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Blockbuster's Lesson for Brick-and-Mortar Bookstores

BlockbusterIf you spent any time watching the slew of college bowl games today it was hard to miss the promotional effort Blockbuster is putting behind their Total Access program.  Total Access is Blockbuster's response to Netflix, but with an important additional component: rather than being forced to swap movies through the mail, you also have the option of swapping them at your local Blockbuster store.  This helps address the instant gratification issue of waiting for your next Netflix DVD to show up in the mail.

What's the lesson for brick-and-mortar bookstores?  (I'm not suggesting a book loaner program, btw!)  The lesson is in seeing how Blockbuster is using their physical store presence as a strategic asset against Netflix and their virtual presence.  The big brick-and-mortar bookstores have used the opposite approach, choosing to keep the online and physical stores as separate as possible.  Part of this has to do with "maintaining the margins" of the physical stores, "not getting into discount wars" and just old-fashioned thinking, IMHO.  Meanwhile, Amazon (and others) continue to chip away at their core business.

Why not take a page out of Blockbuster's playbook and treat your stores as an extension of your online presence?  How about letting me find the book I want on your website, confirm that it's available at my local store and then giving me the online discount when I come in and buy it at your store?  This hasn't happened up to now because of the margin/discount concerns noted above.  These chains would rather hold their margins and lose the sale.

OK, I'm oversimplifying a bit here since some folks still prefer the instant gratification (and full price) associated with a brick-and-mortar store; these are the same customers the chains don't want to offer discounts to because they know they're leaving money on the table.  But wouldn't the incremental sales that could be stolen from the online stores more than offset this?  I think so.

Don't stop there though.  Why not leverage the "buy-x-get-y" program made famous by Amazon for this type of transaction, thereby upselling a second or third product?  So once I start the online transaction for the book I'm going to pick up at the store, the system tells me I can also get a great discount on a related title.  Every store prefers a 2-item $40 transaction over a 1-item $20 transaction.

Then there's the benefit of additional foot traffic in the stores.  How often do you go to a store and only buy exactly what you set out for, ignoring all the other potential impulse items?  If you're like most people it's rare that you leave without an extra item or two.

I see this as a huge opportunity for the brick-and-mortar accounts to turn the tables on the online stores.  Despite the fact that B&N recently increased their in-store discount policy for their member program, I think what I'm proposing has about a zero percent chance of happening anytime soon.  It's a shame because it could really change the competitive landscape of bookselling.

Comments

Drop F.

Hi Joe,

I am surprised to hear US retailers don't use their online stores as brand extensions to their bricks and mortar counterparts. In Canada, Indigo/Chapters allows costumers to check store inventory directly from their website (indigo.chapters.ca). Sadly they don't offer you the online price in store.

It is not a perfect system, for that and other reasons, but the functionality is there.

You can also return online purchases to any store location.
And you can have online orders delivered to stores for pickup/payment -- if you don't want to have the order come to your house or use your credit card online.

Also I am not sure if self-serve kiosks are wide spread in US stores either but Indigo offers a streamlined version of their site on all instore lookup terminals.

I thought this was common practice in the USA, then reading the "Long Tail" made me question that assumption? Can you validate?

Lastly, I have heard the Netflix-model championed as a good one to follow when thinking of viable, customer-friendly DRM-solutions.

You would need to work out the issues surrounding watermarking but if you could get around those, you could then download a movie from a Netflix or a Blockbuster -- you would own it and could do what you wanted with it until you put the movie back in circulation.

If that comes to be, could an e-book loaner program be far behind?
Just an idea.
Cheers,
Drop F.

Joe Wikert

I think most of the features you list in your comments are available at U.S. chains as well. The big missing piece, as I see it, is the ability to enable better shopping (including more favorable discounts!) online, coupled with the capability to then pick up your books at the local store and not have to wait for them to arrive in the mail. Checking inventory online is a nice feature, and I use it regularly for Borders, for example, but that's a tiny feature compared to what I'm looking for.

Katie W.

Granted, I left the Barnes and Noble corporation as an employee a few years ago (I was a bookseller for B. Dalton, which is slowly dying) but I can't see Barnes and Noble ever being able to fully integrate what you are proposing.

You are definitely right that, when bn.com was launched, it was considered an entirely different company under the Barnes and Noble umbrella. It took ages before we were able to do simple things like take on bn.com returns in the store (or allow the customer to ship the book to us, which never made any sense to me at all).

Unless B&N manage to get some really creative, innovative executives, I doubt they will ever completely realize their potential. They're just too stuck in old business methods and fairly unwilling to change.

Although I do think that if they (mostly Borders, I mean) want to entice people into their store, they need to stop hiring imbeciles who don't even know the layout of the store in which they work. I can't remember the last time I walked into a bookstore, asked a reasonable question (such as, "Where is this book?") and received an intelligent response. Most employees direct you to a terminal where you can look up the book in question yourself, which is fine and dandy until you see that it's in stock and you want to find the damn thing. So, you still need to track down an employee for help and, odds are, you would have been better off just trudging around on your own since Borders employees don't seem to read books, and are rather useless.

Also, any bookstore that doesn't have a Biography section (is that true of all Borders or just the one in my town?) shouldn't really be called a "bookstore." Since what bookstore doesn't have a biography section?! Crazies.

kte12

Starting December 19, 2006, Blockbuster Total Access (online) is giving customers 1 free video game rental each month plus the first month is free.

Sign up at http://www.blockbuster.com/bbfamily
First month free with promo code 1557TA

Facts:

1. Offer changes to 2-week trial beginning Jan 15 2007. 3 movies out at a time. So, signup now !

2. Members can exchange online movies for free DVD rentals at their local Blockbuster (online mailer/movie will work like a coupon). Also, as soon as the online movies are exchanged at the store, the next movies in your que will ship as well. You essentially double the # of DVDs you can watch by returning them to the store (you can’t do this with Netflix).

3. Members will also receive 1 in store coupon every month for a free movie OR video game (even during free month).

4. Only pay $17.99 per month (3 out) after the 1st month or downgrade to the $14.99 (2 out) or $9.99 (1 out) plans.

Michael A. Banks

I like it! Now, if only a BlockbusterVideo would come to Oxford, Ohio ...
--Mike
http://www.michaelabanks.com

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