Sorry, the Barnes & Noble and Google Partnership Won't Beat Amazon

Barnes & Noble just expanded its book delivery reach using Google Shopping Express -- but it's a rather moot point for the bookseller's prospects.

Aug 11, 2014 at 5:00PM

There's no denying Amazon.com's (NASDAQ:AMZN) dominance in online retail and bookselling, but that's not stopping Barnes & Noble (NYSE:BKS) from doing everything it can to match its rival's shipping prowess. That's why last week the company teamed up with Google (NASDAQ:GOOG) (NASDAQ:GOOGL) to offer same-day delivery of its books.

While it's hardly a bad idea to have Google your side, it's doubtful the new partnership will invigorate B&N's business.

Google Shopping Express
Source: Google.

New delivery option, same business model
Barnes & Noble is tapping Google Shopping Express, a same-day delivery service that uses people to physically shop for customers' orders at retailers such as CostcoTarget, and Walgreen, and then delivers the goods to the buyers' homes. Google Shopping Express is a new initiative that is only available in five cities right now, but Barnes & Noble's deal with Google is limited to Manhattan, West Los Angeles, and the San Francisco Bay area.

While this may seem like a great idea for B&N to tackle Amazon head-on, the potential upside is very limited.

For starters, B&N members already have free express shipping for their orders. In New York City, even customers who are not B&N members already had a same-day shipping option before Google came into the picture. So the new partnership, at best, benefits nonmembers of Barnes & Noble who happen to be located in West L.A. and the San Francisco Bay area -- not nearly enough cities to make significant sales gains. Then again, Barnes & Noble told The New York Times that the partnership is a test, so it appears the program could expand into more cities in the future if things go well.

Right now, Google Shopping Express offers free, unlimited same-day delivery for members, and comes with a free six-month trial membership. The company hasn't said how much the membership will cost once the trial expires, but non-members pay about $5 per delivery, per store.

Why even try?
It's hard to fault B&N for trying to gain new retail customers. Over the past five years the company has closed about 63 stores, leaving it with a total of 660 retail stores (not to mention about 700 college bookstores). Despite the closures, in its fiscal fourth-quarter Barnes & Noble increased year over year revenue by just 3.5%. But for the full fiscal year, revenue was down 6.7%, and its Nook division plummeted 35.2%.

Galaxy Tab

Samsung Galaxy Tab 4 Nook. Source: Barnes & Noble.

In June, B&N said it would spin off Nook as a separate company. It announced that Samsung will take over future hardware designs for the Nook, while Barnes & Noble focuses on the software. The two companies have an event planned for later this month to give more details on the co-branded Samsung Galaxy Tab 4 Nook.

This is all part of Barnes & Noble's attempt to earn more revenue from book sales, but it's hard to see how the Google partnership will actually make that happen.

The problem here is that any customers who use Google Shopping Express to buy Barnes & Noble books become Google's customers, not B&N's. The delivery service isn't available on Barnes & Noble's website, which means all the books delivered under the partnership come from sales on Google's website.

With B&N desperately needing to increase sales, perhaps it doesn't care where the book sales are originating. But it seems odd to hand over any type of customer acquisition to another company while Barnes & Noble struggles to retain customers from Amazon.

Google, on the other hand, has the incentive to acquire additional customers for its new service, as it tries to lure people away from Amazon's website. Google makes about 90% of its annual revenue from search advertising, but it doesn't make a dime if users go straight to Amazon.com to buy products instead of doing a Web search first.

Amazon Fire

Kindle Fire tablet. Source: Amazon.

Why Amazon still wins
Amazon has two superior delivery services Google and B&N can't match. The first is Amazon's digital Kindle sales, which are a delivery system in their own right. Millions of books are available for instant download to Kindle devices, Android phones and tablets, Apple devices, and more. B&N's Nook titles can be downloaded to mobile devices as well, but the Kindle's pervasiveness easily outpaces the Nook.

In the fiscal fourth quarter, B&N sold just $25 million worth of Nook devices and accessories. Amazon doesn't break out sales of its books (or anything, really), but research from Morgan Stanley estimates the Kindle brand brought in $4.5 billion in revenue in 2013 and could reach more than $5 billion this year.

Aside from digital downloads, Amazon's two-day Prime shipping and experimental same-day shipping are a better bet for consumers than anything Google and B&N offer. Amazon has millions of titles at its disposal, while any one B&N location has 163,000 titles at most. And just last week, Amazon expanded its same-day shipping from four cities to 10.

So not only does Amazon have free two-day shipping options for its members -- and paid two-day options for nonmembers -- but it can also ship books to a customer's door the same day in 10 cities, compared to Google and B&N's three. Between Amazon's shipping options and its powerhouse Kindle brand, it appears B&N and Google's latest partnership is nothing more than a public relations campaign.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

 
 

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Costco Wholesale, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Barnes & Noble, Costco Wholesale, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers