With the release of both Amazon’s and Barnes & Nobles quarterly figures, which include the 2012 holiday season, the blogosphere has been rife with posts foretelling the demise of Barnes & Noble. I find it interesting that Amazon’s results weren’t much better than B&N’s (according to Businessweek, Amazon earned one-half cent for each dollar of revenue), yet investors continue to support Amazon and blast B&N.
I suppose the reason for the different treatment by investors is that Amazon has a broader range of goods for sale and that investors think eventually Amazon will be able to increase margins by raising prices as soon as Amazon can force competitors out of business.
So, what it boils down to is what can B&N do to revive its fortunes? Can its fortunes be revived?
As it stands today, pessimism is probably appropriate for B&N. Mitchell Klipper, B&N CEO, Leonard Riggio, chairman, and management crew have shown that they are incapable of forward or strategic, or maybe even tactical, thinking. Yet they remain in control of B&N.
It was not so long ago that my wife and I visited our local B&N nearly every week. We rarely left the store without purchasing at least a couple of books, and my purchases were always hardcovers (my wife would buy both hardcovers and paperbacks) — and that was in addition to what I would buy online at B&N and to my ebook purchases. But Klipper and his predecessor have done everything they can to turn me away from B&N stores.
First, they did away with the discount that membership gave me. The first time was by the refusal to sell me Nooks with a member’s discount. The tale then told was that the Nooks were already being sold at cost (remember when the first Nook was sold for $249?). So for the same price, I bought Sonys, which were better devices and bought ebooks at the Sony store and Smashwords instead of B&N, because B&N ‘s DRM was incompatible with my Sonys (although B&N could have made them compatible). It wasn’t long after that Amazon began cutting the price on its Kindles and B&N began cutting the price on the Nook. Riggio and Klipper should have given that discount to members!
Second, they changed the discount members received. I bought hardcovers at the B&N store and received a 20% discount on adult hardcovers that were not already discounted. This was not as much a discount as was being offered at B&N online, but it was satisfactory and I bought more than 100 books a year at the local store. Then the terms changed — the discount became 10%. That wasn’t competitive at all, and so I stopped buying locally, shifting to online purchases.
Third, when B&N finally offered a reasonable deal on a Nook, I bought a Nook tablet. The tablet has been wonderful. In fact, it has become my preferred reading device. But the device has a terrible built-in flaw: the worst customer service imaginable. Even though I have spoken to several higher-ups at B&N about the customer service problems, nothing has been done. It hasn’t gotten worse, but it hasn’t gotten better.
Let me clarify this: The customer service I am referring to is the online customer service, not the customer service at my local store. My local store gives great customer service — as good as Amazon’s and perhaps even better — but it can’t give me the customer service I need for the Nook and Nook ebooks. Also, it is worth noting that I rarely have ever needed customer service for a pbook.
When I need to call B&N customer service, I know I am in for a runaround and an aggravating time. The Nook “technical” support people are so ill-trained and so lack product knowledge and so lack customer service common sense that they do not even warrant being called a joke — it would be an insult to jokes. And this is Klipper’s fault. Based on what I see as a customer, B&N places no emphasis on customer service and apparently little on training. As the CEO of B&N, Klipper should be making customer service the #1, #2, and #3 priorities. You cannot keep frustrating customers and expect them to keep coming back. At some point they will abandon you for the competitor who is viewed as caring. Some of us will hold on longer, but not because we love B&N; rather, because we do not want to see one company become so dominant that there is little market competition. That’s why I continue to buy at B&N.
Klipper and crew also need to become innovative. It is clear that they cannot compete with Amazon based on either price or customer service, so they need to be innovative. They need to increase reasons for Nook owners to visit stores; they need to increase the number of members they have and entice them into stores; they need to entice the general public into the stores.
There are things that they can do. For example, arrange with publishers and authors to exclusively offer limited numbers of first edition, first printing, signed copies of new books. Some of us are collectors and would be willing to pay for such books. Make it so that these limited edition books can be bought online for a minimal to no discount but if bought at the local store — even if having to be shipped from a warehouse — the buyer would get a 20% to 25% discount on the book but also the same discount on any other book purchased at the same time at the store.
Make membership truly worthwhile. Increase the price to $50 a year (from the current $25) but give the member a guaranteed minimum discount of 20% to 25% on everything purchased, whether in the store or online, and if purchased online, with free 2-day shipping.
Another thing that can be done is to offer a free copy of the ebook with the purchase of the hardcover. Nonmembers would pay full price for the hardcover but members would get a 15% to 20% discount (or receive a higher discount if they chose not to get the free ebook). Get a jump on Amazon by getting publishers to offer this arrangement exclusive to B&N (i.e., the free ebook with hardcover purchase) for at least 90 days.
B&N could also make it so that a Nook owner could visit the local store and check out books but buy, on the spot, only the ebook version using a special code that gives the Nook owner a discount off the normal ebook price because it is bought while in the store.
Because the Nook and ebooks are central to B&N’s future, really make the stores a place for Nook buyers. Have a problem with your Nook or a Nook ebook purchase? Come to your local store for real customer service. Train local staff to do real technical troubleshooting, not what is currently done when you call tech support, and authorize local staff to really resolve customer service problems, including giving refunds.
One thing that B&N should immediately implement is a new library system and a new option button. What I mean is this: Now when I buy an ebook, the ebook appears in my Nook Library. In the Library there are option buttons that let me, for example, download the ebook so I can save a copy locally and recommend or lend the ebook. B&N needs to add an option button that tells B&N to notify me when the author has published another book that is for sale by B&N. Additionally, my Nook Library should be changed to my B&N Library and should include all books — p and e — that I buy from B&N, whether online or in-store, each with the notify option button. The one thing that should not happen is that I receive notification for books by authors for whom I did not ask for notification. In that case, a good idea becomes a bad idea and spam.
Most important of all, spend some money on providing real online customer service. Fire your current providers/staff and start from scratch with people who speak English and do not read from a script.
Can B&N be saved? Yes. Will it be saved? Not unless it changes its attitudes and direction.