Does Online Shopping Need a High Street Presence?

Like many of us, this Christmas I received a Kindle in my stocking. I had really wanted one for ages, but it was only recently that they were kindly made available to us 94% of the global population who don’t live in the US. Go figure.

I really love my Kindle. I especially love the ability to hear about a book and be reading it within minutes. I am a voracious reader and it’s just wonderful.

But, it does illustrate very well the difference between “search” and “discovery”. If you know what book you want, it’s easy to find it on your Kindle (or PC). But if you just want to do the equivalent of wandering into a bookshop one wintery Sunday afternoon and browsing randomly through the bookshelves, digital still can’t match the analogue experience. Sure, we have Recommendation engines and such like, but they are still pretty basic and seem to be lagging behind most other technologies. I won’t go into an exhaustive list here, but I’ve lost count of the times that I’ve found a favourite author’s new book by visiting a bookstore or reading a review in analogue media. And yet, I’ve already told Amazon that I love that author, so why haven’t they told me about the new book?

At the same time, some research yesterday highlighted the ongoing trend of people using their mobiles in retail stores to check product reviews (52%) and more worryingly, if you are a retailer, to cross quote pricing – 36% at the moment. Note that this was a survey of Smartphone users, so as more and more of us use these powerful devices, this is going to be an increasingly noticeable trend.

If you are a retailer, you will already be losing market share to the digital world – look what’s happened to the analogue music store in both the US and UK (and I think that this would have happened without “piracy”). But this ability to cross-check pricing, which empowers the consumer to decide if they want to delay gratification for a better price, or if they’re prepared to pay a premium price to have it now, is going to accelerate the trend.

At the moment, online stores like Amazon benefit from a low cost distribution model, with no retail stores. However, there is an argument that we’ll increasingly hear that online retailers are actually parasitically benefiting from their physical competitors by inadvertently being free showrooms for Amazon et al, where consumers go to discover and browse, only to actually buy online or over-the-air.

In the short term, I don’t doubt that we’ll see all kinds of shenanigans associated with industries experiencing great change. Sooner or later a book store or other retailer will ban people using their mobiles in-store and much good it’ll do them as it isn’t trying to solve the problem, but treat a symptom. We saw a lot of this kind of behaviour from record companies in the last decade or so.

Longer term, I believe that online retailers will have to grab the bull by the horns and recognise that they need to help physical stores stay in business. This isn’t a philanthropic motivation at all. If physical stores disappear, there”s a very real danger that the market as a whole will shrink, certainly for a product such as books. If we can’t find something we really want to read, we’ll find another way to occupy our time. And discovery remains an important stimulus of sales.

So, do you think we’ll see Amazon bookstores on our High Streets and in our shopping malls? I do. I also think we’ll see some intriguing affiliate programmes aimed at supporting and making money for the independent book store in the not so distant future.

In some ways, it’ll be the giant bookstore chains that will no longer be able to compete and we may see a renaissance of local bookstores which, on balance, would probably be a good thing.

The book industry is changing increasingly in a fast and furious way and the players in the market need to change accordingly. And we know what the alternative to change is, don’t we?

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