B&N CFO "thrilled" about holiday sales

[GreenMonkey]

Heard this story on NPR today. Thought I'd post it.

"Digital Divide Propels Barnes & Noble Past Rival"

http://www.npr.org/2011/01/06/132713...-rival?ps=cprs

"Thrilled" was the word Barnes & Noble Chief Financial Officer Joseph Lombardi used to describe the mood at his company. Holiday sales at BarnesAndNoble.com were up 78 percent over last year; store sales increased by almost 10 percent. While sales of hardcover books were better than expected, Lombardi made it clear that Barnes & Noble's popular e-readers, the Nook and the Nook Color, were behind the good news.

Talks about their positive sales results. They definitely attribute a lot of it to the Nook. Some talk about Border's financial trouble and what B&N was doing right that apparently Borders didn't.

Good signs for future Nook support.

[DMcCunney]

A bit more on the B&N results:
http://www.publishersweekly.com/pw/b...y-digital.html

Interesting glimpses of future plans, including closing some brick and mortar stores as leases expire, and a predicted decline in print sales with a corresponding ebook increase.
______
Dennis

[John Carroll]

It sounds like B&N really has a good plan for handling the change. I must say that I'm impressed.

[fjtorres]

B&N's concerns are about short-term cash flow; their long term plan of fortifying pbook sales with ebook revenue has little margin for error in the short-term but it looks like the NC is generating enough cash to bridge their gap.
They still have one huge bridge to cross, though, and that is to find a way take Nook international. They need the added scale to keep up with Kindle or they will be at an ongoing disadvantage.

[kuliand]

it does sound like B&N have done a good job so far of saving them selfs as i think they could easily be in the position of Boarders which is looking like it's days are numbered.

As for their international presence no one has really heard of them hear in the uk so maybe open a flagship store or two in big cities? But design these stores from the ground up for the digital age just don't ask me what a book shop for the digital age should be.

[jasonkchapman]

Originally Posted by kuliand

it does sound like B&N have done a good job so far of saving them selfs as i think they could easily be in the position of Boarders which is looking like it's days are numbered.

As for their international presence no one has really heard of them hear in the uk so maybe open a flagship store or two in big cities? But design these stores from the ground up for the digital age just don't ask me what a book shop for the digital age should be.

They'd be smarter to partner with someone who is already in the primary markets to handle the physical sales. Their local arrangements with Best Buy are good practice for that. It would allow them to move into markets without the massive outlay for brick-and-mortar stores that aren't going to last long anyway.

A while back, they put out employment ads seeking people who specifically had experience in international e-commerce, so I assume that part of the plan is already underway. Getting those details right and negotiating/managing the deals with the publishers are the two key pieces of the puzzle. That's where Amazon has the advantage. They've always really been a software company at the core.

[Kali Yuga]

Originally Posted by fjtorres

....it looks like the NC is generating enough cash to bridge their gap.

I doubt they're earning much, if anything, on the hardware -- margins are too thin. It's the ebooks themselves that are generating profits.

Originally Posted by fjtorres

They still have one huge bridge to cross, though, and that is to find a way take Nook international. They need the added scale to keep up with Kindle or they will be at an ongoing disadvantage.

I don't see why, other than as a convenience for US customers. I don't believe they have a big international presence, and the ROI on international is likely much lower than domestic sales.

[Fbone]

How would overseas Nook owners purchase ebooks? They can't use the US B&N website due to publisher's restrictions.

[DMcCunney]

Originally Posted by Fbone

How would overseas Nook owners purchase ebooks? They can't use the US B&N website due to publisher's restrictions.

How do overseas Kindle owners purchase ebooks?

Publisher restrictions are geographic, and depend on whether the publisher has the right to sell a book in a particular territory. There's no reason the B&N site couldn't stock electronic titles salable overseas, and use geolocation on the IP address of the purchaser to determine if they can purchase a particular volume. (You might wind up with ebooks on the B&N site US customers couldn't buy, which would be a grimly amusing reversal of the usual state of affairs.)

It's a good bet that going forward, publishers will want to acquire worldwide ebook rights on titles they publish, precisely to get around such problems.

For that matter, there's no reason B&N couldn't list print volumes on the website salable overseas, though they would have to partner with local enterprises for warehousing and fulfillment.
______
Dennis

[caleb72]

I don't know if there's any real need for B&N to go international is there? Not speaking from any position of knowledge really, but isn't the U.S. market big enough to sustain a company like B&N?

Surely you don't always have to compete against your biggest rival in one country by matching them in every other country?

Although as an Aussie, I wouldn't mind having the extra option.

Regards
Caleb

[Fbone]

Originally Posted by DMcCunney

How do overseas Kindle owners purchase ebooks?

With some difficulty.

Publisher restrictions are geographic, and depend on whether the publisher has the right to sell a book in a particular territory. There's no reason the B&N site couldn't stock electronic titles salable overseas, and use geolocation on the IP address of the purchaser to determine if they can purchase a particular volume.
Dennis

Even Amazon isn't doing this except for indies.

Amazon has several country specific websites set up already. B&N doesnt. And the geo restrictions are more narrow than realized. A customer from Netherlands can't purchase from UK Amazon. Into how many parts do the publishers split the globe? And there are already many ereaders available globally. Do they need another one?

[caleb72]

Originally Posted by Fbone

Even Amazon isn't doing this except for indies.

Don't I know it!

Regards
Caleb

[jasonkchapman]

Originally Posted by Fbone

And there are already many ereaders available globally. Do they need another one?

Considering the number of complaints I've read about the lack of internationally-available content, I'd say the market thinks so, especially considering that the inclusion of nook for PC, nook for Android, nook for iDevices, and nook for whatever-other-platform-comes-along are part of the plaltform.

[DMcCunney]

Originally Posted by Fbone

Amazon has several country specific websites set up already. B&N doesnt. And the geo restrictions are more narrow than realized. A customer from Netherlands can't purchase from UK Amazon. Into how many parts do the publishers split the globe?

<shrug> How many publishers are there?

Geo-restrictions bite when rights to a book are held by more than one publisher. "Foreign rights" are normally negotiated separately. My book may be bought by a US publisher for US sale, and then (I should be so lucky...) picked up by publishers in other countries for release there. Those publishers have the right to issue the book in their respective territories.

And there are already many ereaders available globally. Do they need another one?

Why not?

B&N wants market share. The nook is a worthy reader, and the nook color is doing nicely, thanks.

There are plenty of other readers, but where do you get content? If you want to get Kindle editions from Amazon, you need to use a Kindle or Kindle app. If you want to get content from B&N, you need to use a nook or nook app.

As publishers increasingly push for worldwide electronic rights, geo-restrictions will fade. Each on-line book retailer will want to be your sole source for purchased ebooks.

Amazon built an eco-system around the Kindle and Kindle apps to encourage you to buy only from them. B&N will have incentive to do likewise.
______
Dennis

[fjtorres]

Originally Posted by Kali Yuga

I doubt they're earning much, if anything, on the hardware -- margins are too thin. It's the ebooks themselves that are generating profits.



I don't see why, other than as a convenience for US customers. I don't believe they have a big international presence, and the ROI on international is likely much lower than domestic sales.

As you said: hardware margins are thin.
Thin-margin businesses are by definition high volume businesses.
Amazon sold 8 million kindles in 2010 because they are a worldwide player and the cheapest connected reader around. And one reason they are so cheap is because they sell so many readers (and books) the world over. Development costs are fixed, so are back end costs; spreading them over a large volume is the most competitive way to beef up margins.
Amazon is not going to stop international operations any more than Kobo is so if B&N is serious about playing with the big boys they need to follow suit.
Kindle 4 is coming so anybody who is serious about staying in the game needs to get within striking distance of K3 before then. Or else.