Retailers shift their ad spending from TV, radio and print ads to digital ads.
As consumers increase the number of books they buy online, book store chains are turning more to the Internet to hone their growth strategies and competition is heating up between Google and Amazon.com over e-book sales.
Consumers like cozying up with a good book and, increasingly, they like to buy them online. The result could lead to consolidation of the biggest bookseller chains and has sparked competition between Google Inc. and Amazon.com Inc. for shoppers’ e-book business.
Selling books online—both physical and electronic—is becoming the biggest sales growth area for big retailers Barnes & Noble Inc. and Borders Group Inc. Both report significant year-to-date web sales from books and related products and faltering store sales.
For example, through the first six months of the 2011 fiscal year, Barnes & Noble reported web sales of $321.4 million, up by about 44.5% from $222.5 million in the prior-year period. Total retail sales were $1.90 billion, down by 5% from $2.0 billion last year. That means the web represented 16.9% of sales for the first half of 2011, compared with 11.1% in the prior year period.
At Borders, for the first nine months of 2010, Borders.com sales were $43.3 million, a 24% increase from $34.9 million year over year. Total sales were $1.51 billion, down by about 15.2% from $1.78 billion in 2009. Comparable-store sales declined by 10.2%. The web accounted for 2.9% of sales through the first nine months of 2010, compared with 2% in the prior year period.
Borders attributes web sales growth to improvements made in its November site redesign, including customer reviews and product recommendations and content personalized to shoppers’ interests.
Barnes & Noble is banking on web sales and its new Nookcolor e-reader for growth.
The book business looks bright enough for Borders that a group of shareholders offered in early December to finance the purchase of Barnes & Noble, bringing about the merger of the two largest bookstore chains. The offer, described in a filing with the U.S. Securities and Exchange Commission, was for $912 million. Barnes & Noble announced in August that it was exploring strategic options, including a possible sale. The company declined to comment on the Borders offer.
Meanwhile, two of the biggest names on the Internet are stepping up their efforts to sell e-books. In the first week of December, Google took a swing at Amazon.com’s Kindle store with the opening of the eBookstore, which sells e-books that are accessible from just about any web-enabled computer or mobile phone.
The next day, Amazon counter-punched by expanding Kindle for the Web to enable anyone with access to a web browser to buy and read full Kindle books without requiring a download or installation of a Kindle reader application. The offering previously allowed consumers to read for free first chapters of Kindle books through web browsers.