October 20, 1999 2:15 PM PDT

Small bookstores plan to fight Goliaths

Gearing up for holiday shopping, a coalition of independent bookstores plans to launch an online bookstore next month, but observers wonder whether the site will be too little, too late.

BookSense.com, sponsored by the American Booksellers Association (ABA), will provide links to independent bookstores across the nation, allowing many of them to establish a much-needed Web presence.

The site, however, will be hard pressed to make a dent in a market that's dominated by the likes of Amazon.com, Barnesandnoble.com, and Borders, many industry observers say. E-commerce giant Amazon has established dominance in the online book business since launching in 1995. Barnes & Noble's Web store also has become one of the largest sellers online--even though the company is still criticized for setting up shop late, opening in 1997.

"They won't collectively be able to match Amazon and Barnesandnoble.com in sales and marketing," said Ken Cassar, digital commerce analyst at Jupiter Communications. "I don't know how much this is going to stanch the bleeding [either]."

The president of the ABA, Richard Howorth, acknowledged that BookSense.com will face tough competition.

"We are extremely late coming to the game," Howorth said. "But we're not really playing the same game Amazon is playing."

Unlike Amazon, BookSense.com plans to implement a "clicks-and-mortar" strategy, where users can interact with booksellers either online or in their physical stores. It also intends to become a source of online marketing for the independent bookstores, helping them retain customers and draw in new ones.

Such independent shops--many of which have been put out of business by major chains such as Borders--have lost further sales to the online bookstores.

Forrester Research projects the online book market will grow in sales from $1 billion this year to $3 billion in 2003. Much of the sales, however, will come at the expense of offline retailers, analysts say.

Many independent booksellers, consequently, believe selling online is the best line of defense.

"We feel that one way we can compete is to be online ourselves," said Barbara Morrow, co-owner of Northshire Bookstore in Machester Center, Vermont. Northshire plans to launch its own Web store on November 8 and will link to BookSense.com when it launches.

"We're hoping that we can win back some of those customers that have been lost to Amazon," Morrow said.

But the ABA is divided on the issue and is also woefully underfunded, according to Jupiter's Cassar. After meeting recently with Booksense.com executives, Cassar said that the ABA is neither united nor packs the financial firepower to fight the book-selling giants of the world.

"Their marketing, sales, and site-development budget is about $2 million," Cassar said. "And nobody at the ABA is saying 'Hey, we need more.' Booksense.com is facing an uphill battle and worse, facing antiquated business thinking."

Argus Research analyst Alan Mak praised the "grassroots" effort the booksellers are making, but he questioned what the BookSense.com site would offer that Amazon or the other sites can't already provide. Mak said he expects Amazon will be able to outmatch the BookSense.com coalition on a variety of fronts.

"This is probably the best thing the independents could do, if they really think jumping on the Internet is necessary," Mak said. "But Amazon is likely to undercut them in price and delivery."

Amazon declined to comment at this time.

Initially, the bookstores will just get a portion of each sale, outsourcing the fulfillment of book orders to book distributor Baker & Taylor. Early next year, the coalition plans to combine each bookstore's inventory with Baker & Taylor's database of books.

Bookstores will then be able to choose whether to fulfill orders themselves or to outsource them to Baker & Taylor. And will have the option of picking up books in the stores after ordering them online.

Interestingly, Amazon is a member of the American Booksellers Association. However, Howorth said Amazon is not eligible to take part in BookSense.com because it does not have any offline stores. Borders and Barnes & Noble are not members of the association.

Regardless of what the independents booksellers do, analysts agree that they face a gloomy future. "Customers may have an emotional attachment to the Mom-and-Pop book store initially, but in the long term they will be rational and they will buy from Barnes & Noble. It's cheaper," Cassar said.

 

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