Eason

The Rewards & Costs Of Inaction

Eason LeafI’ve often written of the value of inaction in the face of an uncertain future. Today, I want to write about both the rewards and the costs of inaction in a specific case, Ireland and the ebook retail business.

Eason, by far the largest bookstore chain in Ireland, is set to launch an ereader onto the Irish market in December. It’s called the Eason Leaf. To be fair to Eason, it has a natty offering, a 6-inch, touch-screen eInk device with weeks of battery life and storage for 4,000 titles. All for less than €100. It could plausibly become the best-selling dedicated ereading device in Ireland after the Kindle and create a mass market for ebooks sold via the Eason ebookstore.

You could say that the company’s move is a great example of collecting the rewards of inaction. Having followed a sensible and cautious strategy in a period marked by uncertainty and using the intelligence it gained during that period, Eason acted decisively.

It bought in a device from an OEM, branded it and is selling content directly to readers via its own ebookstore. In this way Eason can build a closed circle for its customers with itself at the centre and all the while build a digital retail position to rival its physical one.

No doubt Eason has seen the work Barnes & Noble was able to do in the US, converting heavy book readers to Nook users through in-store selling efforts and hopes to replicate it.

Even if you see the move as more defensive, ie a way to capture a limited audience of ereading book people, while ensuring the majority stay devoted to print, the strategy has the benefit of being low cost. I don’t often have praise for Eason, but in this instance I think the company has played a good hand. Given the choices available to Eason I think it has taken by far the best option it has.

The costs of inaction of which I wrote at the beginning then are being paid by the other ereading/ebook retail players (Kindle aside) whose inaction has meant their ereader presence here is not backed by a convincing consumer message, and certainly not by a retail store presence. They have not scaled rapidly enough in order to stifle competition,

Kobo seems to be making the most of its distribution via chains like PC World (distribution which includes even the keenly priced Vox table at only €139 which packs a fair punch relative to the Leaf) but name recognition is low and no BOOKSELLERS seem to be on board except WH Smiths whose High Street retail presence in Ireland consists of one concession in Arnotts. Without a convincing way to reach the readers how will Kobo convert them from print to digital?

Nook‘s plans are mystifying though the company does seem to be offering to ship tablets and ereaders to Ireland from its UK Nook site. If Kobo has a name recognition problem I wager Nook’s is far, far worse in Ireland. Nook then faces a huge challenge in establishing a name, a brand and a conversion strategy in Ireland.

Apple is the only competitor with some chance of making gains in 2012, with the iPad mini, but in truth I suspect that device will not be a book readers choice. I’ll wait to see.

The truth is though that all these companies could have acted more forcefully in Ireland at any time, it’s a small, English language territory with pretty friendly tax arrangements. It was inaction when the time called for action that led them to where they are now.

The costs of inaction for the major Amazon rivals are first and foremost that a local competitor in a small local market looks set to steal a march on them. It seems so very unlikely but it’s really happening (I wonder who will be the first to pondering buying out the Eason operation should it prove successful?).

In an English language market that could easily be technologically serviced from the UK or US (as Amazon does with Kindle) so long as the retailer made a small commitment on the ground marketing and brand building and converting print readers to digital, a small bookseller with great physical footprint and footfall but not much by way of a digital track record might just, strangely, be a leader in this shift from print to digital in Ireland.

We always do things a little differently here!

Eoin

Bookshops, You Have Three Choices

It is becoming increasingly clear that bookshops, both chains and independents, are the first segment of the trade book publishing industry to face wrenching decisions that amount to bets on survival in this digital transition.

Publishers, agents, authors, wholesalers and many others all need to respond and some have already made significant efforts to do so, but it is clear that bookshops are the facing the full thrust of this change right now.

The way I see it bookshops have three choices:

1) Bet On Digital
Betting on digital means much less emphasis on real bricks and mortar locations. In order to win in this space you’ll be taking a leaf out of Barnes & Noble‘s book and building a real platform for content that provides self-publishing access AND access for traditional publishers direct to your platform and be shifting readers to your platform in your store(s).

Waterstone’s looks like it is about to embark on this strategy by launching its own device next year, I fear it will be too late. Barnes & Noble is two years into this strategy and is well on the way to building a convincing platform with a significant share of the US ebook market. They could still fail, which only goes to emphasize the importance of acting quickly.

Make no mistake about this choice, it means closing bookshops and shedding staff and soon. It’s a hard choice for chains because up until recently floor space devoted to print books were hallmarks of success. That is no longer true.

Smaller chains and independent book stores are faced with an impossibly high barrier to entry here, their own device is an excessive cost, as is creating their own platform and I don’t see a real way for them to pursue this strategy unless they can develop a loyal customer base for a curated ebook offering. It’s not an impossible prospect, but it will be damn hard for them to take this option.

2) Bet On Retail
This is perhaps the hardest decision for a bookseller to make because in essence it involves admitting that the product that to date has defined your business, books, is no longer the most important aspect of your business.

It seems to me that WH Smith has decided that its focus should be on retail, that its retail space can be best used to sell anything and perhaps over time that means fewer books and more of the other things it sells. If that is the case, then being in the digital book business is a distraction not an essential element in its future, hence the Kobo Deal.

By working with Kobo, Smiths leverages the book portion of its business to gain revenue and to sell devices while shifting its actual in-store focus towards products that deliver more revenue and profits. The company may feel some regret about that but as a retailer it will have to be unsentimental and profit driven. The flip side of not developing its own platform and device is a significant investment saved for another opportunity.

On balance, I think it’s probably the right decision. Either ebooks take off and WH Smith must replace a large section of their product line up OR ebooks plateau and what has the company lost?

I suspect that here in Ireland Eason is following this strategy, but the signs could point either way.

3) Bet On Print
By betting on print, bookshops will be making the assessment that they cannot compete in another retail space (or that they choose not to) and, as I suggest above in 1, they simply don’t have the resources to compete in digital.

Nothing about betting on print prevents a bookshop or a chain from doing a deal with an ebook platform to sell a device and provide access to an ebook library. That will bring some revenue but it won’t  (in all likelihood) be enough to replace the revenue lost to most bookshops of falling print sales.

The bet here is that YOUR bookshop or chain will the lucky one. The one with just enough customer loyalty, just the right location, just the right level of population density, just the right amount of print loving readers, just the right range of books in the right formats and at the right prices, just the right amount of business nous and just the right amount of marketing know-how to rise above the other bookshops hoping the same thing.

Sadly, some bookstores probably most of them will lose this gamble. Many will lose because of bad luck or poor location, nothing to do with how good a bookstore or a bookseller they are which is a slightly depressing reality, but one we should face.

The winners may well do pretty well because although the overall market for print books shrinks, they will have an increased share of that market and also because the market for print will change most likely towards higher value books.

There’s a final choice of course, which is to do nothing and keep on rocking. I don’t hold out much hope for survival for those who make that choice.

Go Read This | Book Blog | The Spectator

A wonderfully snide analysis of Eason (Ireland’s largest book retailer) in The Spectator Book Blog the other day.

Foreign retailers have it no easier. In the States, Borders is poised to collapse; whilst in Ireland, shrinking giant Eason can’t stop making a loss. Radical measures that should have been taken years ago are finally in the offing. Eason has been forced to introduce another loyalty card package and establish in-store interactive zones, in addition to giving its outlets a lick of paint and a squirt of Fabreeze. The firm is also working to narrow its stock categories, having conceded, like Waterstone’s, that it can’t compete when it comes to shifting Sophie Kinsella. Most conspicuous of all, Eason is relaunching its website to boost sales.

via Book Blog | The Spectator.