Kobo Coming To U.S. Independent Book Stores - Next Week?

[fbrII]

My local Independent Book Store Alliance website is now advertising Kobo's e-readers, and provided a list of five book stores in the St. Louis area who will be stocking Kobo units. I spoke to two of them, who both said they expected to have units to sell some time next week.

I was surprised, as I really only expected one large independent in the area to be willing to take on the gamble of carrying high end items like e-readers or tablets. My guess is Kobo must be offering them a pretty attractive/low-risk buy-in and I'm happy to see Kobo taking independent book stores seriously.

So, if you are in the U.S. and still holding out for a Glow or Mini and you have a local independent book store, you may want to give them a check. (No, pun intended)

[dakini]

that's good news, and it might explain why Best Buy is so slow to get the new Kobos ... if they're being offered first or nearly first to the independent booksellers that just joined into the ranks with Kobo.

good luck on getting your hands on one this week. i suspect there will be a lot of americans checking out their locals as well.

[tnforpaul45]

Good Luck! I'm sure that the independent stores will work MUCH HARDER for your sale than would the bozo's at Big Buy

[thp1017]

Yeah, I called two stores here in Abq, and one had no clue what I was talking about, the other said that the program was too expensive for them. Maybe that is why in St. Louis a bunch are doing the program together - to share the costs?

[oj829]

I spent some quality time with an indie bookstore owner today, and got to handle his demo glo. (MHO: 2.1.5 FW sucks, and the slide control for brightness leaves ghosting on the screen.)

Some things to keep in mind when wondering about why EVERY INDIE IN THE WORLD isn't jumping on this bandwagon:

* Agency pricing is not long for this world, and in a world where vendors can lowball on retail, everyone is up against Amazon.

* Depending on publisher, Kobo does actually do some aggressive discounting (vs. Google) right now. While it's right that the retail store only gets a piece of the pie, as they did with the Google deal, that pie is getting smaller.

* That piece of that smaller pie is getting smaller, too. The indie's cut from the sale of a Kobo ebook is 8.4%, smaller than the (unknown to me) cut Google was offering. 84 cents on a $10 book.

* Under the ABA/Google deal, indie retailers were paying $200 a month for the privilege of access to the program. It is unknown what their future monthly cost is going to be, but they had to affiliate-sell a lot of books under the Google program to even hit that $200, which was one of the reasons retailers are not all that excited about yet another dive into these waters.

* Store owners only get a 5% cut on hardware sales (Calculate 5% of $129 or $79). Furthermore, it is only during the introductory/launch period that they'll be able to return these things. What are small retailer credit card fees these days? 4%?

[rwhe]

In Seattle(ish), both the University of Washington Bookstore and Third Place Books expect to be getting some in soon. UW says within a couple of weeks; Third Place says not sure.

[scrapking]

Interesting comments, and thanks so much for sharing them with us!

Originally Posted by oj829

* Depending on publisher, Kobo does actually do some aggressive discounting (vs. Google) right now. While it's right that the retail store only gets a piece of the pie, as they did with the Google deal, that pie is getting smaller.

This is correct of course, but if the alternative is losing customers to e-reading with a 0% revenue stream it's possibly still worth doing.

* That piece of that smaller pie is getting smaller, too. The indie's cut from the sale of a Kobo ebook is 8.4%, smaller than the (unknown to me) cut Google was offering. 84 cents on a $10 book.

Hmmm... is that 8.4% less of a stake in the whole, or an 8.4% reduction to their commission? The difference is huge! (eg., is it 20% dropping to 11.6% commission, which would be a huge drop; or has the commission dropped by 8.4% from, say, 20% to 18.32%?)

* Under the ABA/Google deal, indie retailers were paying $200 a month for the privilege of access to the program. It is unknown what their future monthly cost is going to be, but they had to affiliate-sell a lot of books under the Google program to even hit that $200, which was one of the reasons retailers are not all that excited about yet another dive into these waters.

I can understand, that would be tough. Is Kobo even requiring a monthly cost to be involved? Perhaps the lower percentage Kobo's offering is in lieu of not charging a monthly fee?

* Store owners only get a 5% cut on hardware sales (Calculate 5% of $129 or $79). Furthermore, it is only during the introductory/launch period that they'll be able to return these things. What are small retailer credit card fees these days? 4%?

I'm a small retailer (bicycles) and we typically pay 2-3% on credit card merchant fees. Occasionally as low as 1.5%.

Margins like that on hardware is pretty normal for any industry that uses the razor/razorblade model in the electronics industry. For example, those are the kinds of margins that stores typically get on video game systems. Video game stores also get truly terrible margins on boxed video games (15-25%), despite having to hold inventory! (That's the worst of every world). Video game stores do make money on accessories, though, and I would expect the e-reader accessories to have much higher margins. The real cash cow for video game stores is in used games, and bookstores do have the option of dealing in used books.

Like I say, I don't expect this to be a huge money-maker for the independent bookstores. I do see it as a better alternative than watching their business wither on the vine as the trend towards digital continues. At least with e-books, the stores don't have to carry "inventory" of e-books like the video game stores do with boxed retail video games. If I owned a bookstore in the U.S., I would model my store after video game stores: a strong focus on used product at high margins, and accessory add-ons to e-reader sales. I would merchandise my store with these two categories front and centre, and train my staff to make every customer aware of them, and I would take trade-ins of used books towards new e-readers and accessories.

[oj829]

Originally Posted by scrapking

Hmmm... is that 8.4% less of a stake in the whole, or an 8.4% reduction to their commission? The difference is huge! (eg., is it 20% dropping to 11.6% commission, which would be a huge drop; or has the commission dropped by 8.4% from, say, 20% to 18.32%?)

Okay, okay, my bad. I didn't think "cut" was a slang term, but maybe it is. I was using the word "cut" as a synonym for "percentage", not "reduction", but I used it in a paragraph describing a revenue reduction. That was sloppy on my part.

So let me be clear: Under Kobo, the indie gets 8.4% of an ebook's price. 84 cents from a $10 ebook. The person I was chatting with wouldn't tell me what the percentage was on the ABA/Google deal, only that it was more generous than the ABA/Kobo deal.

[oj829]

Originally Posted by scrapking

I can understand, that would be tough. Is Kobo even requiring a monthly cost to be involved? Perhaps the lower percentage Kobo's offering is in lieu of not charging a monthly fee?

To the best of my knowledge, the $200 was going to the ABA, the umbrella organization which was providing a lot of the support and infrastructure to booksellers who were not necessarily web geniuses.

[oj829]

Originally Posted by scrapking

Video game stores do make money on accessories, though, and I would expect the e-reader accessories to have much higher margins.

It's "widely" known that Kobo is allowing higher margins on the accessories. Well, I saw the official PDF of 2012 accessories: the now-famous magnetic case - one for mini, one for glo; a zippered neoprene case; and a Kobo-branded AC charger which will do the mini or glo. Eh.

The real cash cow for video game stores is in used games, and bookstores do have the option of dealing in used books.

not if people stop buying new ones!

Like I say, I don't expect this to be a huge money-maker for the independent bookstores.

Several are convinced that this deal is negative cash flow, period.

To justify the expense, support, etc., I think any bookstore owner has to think about using this to solve old problems: getting warm bodies through the door; using web presence to sell their dead-tree wares through mail-order - both titles that are and aren't digitized. And more problems that I don't have a clue about, not being in business for myself.

And that's if a bookstore is specialty, which has a chance of surviving.

And if that bookstore isn't... the writing's been on the wall for some time, and this isn't going keep the lights on.

[fbrII]

From my point of view I think anything that draws customers in a store is a plus. I don't expect the agreement between Kobo and the independent book store association is going to have a dramatic affect for either independent book stores or Kobo. However, I do feel it's a positive step for both and represents progress.

I don't think Kobo bares the responsibility for insuring independent book stores survive the digital age, nor do I expect that independent book stores are looking for the Kobo agreement to dramatically change their current situations.

What I do know is I will be walking into an independent book store and making a purchase and I am happy that whatever markup/commission/cut involved is going to a local independent merchant.

[jrasmussen]

Originally Posted by fbrII

From my point of view I think anything that draws customers in a store is a plus. I don't expect the agreement between Kobo and the independent book store association is going to have a dramatic affect for either independent book stores or Kobo. However, I do feel it's a positive step for both and represents progress.

I don't think Kobo bares the responsibility for insuring independent book stores survive the digital age, nor do I expect that independent book stores are looking for the Kobo agreement to dramatically change their current situations.

What I do know is I will be walking into an independent book store and making a purchase and I am happy that whatever markup/commission/cut involved is going to a local independent merchant.

well said--I couldn't agree more!

[oj829]

Originally Posted by fbrII

From my point of view I think anything that draws customers in a store is a plus. I don't expect the agreement between Kobo and the independent book store association is going to have a dramatic affect for either independent book stores or Kobo. However, I do feel it's a positive step for both and represents progress.

Maybe a lot more progress for Kobo than the indies. For their part, Kobo will be getting a lot out of this deal: a built in demographic of avid readers (as opposed to just avid consumers), for one. Also: people with strong ties to their local bookstore who will maintain that loyalty once moved over into the digital realm; from my conversation with the store owner, he's got regulars who don't bother at all with ebooks. (I discovered several shocking things that day, but this may have been the most surprising.)

For their part, Kobo is bringing to the table a very sub-par store experience, an execrable desktop software experience, and a hardware experience that leaves some pretty smart people stumped and frustrated. No one has ever said of Kobo: "It just works."

OTOH and to their credit, Kobo is very aggressively getting their ducks in a row with respect to their iPad and iPhone apps. As recently as last Thursday, their official blog announced Instant Reader for anything with an "i" in front of it. I assured the store owner that it was going to be a big deal to be able to say that any Kobo store purchases can be seamlessly read on his customers' already-owned i-devices. (To say nothing of bringing book purchasing back to the iPad via the web.)

What I do know is I will be walking into an independent book store and making a purchase and I am happy that whatever markup/commission/cut involved is going to a local independent merchant.

Okay, 5% of MSRP is $4.50 on a mini, $6.50 on a glo. If a customer pays in cash.

On a credit card? The store is "pocketing" probably something closer to $2.50 or $3.25. No one's saying that local indie bookstores are a charity, or anyone's responsibility but their own, or that selling e-readers should put someone on easy street; but really - don't pat yourself on the back for adding $3.25 to their fortunes.

[fbrII]

don't pat yourself on the back for adding $3.25 to their fortunes.

Well, I guess I'll just light my small candle, while you continue your rant against the dark.

[fbrII]

IMPORTANT NOTE! All Kobo eReaders sold through us are encoded so that every Kobo eBook you buy (whether that purchase originates with our website or though Kobo directly or through Goodreads or anywhere) is credited back to us. Super cool, right? If you buy your Kobo eReader at any other store (other than another participating Indie book store) you will need to first set up your account through our website so that we can be credited with your eBook purchases going forward. After the initial account set-up through the link on our website, your device is then encoded to credit Subterranean with every eBook you purchase no matter where that purchase originated from.

We'll be sending out more information over the next days and weeks and please don't hesitate to email me with any questions-- info@subbooks.com.

Our eReaders should be arriving any day (we'll be stocking the Kobo Glo and the Kobo Mini) --and we already have folks asking to reserve a device!

This is from an e-mail I received today from a local independent bookstore. The e-mail goes into detail about how the relationship between Kobo and independent book stores and offers links to various 'how-to's' to help new Kobo users.

Suffice it to say, I think this book-seller is excited about the new agreement and it appears to me that some thought has been put into how to make this a successful launch by both Kobo and the independents.