Len Riggio has just dashed the hopes of everyone who had been praying for a Nook turnaround.
According to Publishers Weekly, Riggio told the attendees at the B&N annual meting that the retailer fully recognizes its failures as a tech company.
Riggio also assured shareholders that B&N is no longer in the tech business. While the Nook e-reader and e-books will remain a part of the company’s offerings to customers, bricks and mortar stores will be its focus. Riggio explained that when e-book sales began exploding several years ago, B&N felt it had no choice but to enter the digital market. In retrospect, Riggio said, B&N didn’t have the culture or financing to compete with the likes of Amazon and Google.
Instead, according to Riggio, B&N will focus on its physical stores and will partner with technology companies to keep a presence in the digital space. “There is no business model in technology” for B&N, Riggio acknowledged.
While I am sure everyone saw this coming, we were all still hoping for a miracle turnaround where someone at B&N got a clue and figured out how to rescue the Nook.
Digital was the one bright light at B&N – it’s why B&N revenues rose in 2010 and 2011. Online sales and ebook sales made up for B&N’s declining retail sales, painting the picture that B&N was making an orderly transition to the modern era.
People want to shop online, and they want to buy ebooks, and for a brief while it looked like B&N could give customers what they want. But that illusion was slowly stripped away as Nook entered its death spiral following the 2012 holiday season.
Nook revenues have since declined to the point that Kindle Unlimited is far larger (and the new version of B&N’s website is so painful to use that online sales are also declining). While one estimate said Nook ebooks sales exceeded Kobo ebook sales in 2016, you shouldn’t bet money on things staying that way.
Instead, the more likely scenario is that B&N is going to strike a deal with Kobo to let the latter either run Nook or simply take over Nook customer accounts. In either case, B&N will got from being a potential player to being little more than one of Kobo’s retail partners – think Indigo, only in the US.
B&N probably winces every time they are compared to Indigo, but that Canadian bookseller is the perfect example of what Barnes & Noble could have done. Both companies got into ebooks in 2009 by launching their own platforms, but Indigo was smart about it: they found international partners early on, and when Rakuten came calling in 2011, Indigo sold out.
Indigo still sells Kobo ebooks and ereaders, but they don’t own the platform and thus don’t have to invest in or maintain it. Instead they have focused on turning their retail business around (and they’ve succeeded, too).
Indigo is the perfect example of how to turn around an ailing bookseller.
It’s too late for B&N’s current management to copy Indigo, but who knows, when B&N goes bankrupt maybe Indigo will get a chance to take over the remains and see if they can pull their magic trick twice.
image by dreig