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Sunday, November 01, 2009

Does BN Nook Compete with Amazon or Starbucks?

by Steve McKee

BN Nook in Competition with Amazon Kindle or Starbucks?There has been a flurry of news lately about Barnes & Noble's new e-reader, the Nook. It will compete head on with Amazon's Kindle and Sony's Reader, offering additional features such as limited book sharing and newspaper subscriptions. If successful, of course, those features will be matched by the Nook's competitors, just as Barnes & Noble has matched their price points.

It's fascinating to watch these three powerful companies--the dominant bricks-and-mortar bookseller, the dominant online bookseller, and a long-dominate electronic industry player - compete in this new arena. And word is that Apple's e-reader isn't far behind, which will further mix things up (and will be good for us all).
I couldn't help noticing, however, a little aside in a recent Wall Street Journal article about the Nook. The article was talking about how Nook users would be able to receive discounts and other special offers when they walk into the store, a smart use by Barnes & Noble of its one true competitive advantage over Amazon. But the piece went on to say this: "Eventually, the company says, customers will be able to read entire e-books for free inside the physical store."

Read entire e-books for free? Why would Barnes & Noble want to give away content? How's this for a reason: the company may have up its strategic sleeve the idea that it can become the other Third Place.

Starbucks has always been an appealing place to linger, and many people go there to enjoy a good read as they nurse their lattes (most Starbucks locations sell a handful of newspapers and books to encourage just such behavior). While Barnes & Noble has in recent years been adding coffee bars to many of its locations, they have always seemed to be somewhat of an afterthought and secondary to the company's primary purpose of selling books. But by offering free in-store content with the Nook, Barnes & Noble seems to clearly be saying that this is they place they want people to linger. And Since none of us can be in two places at one time, Starbucks and Barnes & Noble may increasingly butt heads.

It's a fascinating world in which we live, where two previously unrelated companies can wake up and find themselves arch-competitors, and it's fun to watch such changing dynamics unfold. Keep your eye on Barnes & Noble as it continues to take advantage of its physical locations (the one thing its current big competitor, Amazon, can't match). In combatting one foe it may have just picked a fight with another.

Steve McKeeSteve McKee is a BusinessWeek.com columnist, marketing consultant, and author of "When Growth Stalls: How it Happens, Why You're Stuck, and What To Do About It." Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.


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Anonymous Avil Beckford said...


Thank you for this great article. WE are living in interesting times. Most people would not think that Starbucks and Barnes and Noble's would be competitors, direct or indirect.

Technology often turns things upside down and gives us unique opportunities. This post reminded me of Heraclitus, the Greek Philosopher's quote, "Expect the unexpected or you won't find it."

Opportunities are everywhere, and if we have that mindset, we will spot them and use them to our advantage. People who are considered to be "lucky" know how to do that and that's why they are lucky. Thanks for the post.

Avil Beckford (The Invisible Mentor)

5:05 AM  
Blogger Loupy said...

Barnes and Nobles readers can already read books for free at their stores. The have couches and chairs just for that - you just need to pull a book off the shelf.

To me the real question is: why would you go into a store if you can preview and download from home?

6:47 AM  
Blogger Conrad said...

Don't BN and Starbucks already have a partnership? Many, if not most, BN stores have a retail franchise Starbucks in them. Wouldn't it be to BN's advantage to instead offer discounts and free-reads in other Starbucks locations as well, lest Amazon beat them to it? BN already has the partnership with AT&T, and AT&T provides the connectivity to Starbucks locations. Seems to me that a partnership that creates a broad "Third place" that includes BN and Starbucks locations is a powerful way to drive sales.

4:51 PM  
Blogger Tony Maro said...

Now if only I had a B+N within 2 hours of my house...

But yes, The two B+N's I used to shop at before I moved both had Starbucks inside. So does the one that's 2 hours from me now.

B+N was the first big bookstore I'm familiar with who added couches and chairs around the store for people to sit and read. No doubt in other areas of the country other stores (Borders?) have done the same and I don't know who was first, but for me half the draw to a brick-and-mortar bookstore is the idea that I'll spend an hour or so there browsing, reading, and grabbing a snack in the cafe.

9:47 AM  
Anonymous Anonymous said...

Yes many BN's have a Starbucks in them, but they are not actually a Starbucks. They have an agreement with Starbucks to sell the products. If you notice, the food items they carry are not the starbucks product. It is the same thing with airports. The restaurants in an airport are usually run by the same one or two companies they have a contract to carry the name and product. So yes there is becoming more and more competition between the two.

9:44 AM  
Anonymous Bookseller said...

As previously stated, Barnes and Noble is contracted to sell Starbucks coffee products (and Cheesecake Factory products). I have a difficult time foreseeing them become competitors, however. They are in two entirely different markets and I believe that Starbucks still receives a portion of the profits from BN sales. If anything, I think that more people hanging out at Barnes and Noble stores will do more to improve their relationship than hurt it, and I don't think there are sufficient warrants in this paper to prove otherwise. Also, with the Nook you will only have limited free access to books in the store while connected to BN's ATT wifi network. You can only browse the book for an hour before being asked to purchase it. They will not be giving away reading material; rather, they will be giving the customer more previewing access than the competitors can offer.

12:40 AM  

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