Lusty Tales and Hot Sales: Romance E-Books Thrive

[doreenjoy]

Originally Posted by DMcCunney

If it happens, it will be "little fish eats bigger fish", with all concerned hoping a terminal case of indigestion isn't the result.

I think a merger between Borders and B&N would strengthen both companies. Was talking about this with a friend who's a financier, but alas I don't have the time to get into details.

[DMcCunney]

Originally Posted by doreenjoy

Yes, that was my point. Women have always bought the vast majority of books. Women today buy 80% of all books -- ebooks and print books included.

Sounds about right. My thumbnail description is that "Men watch. Women read."

Sony knew what they were doing when they co-branded the pink 300 with Harlequin last year.

Agreed. Sony is a consumer electronics manufacturer. They want to sell devices. If they can customize a device to sell to a female audience, they'll do it in a heartbeat. It's the same sort of thing as HP offering a laptop with a case decorated by Vera Wang.

I believe New Concepts was the first e-publishers. They date from 1995, if not earlier. They sold books on floppy disks.

Now that you mention it, I recall them, and I believe they are still around. There were other floppy based publishers as well. What differentiated Peanut Press was licensing electronic versions of mainstream print books from major publishers. I think they were the first to do that.
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Dennis

[dsvick]

Originally Posted by K-Thom

Two interesting aspects.

2) eBooks are discreet: You might even read a hardcore porn novel during a bus ride and your neighbor wouldn't necessarily notice.
This is a privacy which might also attract more readers to consider eBooks. "What you always wanted to read in public but never dared to open".

Not only are they discreet to read but they are also easier to buy without being embarrassed over your purchase. No, I've not purchased one, but I'm sure there are a lot of people out there (both men and women) who would never dream of dropping a stack of romance books to purchase on the counter at borders in front of a complete stranger. Now they can go online and buy as many as they like with no worries.

[DMcCunney]

Originally Posted by doreenjoy

I think a merger between Borders and B&N would strengthen both companies. Was talking about this with a friend who's a financier, but alas I don't have the time to get into details.

Should you get a few moment to go into them, please do. I agree it's possible to create a stronger entity out of the pair, but I'm not laying any bets on the success. I'd be curious to hear your friend's notions on the topic.
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Dennis

[Terisa de morgan]

Originally Posted by darknessangel

"Romance" ebooks? Let's call it right... that's softcore porn for ladies! XD

Yes, Lyn Kurland, with no kisses A very knowlegdeable guy

[doreenjoy]

Originally Posted by DMcCunney

Should you get a few moment to go into them, please do. I agree it's possible to create a stronger entity out of the pair, but I'm not laying any bets on the success. I'd be curious to hear your friend's notions on the topic.

I didn't mean to imply that it was an obvious "win" for them, but at this point both companies are in so much financial trouble, they're definitely going down if they don't do something big. And merging the two is the kind of radical thing that just might work.

My friend's thinking was mostly about economies of scale. The easiest advantage is that a combined entity can scale down. They could function with less overhead, fewer management employees; they can shut down the lowest-producing and most expensive locations. Of course that would only occur if they had been collecting good data over the years, and there's no guarantee that they have good data. I used to work for a large company that went through one big merger per year on average, and I was always shocked at how frakked up the data gathering was.

My thinking is that they will likely blow the merger by focusing on internal politics over what's best for the combined entity. They would most of all need to identify and keep the right people at the highest levels. They need visionaries at this point, people who can see new possibilities and not cling to the way they've always done things in the past. One of the big mistakes would be to fire the B&N execs and keep the Borders execs -- that's typically what happens in these situations,and it's almost always a mistake. They need to take the time to ID the people who can lead them into new realms.

The "psychological merger" of the two brands might be the hardest part. B&N has marketed itself as the "literary chain", a kind of nationwide store that still hand-sells literary fiction (hand-selling being the recommendations of each employee to each reader). Borders has always had a big-box style, and they've focused on genre fiction and other elements that make them more "populist" in feeling than B&N. Heck, most B&N locations don't even *have* a Romance section, whereas Borders promotes "romance readers groups" that meet each month and give out ARCs (donated by the truckload by romance publisehrs) to the members of the group. That's a pretty wide cultural divide to cross.

Not saying it's a slam-dunk, but I think it's their only shot.

[DMcCunney]

Originally Posted by doreenjoy

I didn't mean to imply that it was an obvious "win" for them, but at this point both companies are in so much financial trouble, they're definitely going down if they don't do something big. And merging the two is the kind of radical thing that just might work.

As mentioned, the question is "Can two sick companies make a healthy one?" The answer is usually no, but exceptions are possible.

The easiest advantage is that a combined entity can scale down. They could function with less overhead, fewer management employees; they can shut down the lowest-producing and most expensive locations. Of course that would only occur if they had been collecting good data over the years, and there's no guarantee that they have good data. I used to work for a large company that went through one big merger per year on average, and I was always shocked at how frakked up the data gathering was.

Indeed. And if you don't have good data, you are managing on guesses.

I'd like to think they've been at least doing decent sales tracking, but whether they pay attention to the numbers is another matter. One of the problems for the publishing industry is that buying decisions are made by increasingly fewer people, with buying for the entire chain happening at HQ. that's all very well, but it tends to ignore demographics for individual stores, and I've heard too many stories of store managers frustrated because they know what their customers buy, but that's not what HQ orders.

I think both could take a leaf from Target's book. Target is obsessive about customer data, and tracking what sells where, to fine tune the mix at individual locations to emphasize what sells there. I don't know offhand if B&N or Borders even attempts that, but "no" would be my offhand guess.

They certainly need to slim down. Book sales are down, and I don't see a dramatic recovery happening. Less books sold need fewer outlets to sell them. I suspect there is substantial overlap in their store locations, and closing the poorer performing one in any given area is an obvious step.

They would most of all need to identify and keep the right people at the highest levels. They need visionaries at this point, people who can see new possibilities and not cling to the way they've always done things in the past. One of the big mistakes would be to fire the B&N execs and keep the Borders execs -- that's typically what happens in these situations,and it's almost always a mistake. They need to take the time to ID the people who can lead them into new realms.

That's always a fraught process. It's more so when you have a very sick chain like Borders trying to acquire a sick larger competitor. Given the state Borders is in, are the people running it the best to run the new merged entity?

But if Borders is the acquirer, there will certainly be a strong tendency to keep their folks and get rid of the B&N crowd.

The "psychological merger" of the two brands might be the hardest part. B&N has marketed itself as the "literary chain", a kind of nationwide store that still hand-sold literary fiction (hand-selling being the recommendations of each employee to each reader). Borders has always had a bix-box style, and they've focused on genre fiction and other elements that make them more "populist" in feeling than B&N. Heck, most B&N locations don't even *have* a Romance section, whereas Borders promotes "romance readers groups" that meet each month and give out ARCs (donated by the truckload by romance publishers) to the members of the group. That's a pretty wide cultural divide to cross.

It is indeed. The B&N near me has a Romance section, but it's one of their superstores, with four fllors occupying half a block, so if it's in print there's a decent chance the store has it. The Borders near me has decent selection but can't compete with the B&N - it simply isn't big enough.

I like the B&N staff recommendations. They don't govern my buying, but they give a sense that the people who work there read, and care about what they sell.

And the B&N does book centric events with author signings and the like, but didn't sponsor reading groups the last I looked.

Not saying it's a slam-dunk, but I think it's their only shot.

I tend to agree. My concern is the hedge fund offering to come up with the money. Those folks are not long term investors. They'll want to combine the operations, close redundant outlets, try to cut costs dramatically, and boost the stock price of the merged entity so they can cash out by buying low and selling high.

I'd feel better about the idea if I thought they were in it longer term. As providers of the financing, they'd have a fair amount of clout in the process, and could do things like trying to insure that the best people were kept, regardless of point of origin. I just don't see them being hands on long enough.

I rather hope I'm wrong.
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Dennis

[doreenjoy]

Originally Posted by DMcCunney

I'd like to think they've been at least doing decent sales tracking, but whether they pay attention to the numbers is another matter.

The issue really is, are they tracking the sales by store? And do they know the expenses for each individual store? From what I've seen in businesses of this size and age, they may know the overall bottom line, but they may not know which individual stores are the most profitable. So the shut down decisions end up not being made on the best criteria.

Target is a great example, but I suspect B&N and Borders have nothing close to that level of tracking. Target had money to spend on those systems; B&N and Borders didn't.

They certainly need to slim down. Book sales are down, and I don't see a dramatic recovery happening.

They need to slim down and come up with a radical new way of making money. Something clever and profitable. That's the only way they can survive IMO. The profit margin on print books was always razor thin, and it isn't getting any bigger.

If they simply merge, then artificially inflate the stock price in time for the hedge fund to turn a quick profit, it's all over. (And of course that's the hedge fund's motivation in getting involved). But they've been on the verge of collapse for a long time, so the hedge fund may just be speeding up the process.

[DMcCunney]

Originally Posted by doreenjoy

The issue really is, are they tracking the sales by store? And do they know the expenses for each individual store? From what I've seen in businesses of this size and age, they may know the overall bottom line, but they may not know which individual stores are the most profitable. So the shut down decisions end up not being made on the best criteria.

Well, they should know. Stores all use electronic cash registers, and all sales will be recorded. That data should be automatically transmitted "upstairs" on a daily basis. They should at least know things like what sold, what to restock, and what stock is stale enough to be returned for credit to make room for new releases. I suspect they also at least know what stores are profitable, as store managers likely have revenue and expense targets.

The question is whether they track what sorts of books sell at what stores, and attempt to tune the product mix by store. I'd be unsurprised if they didn't.

Target is a great example, but I suspect B&N and Borders have nothing close to that level of tracking. Target had money to spend on those systems; B&N and Borders didn't.

Probably not, but I believe Target makes extensive use of data mining, not only to fine tune the product mix at individual stores, but to try to profile individual customers, so they can say "What does Estella Ramirez buy from her local Target? What new products are in her store that we can send her an email about because they are the sort of thing she buys?"

I'd be startled if B&N or Borders had anything like that, but I suspect they could make better use of the data they do have.

They need to slim down and come up with a radical new way of making money. Something clever and profitable. That's the only way they can survive IMO. The profit margin on print books was always razor thin, and it isn't getting any bigger.

The profit margin in most retailing is razor thin. You make pennies on a dollar, so you compensate by trying to take in as many dollars as possible. The measuring sticks will be inventory turnover and return on assets, not simple profit margin.

Their biggest win would be finding higher margin products to sell.

If they simply merge, then artificially inflate the stock price in time for the hedge fund to turn a quick profit, it's all over. (And of course that's the hedge fund's motivation in getting involved). But they've been on the verge of collapse for a long time, so the hedge fund may just be speeding up the process.

That's what I'm afraid of. I think this has a chance of either making a healthy company or killing off both of them, with not a lot between, and killing both of them is the likelier bet.
______
Dennis

[doreenjoy]

Originally Posted by DMcCunney

I suspect they also at least know what stores are profitable, as store managers likely have revenue and expense targets.

My understanding of BGI is that most of the quotas are regional, not store-specific, but I could have bad information on that as I heard it through the grapevine.

I think this has a chance of either making a healthy company or killing off both of them, with not a lot between, and killing both of them is the likelier bet.

Both companies were already circling the drain. This is more like a Hail Mary pass IMO.

If the money-men don't strip every dollar they can from the company, then they might have a chance after the merger. As it is now, they don't have a prayer.

[DMcCunney]

Originally Posted by doreenjoy

My understanding of BGI is that most of the quotas are regional, not store-specific, but I could have bad information on that as I heard it through the grapevine.

You may well be right, but same difference. Regions are made up of stores in an area, and you can't know how the region did without knowing about the stores that make it up.

I believe the underlying data is there. What I question is the use made of it.

Both companies were already circling the drain. This is more like a Hail Mary pass IMO.

Agreed. I suspect there were people taking bets on when Borders would go belly up before this bit of news.

If the money-men don't strip every dollar they can from the company, then they might have a chance after the merger. As it is now, they don't have a prayer.

Well, if they raise the funds needed to try the takeover, it's a toss up. They'll certainly want to make it back, and the question will be how. I assume they'll want to try to boost the stock price then cash out, but in the current market, I wonder who would buy if they succeed? Given the underlying structural problems in the industry, I can't see even a merged, trimmed down, lower cost entity as an attractive proposition. It will have a better chance of surviving, but prospective buyers will want growth.
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Dennis

[Kali Yuga]

Originally Posted by doreenjoy

The issue really is, are they tracking the sales by store?

Yes.

They've tracked individual store sales for a long, long, long time. In fact, for retail in general "same store sales" (comparing last year's sales figures to the current year's) is a critical indicator. They use that data to determine profitability, who's a good manager, etc etc

Originally Posted by doreenjoy

the shut down decisions end up not being made on the best criteria.

AFAIK that typically happens due to mergers. E.g. a Borders store might be profitable, but not profitable enough (or facing a decline) to justify the cost of rebranding it.

Otherwise if a store is doing well, they won't randomly close it.

Originally Posted by doreenjoy

They need to slim down and come up with a radical new way of making money.

Unfortunately, they're pretty much doomed. They are two sinking ships that want to lash to each other.

Weren't we talking about romance ebooks?

[Grace Elliot]

Totally agree about the discresion of eReaders and Kindles.
I read and write historical romance and its amazing how people make judgements about you based on a book cover!


My debut historical romance (sensual) 'A Dead Man's Debt' is now available from most eBook stores and on Amazon kindle.

Reviews for 'A Dead Man's Debt.'
'I was so hooked my battery died and I had to connect my phone to the charger to finish it in one sitting'
'Grace Elliot has an amazing gift for writing. Her descriptions, her story progression, just the way she paints the pictures is absolutely beautiful. It is a delightful experience reading.'

To find out more visit: http://graceelliot-author.blogspot.com

[abookreader]

Originally Posted by darknessangel View Post
"Romance" ebooks? Let's call it right... that's softcore porn for ladies! XD

My friends and I sometimes refer to the Berkley Sensation Imprint as female Viagra.

[fallsauce]

"Romance" ebooks? Let's call it right... that's softcore porn for ladies! XD

I actually skip most of the sex scenes... :P They're pretty much all the same anyway.