Waterstones

Go Read This | Waterstones up, Quercus down—what’s the story? | Independent Publishing Guild in the UK | IPG

Very good piece looking at the competing fortunes of Quercus and Waterstones. I’d add a small amount of caution here. Firstly, the Waterstones figures are for the year up to April 2013 whereas the Quercus figures are more up to date. Even so you can follow the logic through from April 2013 until today, in many ways that makes sense because the impact of the kind of policies highlighted here would be more dramatic on publishers in the key Christmas Trading period than at any other time:

Now, cash management is closely related to stock management, so it should come as no surprise that Waterstones’ stock has come down as their cash has grown. I have no knowledge of the state of Quercus’ stock management, but it’s a pretty safe bet that they’ve got too much stock, probably of extremely good titles, sitting in a warehouse, intended for those big orders that never came from the retailers with those challenging conditions.

For independent publishers to remain independent, and sadly it looks as though Quercus will not, we need a relentless focus on cash management and cash generation. Our businesses and the titles and content that make them need to be profitable, and we need to use the digital print and e-book technologies that enable us to hold the lowest stock possible. Easy to say, and probably pretty obvious, but if we don’t hold it as a top priority we can easily be caught out.

via Waterstones up, Quercus down—what’s the story? | Independent Publishing Guild in the UK | IPG.

Advertisements

Go Read This | Waterstones turns a corner under Russian ownership – Telegraph

A curious take on Waterstones results:

The new Waterstones-branded Café W coffee shops, which have been introduced in 17 stores, are another driver of the company’s growth. “Book sales are far stronger in the Waterstones shops that have a coffee concession,” said Mr Daunt.

But the company’s partnership with Amazon to sell its Kindle e-reader tablets and e-books, introduced in May 2012, does not a make a “significant” contribution to Waterstones’ revenues, according to Mr Daunt. “Both sides are happy with the partnership, but it doesn’t materially change the business,” he said.

via Waterstones turns a corner under Russian ownership – Telegraph.

Go Read This |The adjusters

Rather nice piece from Philip Jones, a bit of a kick for everyone along with a solid dose of realism and practicality:

Booksellers must find ways to emphasise their uniqueness: the smart ones offer an experience at the heart of which is the content and the theatre. But they must do this in an environment that is unsparingly tough, with customers who have a myriad of choices not just about who they buy from, but what format they use.

via The adjusters | The Bookseller.

Some MORE Thoughts On Amazon & Waterstones

The possible pit falls of Waterstones decision to link up with Amazon and sell Kindle devices in-store have cropped up again, most especially in this blog post over on the Telegraph by Mic Wright:

Unless the customer buys e-books on the company’s own in-store WiFi network, Waterstones gets no cut of future sales. Effectively, the book chain is shepherding customers over to Amazon. The sheer convenience of being able to shop for new titles directly from their Kindle means most of them are unlikely to darken the doors of a real-world bookshop very often in the future.

While many people are still wedded to the experience of reading a traditional book, customers seduced by the Kindle tend to stick with it. Russ Grandinetti, the Amazon vice-president who heads up its Kindle efforts, told the author Peter Nowak earlier this year: “Customers buy three to four times as many books after they buy the Kindle device.” If that’s true, and the Kindle makes for more engaged readers, Waterstones is actively going to be losing valuable customers.

It is true that the deal presents challenges for Waterstones but as I wrote a little while ago I wrote:

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.

The other issue that gets glossed over in the discussion is that Waterstones other potential partners are either currently or would become by way of a partnership, direct competitors in the ebook marketplace. Enabling any one of the major players (or even a smaller scrappy rival) would make the marketplace more difficult for Waterstones.

You might even argue that Waterstones, in choosing Amazon were choosing the partner who already has the most exposure in the market and the one least likely to make a dramatic splash in store. After all, what Waterstones customer hasn’t heard of the Kindle five years after launch? Nook & B&N on the other hand, had they entered the market via Waterstones would have done so as a fresh and potentially big arrival on the scene. They might well have given a more dangerous rival a platform rather than a known entity.

Still the threats are real for Waterstones, they’ll need to make sure they take the painful closure and revamp decisions the chain needs while taking advantage of the fact that they don’t need to compete in the ebook market. They can also watch and wait and plan for the day they DO step back into the market, if they ever do.

If the ebook market does grow to more than 50% of all book sales, then perhaps the best they can hope for is a graceful decline towards a rump of the former chain, but a profitable and sustainable one if they can adapt and change.

Easons Will NOT Be Building A Platform For Ebooks Anytime Soon

Waterstones decided to team up with Amazon and one of most compelling reasons for that was the sheer cost of developing an ereader and a fully fledged ebook platform (just look at B&N’s capital expenditure and increased costs and their need for cash to support their successful Nook business, hence their deal with Microsoft). Which is why reading the paragraphs below make so little sense:

Ireland’s largest book retailer, Easons, revealed plans yesterday to enter the market as well. “We are not getting into bed with Amazon, that is for certain,” a spokesman said.

“But as part of a €20m plan to modernise our entire chain, we will be providing live wi-fi in our stores from this summer and dedicated e-book areas which will permit customers to download e-books from our website. The next phase of this process is to launch our own Easons branded e-reader.”

Rival

This means that the Irish market leader will follow in the steps of the US market leader, Barnes and Noble, which has already developed its own digital reading device to rival the Amazon one.

via Hodges Figgis and Easons to sell rival e-books – Irish, Business – Independent.ie.

If B&N struggled to build a platform and needed $300 million and a Microsoft partnership, and Waterstones joined forces with Amazon, some portion of a €20 million modernisation fund simply wont be enough to do it for Easons, even given a smaller market.

Unless
That is unless the spokesperson simply meant that Easons would use a white label ebook reader with an Eason logo on the outside. That wouldn’t be the worst idea ever, but it certainly does not mean Easons will be following in B&N’s steps!

As Philip Jones, deputy editor of The Bookseller, commented on Twitter:

A nice, nice day here in Dublin,
Eoin 

Further Thoughts On Waterstones And Amazon

Yesterday I wrote a post that was generally favourable to the deal between Amazon and Waterstones:

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.

I still think the above holds true. One major issue has begun to loom larger in my thinking though, and that is the impact of Waterstones dedicated heavy readers converting to dedicated digital readers on Amazon’s platform. The sales those dedicated heavy readers drove will be lost to Waterstones.

That brings me to the issue of lock in and whether, in the new ebook world, it exists in any real sense. The truth is that it does in a modest form, but without doubt it is relatively easy to move away from any individual content silo or platform to any other platform because unlike music, which we listen to repeatedly, we only occasionally re-read the books we buy once we have have read them for a first time.

So the fear of lock in is a misplaced one in my view. As publishers see sense (which I think they will) and move away from DRM systems an ever greater interplay of retailers and devices in the ebook space will be enabled and lock-in will be even less important.

That means it might even be possible for Waterstones to re-gain its lost heavy readers at some point in the future. No doubt the company hopes that the short- to medium-term play it has gambled on with Amazon pays off and enables them to refurbish and revitalise their physical estate and in doing so regain customers, rebuild profitability and take charge of their own future when they have done that.

I still think the logic of this move works, if they CAN make the print side of the business more profitable, more slimline and more flexible. Otherwise, we will look back in five years and it will look like a huge mistake. It’s a big gamble, but I think it’s worth it.

Eoin

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