offered sales on the kindle to drive traffic, and found Walmart doing the same. Finally executives asked themselves why are we giving up brick and mortar floor space to compete with ourselves. Notice how Target reduced floor space of paper books, and has not pushed back and expanded to its prior size.
    This Christmas I promise to get photographs of customers standing in Waterstones spilling a coffee on the kindle ordering hardbacks from Amazon that are cheaper than in store. Unforeseen eggs/cojones missing from basket?

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