Monday, May 21, 2012

Waterstones Let The Fox Into The Chicken Hut

Today is a new dawn for UK Booksellling, as its premier retail chain Watersones, effectively handed over its digital if not its future to Amazon. We will read in the press how this is a logical move by Waterstones and is the dawn of a new ebook beginning under its new management, but some will now start to ask whether this is the end of the beginning, or in fact the beginning of the end? 
They first started their digital adventure with Sony. Sony themselves were bullish, gave Waterstone’s an exclusive window and spent heavy on advertising. It failed for many reasons; Sony didn’t have the content, the market wasn’t ready, the price wasn’t right, the stores couldn’t or didn’t want to sell digital, the eink devices by themselves were not the answer, etc. Waterstones then tried to accommodate all the eink ‘lookie likies’ and proceeded to badly merchandise the goods, failed to engage customers in store and as we previously wrote in our article ' Would You Buy an eBook Reader Off This Man?' , they made a hash of the opportunity. Now they have chosen to partner Amazon and their Kindle platform. 
We have to ask why they didn’t partner Barnes and Noble, not today but a couple of years ago, when a partnership could have been mutually beneficial. Imagine a situation today when you could have Microsoft, Barnes and Noble and Waterstones, all on the same team and remember Barnes and Noble and the Nook is virtually unknown outside of North America. Both Barnes and Noble and Waterstones could have kept their own customers and shared a Nook platform with a giant partner called Microsoft.
Imagine if they had chosen Kobo before everyone else did? Could they have done any better than WHS? They would have however chosen an international player and one with a heavy weight parent and importantly they could have probably retained their customers or at least limited the damage to digital.
What does Amazon have that Waterstones doesn’t have in the UK? A significant internet store that sells all books (used, rare,new), a growing publishing business, a self publishing business and growing affinity with authors, a customer mail list, demographics and data to die for, a viable audio book business in Audible, a successful internet book business in The Book Depository, an agreement with the major UK supermarket Tesco to sell Kindle,  a digital music offer, a digital on and off line film offer and now a High Street presence across 300 outlets and for what is probably ‘chump change’.
People have asked whether Amazon would open up physical stores, it doesn’t have to as long as stores such as Waterstones open their doors and let them in. Some would suggest that it is like letting the fox into the chicken hut and only time will tell what will happen. Maybe some will see it as a quiet reverse take-over without the exchange of shares and money. It will be interesting to watch how Waterstones shops now step up with renewed enthusiasm to sell themselves out of their digital future, give away their customers and even loose more physical sales. If Waterstones are unable to compete on price will the increased foot fall of folk coming in potentially once to buy a Kindle be enough to save all but a small number of their estate? 

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