Bookstores are Cool

I love bookstores.  A lot of people love bookstores.  I love hanging around in a bookstore and seeing what is new, what is popular, and what is available.  I love seeing the cool games and other non-book stuff they have.   I love how most bookstores now have wireless, a café, and plenty of large cozy chairs to sit in if you want a closer look at a book. Bookstores are very cool, and I like having a good one nearby.

There are more than just superficial reasons to like bookstores.  First, they provide instant gratification.  If you want a book, you can get it immediately.  You can hold it in your hand and walk out of the store with it.  Another nice feature is the ability to browse – you can wander around, look around, and perhaps find a title that you didn’t know you wanted.  In addition, the ambience of a good bookstore is appealing and valuable as well.   The addition of café’s, music, and other products have also made bookstores much more appealing.  Clearly there is demand in the marketplace for bookstores, since whenever I go to one, there are always people there. 

Bookstores are in Trouble

But bookstores clearly are struggling.  Big player Borders recently went out of business (Anyone else notice where http://www.borders.com goes?)  Many smaller, independent vendors have been driven out of the market as well , though some of superior quality to survive (For instance, my sister loves Wild Rumpus, near her home, and they seem to be doing very well).  Online retailing has affected brick and mortar sales.  In addition, used book stores seem to have grown as well, putting market pressure on retailers of new books.  The Books-4-Less store near my house is a pretty good source of reasonably priced books, and they have a very nice selection.  They also accept “trade ins” for store credit, so you can clean out your basement and get a few new books at the same time. 

But people shopping online in the comfort of their own homes at sites like Amazon can get a much wider selection, recommendations, reviews, and all kinds of information available.  Online retailers can offer reviews, an almost infinite range of other books to “browse”, recommendations, and more.    If you know what book you want to get and aren’t feeling an urgent need to have it at this exact moment, dialing it up on Amazon’s site and ordering it with (often free) super-saver shipping can be a great time saver.  Plus, there’s non tax, and you save the gas and time of a trip.  I don’t have specific numbers, but I’m guessing that the ease of buying books online has hurt bookstore sales more than anything else.  For instance, books are always a popular gift, and the convenience of Amazon’s gift giving capabilities make giving a book as a gift vastly more convenient.  Amazon gets the book, wraps it in gift paper, and takes it to the post office for you.  Very convenient.  I’m guessing that I’m not telling you people something that you haven’t already figured out yourselves -- you are taking advantage of them in increasing numbers.

And if that isnt’ bad enough, adding to the online competition for bookstores are devices like the Amazon Kindle and other similar electronic reading devices.  Sales of Kindles and Nooks continue at a brisk pace, and every one of those represents countless book purchases that won’t be made in a bookstore.  Digital books don’t need a bookstore at all (Can you even have a bookstore of digital books?)  I know people that have Kindles who have bought many books, but haven’t held a new book in their hand in a long time – a fact good for Amazon, but not good for the brick-and-mortar retailers.  Why  even go to a bookstore?  Your friend at the local Starbucks can recommend a book and you can be reading it in just a couple of minutes – not something the owners of Borders were happy to realize. 

The Kindle is cool, but there are a few things I don’t like about it.  The top one is there isn’t any easy way to “peek ahead”.  Surely you do this – you are lying in bed reading, and you start feeling tired.  Do you just quit now, or is there a natural breaking point coming soon – a chapter ending, a sub-chapter break?  You can’t do that easily with a Kindle.  Second, (and this is why Amazon is so up on it), you pretty much have to pay for everything you want to read.  You can’t easily loan books to friends (the time limit is no fun – what to do if you have two chapters left when the time runs out?) Borrowing books from the Library has the same problem.  Amazon Prime does offer a lending service, but again, you pay for it. (See why Amazon likes the Kindle? )  There’s a lot to like about Kindle’s, but there are a few things not to like as well.

The Current Model Costs A Lot

One of the largest struggles of the average bookstore – and the broader book industry – is costs.  The current business model is staggeringly inefficient.  Huge boxes of books – most often more books than will ever sell – are printed at a central location, loaded onto trucks and shipped to bookstores all around the country.  Those boxes are opened, and books put out on the shelves.  The rest are stored somewhere at the bookstore “in the back”.  After a while, a certain percentage – hopefully a high one, but not always – of the books are sold.  The rest are put into the “bargain bin” and sold at a discount.  Eventually, the remainders end up at those sad little bookstores at the mall or destroyed.  The costs of transporting books – they are heavy, as anyone who has moved house knows – is high.  The waste of printing books no one wants is high.  Trying to figure out the right number of books to go to the thousands of different locations – some books may be more popular in Topeka, KS than in New York City – is pretty difficult to predict.  It’s the common problem of centralize planning – who can know?

The bottom line is that the costs involved with the current bookselling/bookstore business model are simply too high.  It’s no wonder Borders went out of business – they were a day late and a dollar short with their eReader – and it’s a wonder that Barnes & Noble have kept their stores, too.

Emerging Technology

Despite the aggressive onslaught of online retailing and eReaders and very high costs, I still think there is a future – a pretty cool future -- for brick-and-mortar bookstores. However, they are going to  have to change a bit, and adapt to some new and emerging technologies.

That key emerging technology bookstores need to learn to leverage is on-demand printing.  On-demand printing is a relatively new technology, but one that can be a positive and powerful inflection point for bookstores.  On-demand printing is the ability to print a book – cover, contents, everything (even hardcovers) – immediately and on demand.  Think of it as a copy machine for books.  I’m not intimately familiar with the current technology, but I understand that it is getting to the point where a book from an on-demand printer is virtually indistinguishable from a “real” book.  Services like lulu.com and other retailers enable authors to publish any content completely unencumbered by the established publishing houses.  Because books are printed as ordered, they don’t care about volume. 

In addition, the margins on book sales are much better, and so authors can make more money – much more money – on each book sale.  Delphi authors like Marco Cantu and Bob Swart have leveraged these services to bring you high-quality content while making more money in the process.  Sweet for everyone.  On demand printing is clearly an technology that will require some adjustments to business plans throughout the bookselling business.

The Bookstore of the Future

In the future, I envision a bookstore working very similarly on the surface, but very differently behind the scenes.  Bookstores will become a retail outlet for on-demand printing. On the outside and to the casual observer, bookstores will appear to be much the same – books on shelves, cafés, calendars, music, videos, etc.  But a closer look will reveal some differences brought about by on demand printing. 

First, a bookstore will have the ability to print immediately any book.   The shelves will be full of books as now, but a customer will also be able to ask for, and get, any book in the publishing system.  This feature will help bookstores match the online retailers by allowing a book buyer to get almost anything they want.  The ability to print any book immediately will be a big feature that will enhance a bookstore’s market appeal. 

And not only will a customer be able to get any book they want, the bookstore could offer any number of customizations to a book.  Kids could get copies of the Twilight series with a selection of different covers of their favorite characters.  Readers could choose font type and size, and perhaps even different colors of paper.  Each feature could cost extra, increasing margins.  I can foresee computer kiosks at the store allowing users to pick features a la carte.   Heck, I can even foresee bookstore branded kiosks at grocery stores much like RedBox.

The second subtle change that will take place is that the books available on the shelves will consist of fewer duplicates.  Since the books are printed onsite, they don’t need to stock up on multiple copies, leaving room on the shelves for a wider variety.  This will improve the browsing experience.  And of course the store can keep the shelves fully stocked.  The point of sale system would record each sale, and a book is sold, a replacement can be immediately and automatically printed. Efficient printing and stocking would mean that the shelves would be full, and a wider variety of books would be available on the shelves almost constantly. 

And of course, the printing of books right in the store means no more distribution costs – no more centralized printing with the subsequent distribution inefficiencies. New books will be distributed electronically of course.  Book stores will still need paper, glue, ink, toner, etc., but t’s much easier and less costly to distribute supplies than it is boxes of specific books.  And the waste of printing books that never get sold will be reduced because inventory will be wider and flatter with little over-stocking.

How it Will Happen

The transition to this new model will be interesting.  I don’t think that you’ll see it come from existing chains like Barnes & Noble.  Generally, a radical, disruptive change like this needs a fresh, upstart business to challenge the existing firms.  I also suspect that existing chains are too tightly tied to the existing publishing houses to allow them to be this flexible.  And I’m pretty sure that the existing publishing houses will not embrace this new model. The music industry has been glacial in accepting and understanding the changes brought by digital music, and I suspect that the book publishing industry will have a similar reaction. 

However, I think it will eventually happen.  The current bookstore model is clearly in trouble – even Barnes & Noble is having trouble in the marketplace despite the lost of major competitor Borders.  But in the end, the demand for the things that bookstores offer is strong.  The industry will be fine once they figure out how to leverage the advantages that on-demand printing offers.