This May Be Barnes & Noble's Final Mistake

• Report this Comment On February 01, 2012, at 12:17 PM, oriorda wrote:

  Bricks and mortar bookstores are such an important part of a town's intellectual vibrancy. Their contribution to stimulating thought is high.

  It's patently unfair that they have to compete with an online book distribution system which does not impose sales tax.

  This underpinning of Amazon (and other online stores) needs to be removed. Let the company compete head to head without the advantage of zero tax.

• Report this Comment On February 01, 2012, at 12:35 PM, jdmeck wrote:

  oriorda - How are you getting away tax free on Amazon? I have always been charged tax on their site.

• Report this Comment On February 01, 2012, at 12:39 PM, starz188 wrote:

  My first instinct about this is merely, "so what"? The giant brick & mortar model like BKS is done.

  Boutique bookstores that tailor/curate their offerings toward local clientele will survive...but BKS is done.

  Who cares if BKS doesn't have the latest AMZN published books? The shopper is probably looking on AMZN anyway...

• Report this Comment On February 01, 2012, at 1:43 PM, zeifus wrote:

  Starz, if BKS is "done" and "so what" if it is, where will Bezos go to browse books then? His own warehouse? "Hey Vinny! Roll that palette over here. I want to check out the latest Tom Clancy."

  I know, I know. Bezos is all in on the digital thing. The physical book has had a great 500-year run, as he likes to joke. But you can't turn the pages on a physical book with one hand, so it has to go.

  The point is, forget the (legitimate) sales tax issue for now. Amazon's real despicable practice is using every brick-and-mortar store as its showroom - not just BKS. It saves WAY more money on overhead in the form of showroom employee wages and benefits, lease, upkeep, inventory, etc. than on sales taxes.

  So "so what" if BKS goes t!ts up? Bye bye Amazon showroom. You thought shopping at Wal Mart was bad? Wait until your only shopping option is the online equivalent of Wal Mart. Ugh.

• Report this Comment On February 01, 2012, at 1:59 PM, leonhart03 wrote:

  Zeifus is spot on. Amazon's blatant breach of ethics in using free showroom space from other brick and mortar stores is giving him way too big of an advantage. Just wait for legislature to consider the repercussions of letting such an anticompetitive tool run rampant...

• Report this Comment On February 01, 2012, at 4:02 PM, sepaton wrote:

  Rick, it's a leap of faith to say Amazon will be successful with publishing, but BN's decision here should not be a surprise to anyone. In fact, as time goes on Amazon finds fewer and fewer companies that want to partner with them.

  Besides, if Amazon is successful in publishing then look for the big publishers to view that success as a threat to their core business.

  Amazon is by no means the only game in town for selling stuff. There is plenty of dot com or brick and mortar solutions for any product.

  Furthermore, any publisher at any time could block Amazon from selling their product line due to that competitive threat. In the future I'd be far more concerned that Amazon will have major holes in their book offerings than I would with BN.

  BTW, as you may know BN recently sold off their publishing division (they still offer self publishing), so BN is a clean play for any publisher, no threat to their core business, plus the opportunity to showcase their product in stores or online. I'd imagine BN is highlighting this fact to every publisher out there.

  This is likely to bite Amazon at about the same time as the sales tax issue.

• Report this Comment On February 01, 2012, at 7:21 PM, geekdadnyc wrote:

  I get charged sales tax by Amazon too. I guess it's just a few states that don't.

  And you're all kidding about it using brick & mortar stores as showrooms, right? B&N has a website too. Why doesn't it use it's own stores as showrooms for bn.com? Because it failed at going digital -- it did everything AFTER Amazon did it, including going digital, going mobile, going tablet, and never differentiated itself at all. It's Nook software is so buggy on iOS that I had to give it up and switch to the Kindle software. B&N screwed up through lousy execution -- and Amazon won through excellent execution.

  This vitriol against Amazon isn't really about Amazon -- it's people reacting emotionally to the death of print. Yes, printed books are on the way to "specialty item" status, and yes, Amazon is the company that will win the most from the transition -- because they understood it first and were brave enough to go there. The publishing industry is having to be dragged there -- just as the music industry had to be dragged there by Napster/Kazaa/etc. and then be barely saved by Apple.

  Will publishing be as lucrative as it used to be (for the publisher?) No, of course not. That was an accident of a manufacturing+marketing business model. Their new model is pure marketing -- let's see which publishers make that transition.

  Anyway, this is a forum for investors, right? Aren't we supposed to recognize, and encourage, and invest in, unfair advantages? (In Amazon's case, being forward-thinking in a crowd of backward-thinkers?)

• Report this Comment On February 01, 2012, at 11:18 PM, Popnfresh100 wrote:

  Not carrying the Amazon titles in stores, is the right business decision, if you remove any emotion from the equation.

  In e-tailing, there is no inventory cost or associated risk, and an infinite inventory is possible. So it is typically cutting-off-your-nose-to-spite-your-face to avoid selling a product for any reason. That's why BKS is still carrying the Amazon books on its website.

  But with traditional retailing- an infinite selection is not possible, and the store must make a cash investment in every single product it chooses to keep in stock. Therefore, stores can only afford to keep in stock products they have a good reason to believe will sell well. With bookstores this is particularly true because there are literally millions of books to choose from and nowhere near that many spots.

  And Barnes and Noble has no particular reason to believe the Amazon books will sell well. For one thing, books in general aren't selling that well- they want to diversify into other products. But even for the book-dedicated shelf space that remains- these books would be particularly hard to sell in BKS stores than others because they are associated with Amazon- meaning people would be even more likely than usual to buy them at Amazon rather than elsewhere- and because there would be no nook version available.

  If Barnes and Noble knew for sure that one of the titles would be a red-hot seller than they could make an exception- they've already said they would carry Harry Potter books no matter what the digital availability is. The problem is that there's no surefire way to predict what books will sell best in advance, and Amazon has not demonstrated a dramatically above-average ability as a traditional publisher. Thus, Barnes and Noble's best bet is to simply stick with stocking books from suppliers who don't place them at a obvious disadvantage when trying to move product.

  That's probably the key to understanding why this move is a slam dunk good call for BKS- they simply have too many better options for the shelf space and can't do both.

  All that being said, analyzing Barnes and Noble's decision may be missing the point. If Amazon's move into publishing ends up working out really well for them, and ecommerce will dominate every other product category BKS chooses to expand into, then BKS is screwed no matter what they choose to do about it.

• Report this Comment On February 02, 2012, at 12:41 PM, sepaton wrote:

  From Amazon's website: Sales Tax Requirements

  http://www.amazon.com/gp/help/customer/display.html/ref=hp_4...

  "Items sold by Amazon.com LLC, or its subsidiaries, and shipped to destinations in the states of Kansas, Kentucky, New York, North Dakota, or Washington are subject to tax."

  Arizona hits Amazon with $53 million tax bill - 2/1/12

  http://seattletimes.nwsource.com/html/businesstechnology/201...

• Report this Comment On February 02, 2012, at 12:51 PM, DJDynamicNC wrote:

  I hate to admit it, but I recognize that my instinctive reaction - to cheer on B&N as it opposes Amazon - is a purely emotional one. I don't like the idea of printed books dying out, just like I don't like the way vinyl sales have fallen precipitously.

  But I don't buy many print books, nor do I buy many records, in both cases because the digital equivalent is simply far more suitable to my lifestyle.

  There's no getting around that, even though I instinctively hate it.

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