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Old 04-09-2011, 09:15 AM   #1
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Globe & Mail - Indigo faces digital reckoning

A reasonably interesting snapshot of where Canada's largest book retailer -- Indigo, which holds 48% of physical book retailing and 60% of Kobo -- is headed in the coming months ... and what management believes are the key issues. The Globe and Mail report here.

There's also a rather nice "infographic" here which makes some comparisons of the US and Canadian book markets. Indigo continues to be profitable -- barely -- which is in contrast to the Borders / Barnes & Noble situation in the US. Interestingly, the similarities are stronger than the differences: 57 of Indigo's 96 superstores are 24,000 sq ft. (Indigo operates over 400 locations across the country under several banners. It consolidated every book chain over the past 15 years.)

But what is clear is the management really hasn't a formal strategy to improve the physical retailing business: add more toys, private label housewares, more food related items, cafés, bring back comfy chairs ....

Remarkably, for the owner of Kobo, there isn't a peep on how to integrate offsite sales with onsite ones. Every Kobo sold in store ought to be tagged to the location and percentage of sales be earmarked back to that store. The store itself ought to promote titles to be sold in either physical or electronic medium. And the wifi editions should be able to receive a Kobo / Indigo blog and report events at the local store. The cross-selling opportunities are intense, inexpensive to implement and apparently overlooked.
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Old 04-09-2011, 09:30 AM   #2
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In other words, Indigo and Kobo act like separate companies?
Not good.
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Old 04-09-2011, 09:34 AM   #3
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They are separate companies; it's not like B&N/Nook. Indigo is strictly a Canadian book retailer; Kobo is a global e-reader platform. Nonetheless, integrating the Canadian sales and cross-selling would make a lot of sense and provide a model for Kobo partners.
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Old 04-09-2011, 10:36 AM   #4
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In the article, it also said that Kobo lost $10M in the last quarter and is not expected to be profitable for another year.
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Old 04-09-2011, 10:44 AM   #5
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Lots of vitriol in the comments! I enjoy hanging out in Indigo since it's on my way home; I stop and look a few times a week. I hope they can find a way to make the transition happen for them. But it seems a lot of the comments on that article really blame Reisman for pushing out the smaller retailers when she created her uber-chain and see the coming 'failure' as her just deserts.
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Old 04-09-2011, 10:53 AM   #6
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There was a link to "Indigo launches new rewards program" I clicked it, hoping it would be the announcement of a referrer tracking program with incentives but it was just one of those retail club cards to give you discounts on junk occassionally. Referrer tracking is definitely the way to go, even a 1% toss of the revenue to individuals will more than be made up for by the near infinite increase of sales.

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Old 04-09-2011, 10:59 AM   #7
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How can you have a "near infinite increase in sales" from a very definitely finite group of buyers??? Hyperbole gets extremely boring after a while...


Quote:
Originally Posted by Giggleton View Post
There was a link to "Indigo launches new rewards program" I clicked it, hoping it would be the announcement of a referrer tracking program with incentives but it was just one of those retail club cards to give you discounts on junk occassionally. Referrer tracking is definitely the way to go, even a 1% toss of the revenue to individuals will more than be made up for by the near infinite increase of sales.

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Old 04-09-2011, 12:27 PM   #8
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In the article, it also said that Kobo lost $10M in the last quarter and is not expected to be profitable for another year.
Yes, and fresh capital was injected into Kobo in recent months. But, then again, Kobo launched in the US and the rest of the world less than 10 months ago. One does not expect a start-up to generate profits in the initial couple of years at a minimum. Kobo is run on a shoestring, relative to its rivals, and has become a serious contender in the e-reader space.
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Old 04-09-2011, 01:09 PM   #9
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Absolutely SP. And Indigo must have been a big part of the cash injections that it received this year or else their share/% would have been diluted.
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Old 04-09-2011, 01:21 PM   #10
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Just reading through the comments, Indigo seems to have enormous PR troubles! Man, people posting comments just friggin' HATE that chain! Looks like they're scoring 0 on the sympathy meter.
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Old 04-09-2011, 02:38 PM   #11
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Quote:
Originally Posted by SensualPoet View Post

Remarkably, for the owner of Kobo, there isn't a peep on how to integrate offsite sales with onsite ones. Every Kobo sold in store ought to be tagged to the location and percentage of sales be earmarked back to that store. The store itself ought to promote titles to be sold in either physical or electronic medium. And the wifi editions should be able to receive a Kobo / Indigo blog and report events at the local store. The cross-selling opportunities are intense, inexpensive to implement and apparently overlooked.
I ran into this lately. Went into my local Chapters and found a book I wanted for $24.99. Used my iPhone to check other options. On the Chapters web site, had the physical book, but no mention of getting it as an ebook. Knew they sold Kobo, so went to the Kobo site.

Searched under author name. Didn't show up. Searched under title, didn't show up. Tried another search for title and notices a suggestion popped up which did lead to it - but not in normal search. Ebook price $16.39. So Kobo was very hard to buy from.

But Amazon has the same book at a physical price of $16.99 and an ebook price of $9.99 with one click ordering for my Kindle app.

So I purchased from Amazon.

I really want to support my local store, but I can't see paying 64% more to do it.
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Old 04-09-2011, 02:41 PM   #12
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Originally Posted by SensualPoet View Post
Yes, and fresh capital was injected into Kobo in recent months. But, then again, Kobo launched in the US and the rest of the world less than 10 months ago. One does not expect a start-up to generate profits in the initial couple of years at a minimum. Kobo is run on a shoestring, relative to its rivals, and has become a serious contender in the e-reader space.
After the Agency model kicked in. Kobo receives a minimum of 30% of every sale.

I would have thought the profit margin would be enough to keep from losing $10 million last quarter. That's $100,000 a day!

Kobo must have a lot of employees on their payroll. Or maintaining servers/IT personnel is more expensive than we realize.
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Old 04-09-2011, 02:49 PM   #13
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Here's what jumped out at me:

"By the end of this year, all older books will be digitized, up from the current 75 per cent, said Random House of Canada president Mr. Martin."

If all of the Big Six could say that, then there won't be much "request this for the Kindle" clicking at Amazon.
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Old 04-09-2011, 03:41 PM   #14
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Quote:
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After the Agency model kicked in. Kobo receives a minimum of 30% of every sale.

I would have thought the profit margin would be enough to keep from losing $10 million last quarter. That's $100,000 a day!

Kobo must have a lot of employees on their payroll. Or maintaining servers/IT personnel is more expensive than we realize.
As I said, Kobo is running on a shoestring. It's not hard to spend $10 million more than your current revenues when you are seeding the market with inventory. Kobo expanded to a wide variety of new outlets throughout the fall and winter. It's not just about selling a $10 item and pocketing $3. Besides, Kobo has had extensive discount offers and, so far, I have yet to find a single title I've been interested in purchasing that did not qualify. And finally, lots of titles are less than $10 so they must also be selling a good deal of titles. Good on them!
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Old 04-09-2011, 05:30 PM   #15
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Ultimately, Kobo (like every business) has to make money to continue to exist. I'm betting that their investors are looking more at whether they are on track to become profitable and if they are spending their dollars now in the way that is most likely to make that happen in the future then they are at last quarters P&L statement.
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