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Thursday, October 27, 2011

Book Industry Has A New Savior

Thank you, Books-A-Million!

It was announced today that the nation’s second largest bookstore chain will open up 41 new stars within the next month. It will also close 21, leaving it with a net gain of 20.

This means a lot to the industry that sorely needed a boost.

First, it begins to reverse the tide of store closings, most recently by Borders.

Second, if these stores are successful, there is every reason to believe they will continue to expand, and if they do, this may mean that Barnes and Nobel will start to grow again, in order to compete.

Third, since BAM doesn’t have its own e-reader the way BN has the Nook and Amazon has the Kindle, this means BAM’s store sales will push printed books and create more places for the book-loving community to gather.

The new store locations will be in underserved areas, including the following:

Ames, IA                                Auburn, ME
Bangor, ME                            Barboursville, WV
Butler, PA                               Charleston, WV
Columbia, MD                        Concord, NH
Cumberland, MD                    Cuyahoga Falls, OH
Davenport, IA                         Dubuque, IA
Dulles, VA                              Eau Claire, WI
Edwardsville, IL                     Exton, PA
Hanover, PA                           Harrisburg, PA
Merrillville, IN                        Monaca, PA
Monroe, MI                             N. Canton, OH
N. Conway, NH                      Niles, OH
Pennsdale, PA                         Rapid City, SD
Salina, KS                               Sandusky, OH
Scranton, PA                           Selinsgrove, PA
South Portland, ME                Southern Pines, NC
St. Clairsville, OH                   Traverse City, MI
Valley Stream, NY                 Vineland, NJ
Waldorf, MD                          Waterford, CT
West Lebanon, NH                 Westminster, MD
York, PA

In a nation of 310 million people, we can always use more book stores.

Is Amazon Killing Itself?

Those in the book publishing industry generally do not favor Amazon, for a variety of reasons, but perhaps Amazon would not seem like a threat if it behaved less like a greedy bully.  Case in point. It will sell Kindles $10 below cost in order to capture tablet market share and to gain e-book orders. But in the process, it forces competitors to lower prices unnecessarily.  If Amazon sells books, print or e-books, for spit, then bookstores need to compete with that.  This cut-throat competition could kill the market for everyone.  Consider that Amazon just announced its third-quarter net income fell 73% despite significant growth in sales revenue.  They took in nearly 11 billion dollars in three months but managed to spend all but 63 million.  There are companies that take in a billion and easily net 63 million.  Amazon has a profit margin of less than 1%.  How is that successful? 

Which business takes in a hundred dollars but spends $99.40?  Only Amazon. Even those who run the 99 cent stores make more than a penny from every dollar they take in. Ford, by contrast, made a net profit of 5% this past quarter. Also not very big, percentagewise, but far better than Amazon. Keep in mind, other than a few warehouses and corporate offices, it has very little overhead  It is an online company, so really it’s profit margin should higher than other retailers.

Brian Feinblum’s views, opinions, and ideas expressed in this blog are his alone and not that of his employer. You can follow him on Twitter @theprexpert and email him at brianfeinblum@gmail.com. He feels more important when discussed in the third-person.

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