It was interesting to hear today of the deal between Waterstones, one of the diminishing number of UK-wide book retailers, and Amazon, whereby Waterstones will have a digital section in their stores to help people try and buy Kindle devices and then select content. The two companies come at the same space, book retailing, from two very different starting points.
Amazon focusses on being the most efficient order fulfilment solution for books, yes it does have some rich content on its website to help you select a book, however, it is largely algorithm driven or user provided (i.e. it adds to the experience but without adding cost). Cost through efficient end to end processes is their competitive advantage.
Waterstones on the other hand aims to help people select books through providing richer content in the form of staff reviews, exclusive interviews and other “edited content” whether in their stores or online. Waterstones differentiator is therefore through their service offering.
Whilst an increasingly large number of people are only interested in price or perhaps looking at the book in store and then buying online, there will come a time when this population reaches a mature position. Book retailing is interesting from this perspective in that to access the next large population of consumers it is likely that a different approach will be needed as this population rely more on or are more influenced by guidance or interaction with other people in terms of what they purchase. This could be through book clubs, friends, newspaper reviews, or the like. This is where the next battle ground may be in the book retailing market and will likely be the one that if online retailers can win then will likely be the final blow for high street book retailing as we know it, and that would be bad for the online retailers as well.
It was therefore interesting to hear an interview with the Managing Director of Waterstones this morning where the interviewer consistently took an adversarial approach of implying that Waterstones was getting into bed with the enemy and that it was surely admitting defeat and a bad thing. The line was of course partly to create a ‘good’ interview but it also highlighted the risks if you only view your business model through today’s frame.
For me the real question is whether the tie up is just about Kindle or whether it leads to a blending of the two business models that gives a larger set of consumers the best of both worlds. Only time will tell on that, but the fact that Waterstones and Amazon are willing to look over the horizon shows that they are both possibly pragmatic and adaptive with their business models which is a great lesson for other organisations.