Globe & Mail - Indigo faces digital reckoning

SensualPoet · 04-09-2011, 09:15 AM

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.

fjtorres · 04-09-2011, 09:30 AM

In other words, Indigo and Kobo act like separate companies?
Not good.

SensualPoet · 04-09-2011, 09:34 AM

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.

taming · 04-09-2011, 10:36 AM

In the article, it also said that Kobo lost $10M in the last quarter and is not expected to be profitable for another year.

ficbot · 04-09-2011, 10:44 AM

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.

Giggleton · 04-09-2011, 10:53 AM

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.

elcreative · 04-09-2011, 10:59 AM

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

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.

SensualPoet · 04-09-2011, 12:27 PM

Quote:

Originally Posted by taming

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.

taming · 04-09-2011, 01:09 PM

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.

J. Strnad · 04-09-2011, 01:21 PM

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.

ebusinesstutor · 04-09-2011, 02:38 PM

Quote:

Originally Posted by SensualPoet

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.

Fbone · 04-09-2011, 02:41 PM

Quote:

Originally Posted by SensualPoet

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.

GA Russell · 04-09-2011, 02:49 PM

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.

SensualPoet · 04-09-2011, 03:41 PM

Quote:

Originally Posted by Fbone

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!

taming · 04-09-2011, 05:30 PM

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.

04-09-2011, 09:15 AM	#1
SensualPoet Wizard Posts: 2,302 Karma: 2607151 Join Date: Nov 2009 Location: Toronto Device: Kobo Aura HD, Kindle Paperwhite, Asus ZenPad 3, Kobo Glo	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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04-09-2011, 09:30 AM	#2
fjtorres Grand Sorcerer Posts: 11,732 Karma: 128354696 Join Date: May 2009 Location: 26 kly from Sgr A* Device: T100TA,PW2,PRS-T1,KT,FireHD 8.9,K2, PB360,BeBook One,Axim51v,TC1000	In other words, Indigo and Kobo act like separate companies? Not good.

04-09-2011, 09:34 AM	#3
SensualPoet Wizard Posts: 2,302 Karma: 2607151 Join Date: Nov 2009 Location: Toronto Device: Kobo Aura HD, Kindle Paperwhite, Asus ZenPad 3, Kobo Glo	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.

04-09-2011, 10:36 AM	#4
taming Trying for calm & polite Posts: 4,012 Karma: 9455193 Join Date: May 2010 Location: Mostly in Canada Device: kobo original, WiFI, Touch, Glo, and Aura	In the article, it also said that Kobo lost $10M in the last quarter and is not expected to be profitable for another year.

04-09-2011, 10:44 AM	#5
ficbot Wizard Posts: 2,409 Karma: 4132096 Join Date: Sep 2008 Device: Kindle Paperwhite/iOS Kindle App	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.

04-09-2011, 10:53 AM	#6
Giggleton Banned Posts: 1,687 Karma: 4368191 Join Date: Jan 2011 Location: Oregon Device: Kindle3	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.

04-09-2011, 01:09 PM	#9
taming Trying for calm & polite Posts: 4,012 Karma: 9455193 Join Date: May 2010 Location: Mostly in Canada Device: kobo original, WiFI, Touch, Glo, and Aura	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.

04-09-2011, 01:21 PM	#10
J. Strnad Guru Posts: 915 Karma: 3537194 Join Date: Feb 2009 Device: Kobo, Kindle 3, Paperwhite	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.

04-09-2011, 02:49 PM	#13
GA Russell Montreal wins Grey Cup! Posts: 7,583 Karma: 31484197 Join Date: Aug 2009 Location: Raleigh, NC Device: Paperwhite, Kindles 10 & 4 and jetBook Lite	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.

04-09-2011, 05:30 PM	#15
taming Trying for calm & polite Posts: 4,012 Karma: 9455193 Join Date: May 2010 Location: Mostly in Canada Device: kobo original, WiFI, Touch, Glo, and Aura	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.