If five years ago someone had told me I would be trading in my beloved books for a slimmed-down version of a laptop, I probably would have referred them to the nearest psych ward. However, that is exactly what seems to be happening in the bookselling industry.

In early March, Barnes & Noble (NYSE: BKS) executive Marc Parrish admitted that e-books are expected to dominate book sales in the near future. Although the reasons for this vary, it's clear to Barnes & Noble that there's a growing trend; Amazon (Nasdaq: AMZN) has already reported that e-book sales outdistance physical copies. So how does this affect the brick-and-mortar book retailer?

Kindle vs. Nook
Barnes & Noble currently has a foot in the e-reader game with its Nook, but it faces stiff competition from devices like Amazon's Kindle. Although the two models are similar, Kindle is leading the pack when it comes to sales. Why is Kindle outselling Nook? Well, the Nook has a color option and more tablet-like features, but the Kindle's longer battery life, lighter weight, and smaller size seem to trump those factors. Are the Nook and e-book sales enough to keep Barnes & Noble afloat?

As seen in the two charts below, maybe not -- Amazon shows its dominance. Although Barnes & Noble has slowed its decline in in-store sales since 2008, the number of stores it's closed has exceeded the amount of stores it's opened. Additionally, while Barnes & Noble is up by 24% in online sales, Amazon is up by 46%.

Barnes & Noble

In-Store Sales

Online Sales

Stores Opened

Stores Closed

Fiscal 2010 -4.8% 24% 8 18
Fiscal 2008 -5.4% -1.3% 35 22
Fiscal 2007 1.8% 13.4% 31 13

Source: Company report. Fiscal 2009 is missing because of a change in fiscal year.

Over a similar period, here's how Amazon fared:


Online (N. America only)







Source: 2010 10-K.

As if Barnes & Noble didn't have enough problems, Microsoft (Nasdaq: MSFT) filed a complaint against the Nook for patent-infringement in late March. As of late April, the U.S. International Trade Commission was investigating.

Foolish opinion
I'm not giving up my books just yet. There is something about the smell and texture of an actual book that simply can't be replicated by e-books. That said, the future of the brick-and-mortar Barnes & Noble looks bleak. With companies such as Amazon dominating in sales, both in e-books and paperback, the time of bookselling superstores is gone.

Do you think Barnes & Noble has a chance against Amazon.com? We can help you follow the e-books battle with MyWatchlist, our free, personalized stock-tracking service. Click here to add Barnes & Noble to your watchlist.