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Target Signs New Deal With Barnes & Noble

Over the past 6 months Target, one of America’s largest retailers, has been thinning out their selection of ereaders. In May they dropped the Kindle, and in July they stopped carrying the Kobo eReader. Today I finally learned why Target did this.

I was at my local Target store today when I spotted something new. The ereader display had been reorganized with some of the content shifted around. New signs were added since I saw it last, and now it is pretty clear who is responsible for the departure of Kindle and Kobo:

The honking big banner across the top is new, and so is the sign on the right showing the Nook Glow. The ebook and magazine gift cards used to be in that spot, but now they are hanging on the left.

When the news broke that Target was no longer going to carry the Kindle, I speculated that Target wanted to get into selling content for ereaders rather than just sell the devices themselves. When they added the Livrada ebook gift cards and the Conde Nast digital magazine subscription cards I thought I was right, but now it seems that I missed half the story.

The other half is B&N, which much to my surprise did not get kicked out of Target. Barnes & Noble is as nearly as much of a competitor to Target as is Amazon, and B&N is a bigger threat than Kobo. So if B&N is the only one who is visible in store then I bet there is money involved.

Signage like you see above usually does not come free; B&N likely had to pay cash for the space (as well as the privilege of getting their competition kicked out). Or, as a second possibility, Target is getting a cut of content sales handled via the Nook devices sold in Target stores. That’s about the only reason I can see that Target went with B&N over Kobo, Google, and/or Amazon.

Either way, something happened behind the scenes which enabled B&N to add Target’s 1,700 stores as exclusive Nook showrooms. Now that was a good move.

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Syn October 7, 2012 um 6:43 pm

Putting those Microsoft bucks to good use.

Nate Hoffelder October 7, 2012 um 6:48 pm

Or Liberty Mutual. That money had to go somewhere.

Brian October 7, 2012 um 6:47 pm

This should be good for B&N I’d think. I know this was talked about back when they dropped Kindle & Sony (that they would be selling only Apple and Nook), good to see it confirmed.

Sturmund Drang October 7, 2012 um 7:04 pm

B&N’s got a nother good move on, but I’m not sure how many people know about it. A couple times a year they buy back people’s books.This weekend past was one of those times. I took in 25 hardback books and 10 paperback. They offered me 25$ cash, or 50$ trade-in, or 75$ on a nook. A friend had given me a 50$ gift certificate last Christmas so when the bill came in on a Simple Touch with Glowlight it only cost me $1.24. Maybe they’ve got a slim chance yet?

Mike Cane October 8, 2012 um 11:53 am

This is very interesting. Sony + Target was a big deal early on. So it now seems to be certain that the Nook that really beaten the hell out of Sony. B&N can be happy about that, beating what was once the world’s premier electronics giant. And they just didn’t kick out Kindle and Kobo, you forget they once carried the Google eBook device too. So, did you look to see if the Nexus 7 is being carried under tablets? I wonder about that now, what with the new Nook HD and HD+ due this/next month.

Peter October 9, 2012 um 1:02 am

From the Notes to the Consolidated Financial Statements on all recent 10-Q’s and 10-Ks:

"The Company also pays certain vendors who distribute NOOK ® a commission on the content sales sold through that device. The Company accounts for these transactions as a reduction in the sales price of the NOOK ® based on historical trends of content sales and a liability is established for the estimated commission expected to be paid over the life of the product."

No outside cash is required for this sort of transaction as it is self-financing. It is also cookie jar accounting.

In other words… the actual nook sales were higher than reported nook sales. They recorded the difference as a loss on paper, then write it off in the future as they pay off the vendors.

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