The Future of Independent Bookstores

The Rise of Amazon Source and How Bookstores Should Respond

The other day I came across a BBC article describing Amazon’s new program to expand it’s distribution network for the Kindle via independent bookstores: Amazon Source. More importantly, it describes the vitriol response of bookstore owners toward this arrangement, such as:

“Getting 10% of every book purchased on a Kindle is like getting to keep the autograph of a celebrity caught pissing on your lawn. For two years.”

It made me start thinking about Barnes & Noble’s (B&N) response to the Amazon invasion, pivoting their business model to cater to their strengths, in contrast to Borders — see ya! More specifically how should these small independent bookstores pivot their own models to compete in this new climate?

For the record, I’m not an independent bookstore owner nor an Amazon advocate; I’m just an avid book reader who, at the onset of e-books, approached the concept with a bit of trepidation, but now has completely embraced the lifestyle. It has increased my overall reading consumption, expanded the breadth of topics and authors from which I read, and enabled me to devour books anywhere, anytime. I’m a fan. But at the same time I love wandering through my local bookstores from time to time, browsing titles, exploring new themes, and just enjoying the atmosphere.

But anyway, back to my point, it is one thing for B&N to adjust to Amazon (i.e. the Nook, redesigned store layouts, self-branded publishing, coffee shops, etc.) but

how can a small business in a traditional industry, like these independent bookstores, adapt to the changing times*?

*I’m assuming that e-books are the manifest destiny of the book industry and that the market for traditional printed books is only going to shrink in the coming years.

1) Understand the Perceived Value Proposition

Bookstores are no longer about books. Just like Starbucks isn’t really about coffee. That’s just the vehicle for generating revenue, the “rent” you pay to access to the free services. For Starbucks that includes free internet, a place to hangout and sit, restrooms, plus the music and overall atmosphere. You buy your cup of coffee and you are free to enjoy all that Starbucks has to offer.

So in the age of e-books, why do people visit bookstores? I believe that perceived value proposition includes elements of discovery (new books, new authors, etc.), escape (i.e. a place to hangout, sit and browse) and information via peer-to-peer in-person recommendations from the store owner and employees. I still pop into a bookstore when I have some time to kill and just wandering down the stacks, even if I eventually make my purchase online. It’s still a place to “go” even if I’m not buying a book.

2) Figure Out How to Better Monetize those Values

Using the example above, both Starbucks and bookstores use similar models, but the big difference is that Starbucks does a better job monetizing each visit, at the beginning of the visit. You can go to a Starbucks, sit and use the internet without actually buying anything to drink. But almost no one does that. It doesn't seem ethical… right? But people have no problem hanging out in a bookstore, browsing through books, getting recommendations from the store owner and then walking out having not purchased anything. Why is that?

Moreover, Starbucks extracts it’s rent from you at the beginning, the moment when you walk through the door, and then let’s you take advantage of all the free values you want. Meanwhile, the bookstore model is built to extract rent from you at the end — you browse, you hangout, you get recommendations, then you make a purchase and walk out.

Rather than “pay to play” it is “pay after you’ve already played, if you want to that is”.

Bookstores thus need to reinvent their monetization scheme to better extract this rent as truly “pay to play”. Is there a way to make a higher percentage of visitors pay for visiting and to make them pay at the beginning rather than at the end of their experience?

3) Aim for Space the Other Guy Can’t Get To

Amazon and the Kindle have reinvented our concept of books and reading, making it that much easier and convenient to purchase and read books, but it doesn’t mean they can do everything that bookstores do. As integrated as we are with the internet, there are still some values it leaves out.

For example, when trying to find a new author or a new book to read, like most people out there I turn to the reviews directly on Amazon. But invariably for every 2 people that give the book 5 stars there is 1 person that hates it. And they all have their reasons. Who do I trust? How do I know if that reviewer shares the same reading interests as I do? Sometimes we still yearn for a real conversation, a back and forth, questions with real answers.

Moreover, similar to B&N’s makeover, how can bookstores take better advantage of the space and the atmosphere they are providing? Should there be more seating, comfy chairs and small tables? Perhaps a space where book clubs can gather? Or even using it to facilitate book signings and author talks?

So… what’s the future of the bookstore?

In the future I envision the independent bookstores more as a reading club than a bookstore. Patrons will pay a small monthly fee to support the club, after which they can come and spend time as they please. Rather than rows of books, there will be touch screens and other displays for people to explore new books and get in-store recommendations, which they can immediately download to their device. And this may mean getting into bed with Amazon after all.

However, there will also be print-on-demand machines for people who want a hard-copy edition of their purchased e-book. There will be small rooms scattered throughout where local book clubs and groups can gather, and then perhaps also a large space for events and book discussions.

Perhaps these bookstores will merge with coffee shops and offer a different Starbucks alternative that is more reading and study-oriented. For non-members, they could be encouraged to buy coffee to support the cause.

What do you think? I’m ready to join.