The Synergy Factor Very worthwhile panel discussion on C-Span today. I cannot provide details since I tuned-in while the show was in progress but the gist of things was that various publishers and booksellers were discussing the future of the retail book business. The panelists were all experts about some aspects of merchandising, distribution, marketing, and so forth. The one lesson that the panel discussion left me with more than anything else was an observation that different people each agreed was true, namely, that there have been unanticipated synergies as the book business has moved forward. Yes, mass market retail chains have fallen on hard times, and , yes, e-books have generated major changes in the business, but it isn't an either/or proposition. That is, to refer to Arthur Clarke's principle yet again, it is rare when a past technological innovation actually dies. Most are reinvented and serve new markets, like sailboats, of which there are more than at any time in history. And, while typewriters are dead, the keyboard business is going like gang busters, isn't it? So it is with hard-copy books. There are more than ever before -all the while as the electronic computer business continues to grow by leaps and bounds. That is, synergies come into play and it is necessary to cease to think that trend extrapolation is some kind of holy grail. No strait line trends -none at all- continue indefinitely, any such thing is structurally impossible. Yet people in the computer biz often get snookered by trends -as do many others, needless to say. The phenomenon is universal. But let's stick to books and e-books. One observation: A successful independent bookseller will, as a rule, sell 15% of non book items in a store. Book profit margins are modest, that 15% makes all the difference inasmuch as non-book margins tend to be greater. But a book store should never exceed approximately 15 % because their customer base consists of people who want books, not (necessarily) deluxe gift calendars or music videos. Amazon has this part figured out and, at least so far, is on target with its strategy. I've read some material that suggests that Amazon may be over-reaching and starting down the dubious path of becoming a conglomerate, of which there are far more failures than successes, but that is another story... The point is that there is such a thing as an "ideal mix" in retailing. Here is where synergy gets interesting. The latest sales approach is to suggest to valued customers related purchases that might be of interest. Again, Amazon understands the idea quite well. The wrinkle being used by independent book stores -people who are the most likely to know and value customer preferences- is to seek to sell e-book follow-ups. After all, a store may only have space for 10,000 physical books but with access to e-books suddenly the store can sell 100,000 books. It is a win / win proposition. "You just read Aslan's Zealot? You might like, maybe even more, Michael Wise's The First Messiah, which we have in e-book format for only $ 2. 95." And this is what is happening, none of yesterday's rosy scenario trend forecasts have panned out, certainly none have gone exactly as anticipated. Books are anything but dead -there are more then ever before, and one reason is that the market is driven by all kinds of forces and one of them is synergy. Book selling is peculiar, though, in the vast differences in the quality of the products sold. That is, some books are, IMHO, objectively worthless, like romance novels. But if a store does not sell such books forget about 10% of dependable repeat sales -and an even higher % for e-books. A retailer learns that if there is customer demand, hell, keep shoppers happy. If you have a book store and you sell mocha and it adds even just 5% to profits, uhhh, that is 5% you would not otherwise have. That is, and I'm not sure how some businesses do it, but if a company positions itself as the enemy of other products, rather than selling products that can create synergies with the products of other firms, it limits its prospects. The point may seem moot when a product line has such high quality that some hauteur is justified, but speaking of the long haul, it is difficult to see how "us vs them" thinking can win out in the marketplace. Of course, some niches are so specialized that this argument is not applicable, but for all kinds of products seeing the potential for synergies should be no problem at all: Tires, office furniture, TV sets, Barbie Dolls, you name it. So it is with books -of which about 1,000,000 new titles are now published each year in the USA. But may as well ignore them, right?, if you cannot see any value in them beyond the conventional book trade as it has been known since WWII but which, in the 21st century, is doing its utmost to re-invent itself. Billy
-- -- Centroids: The Center of the Radical Centrist Community <[email protected]> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org --- You received this message because you are subscribed to the Google Groups "Centroids: The Center of the Radical Centrist Community" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/d/optout.
