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Why Multichannel Bookselling is the Future

Bricks-and-mortar stores give booksellers a “human face,” but in the future most books will be sold online. Making the two sales channels complimentary is key.

By Amanda DeMarco

BERLIN: Anyone who’s been following German book industry publications over the past nine months or so has witnessed the rising popularity of the term “multichannel book selling.” It’s not a new concept, of course, but Weltbild-head Carel Halff’s declaration last summer that “the future belongs to the multichannel business,” seems to have encapsulated (or generated) the industry vision at the moment for how the German book market will weather digitization crises. Halff developed Weltbild from a small Catholic publisher and mail-order bookstore into the second biggest force in online book sales in Germany (presumably after Amazon), making him a major voice in industry discussion.

Thalia logo

Following the release of their 2010 sales figures, the second largest German book store chain, Thalia, has also pinned its success on multichannel approaches. In the fourth quarter of last year, Thalia’s sales rose 7.2%, while the rest of the book trade saw a decline of 4.8%, according to buchreport. Thalia’s growth is largely due to its consolidation with buch.de Internet stores.

Thalia’s 232 bricks-and-mortar stores in Germany actually lost 1.4% in sales overall in 2010, which only serves to highlight the stellar performance of its online counterparts. In this case, doesn’t “multichannel” actually mean online sales supporting limping stores? In an interview with Publishing Perspectives, Mirjam Berle, head of Thalia’s corporate communications, affirmed the stores’ importance because they “give Thalia a human face.” Multichannel means building brand loyalty, that is, hoping that someone who stops into a Thalia store to browse will go to Thalia.de when they need to order a book. Free shipping to Thalia stores makes that connection even more likely.

Fewer Books, More E-readers and Toys

A customer tries out an OYO e-reader in a Thalia store

As for store profitability, there’s a consensus in Germany that there needs be fewer square meters of store space and a more carefully curated selection of titles. Thalia’s plans for 2011 do involve opening more than ten stores, though Berle notes they are opening “much more selectively than we did a few years ago . . . it is not about whether or not to run stores, it is rather about what assortment we need to offer there -– besides books, which are of course our core competence and will always be available at Thalia . . . they will not lose their relevance for our customers if we manage to offer them an inspiring and attractive assortment built around books.”

Notice the emphasis on non-book products (“built around books”); as people buy more books on the Internet, stores like Thalia must rely more and more on other products to turn a profit. So a Thalia is a bookstore where you might browse over the bestsellers, pick up the book you ordered on the Internet, and buy some stationery or a toy. Or it’s just a place where you pick up some stationery and a toy.

E-book-news.de recently reported that Thalia’s e-reader, the Oyo sold unexpectedly well in stores, not online. People wanted to touch and try out the readers. But once those Oyo readers are in use, their sales will be exclusively online, and it’s hard to imagine their e-books won’t cut into store sales (you don’t have to go to a Thalia store to pick up your online purchase, which cuts out an important opportunity to buy stationery and a toy!), or that a more e-reader-educated generation might not be comfortable buying the readers online in the first place.

Berle was firm that “our online shop does not cannibalize our stores. On the contrary: we ensure customer loyalty by offering thalia.de as online point of purchase!” In a sense, she’s probably right that thalia.de shoppers would just go to another online book seller, not to a Thalia store, if thalia.de weren’t there. The point is rather that the store sales are migrating online anyway.

Multichannel Means More Competition

If stores are playing a somewhat more PR-related (and less profit-generating) role, providing the “human face” for multichannel booksellers, major players may have to adjust their game a little, and not just by opening fewer stores. Germany’s most widely-read weekly news magazine, Der Spiegel, published an exposé last year on an incident in which Thalia pressured a small publisher/bookseller to give up his store to them in a financially unfavorable deal. When he refused, Thalia briefly made his books unavailable.

Berle said the article was “very one-sided and does not reflect reality,” but conceded that “mistakes have been made on our side as well.” Be that as it may (or not), mistakes of the “oops we thought no one would find out we tried to intimidate the independent bookseller” variety are probably all the more important to avoid if the store you’re pressing to establish is the “human face” of your company. Thalia’s gaffe brings to light some of the possible conflicts of interest and imbalances of power that a multichannel bookseller can create.

To understand why multichannel has captured German attention to the degree that it has, it’s important to take the strength of German bookstore culture into account. Germans buy a lot of books and they have a lot of book stores, independents and chains. Germans are also slower at adapting new technology than Americans, so bricks-and-mortar bookstores figure large in German reading culture.

With the dust settling around Borders’ insolvency, it’s not impractical to ask how German multichannel visions differ from that of the American giant. Borders collapsed under the weight of its own increasing complexity; in a Publishing Perspectives analysis, Philip Downer, the former CEO of Borders UK, said, “I believe that businesses have a finite number of core skills; running an established physical retail business alongside a sector-leading online business is a trick few have pulled off.”

The previously noted strength of their book market is an important safeguard for German booksellers. Also, the scale of their operation is different; Borders has (or had) around 1,000 stores, Weltbild 500, Thalia 300. The question remains as to whether the expansion of online stores and investment in the development of e-readers and the distribution of e-books will be manageable, as well as whether the physical stores are pared-down enough to not create too much ballast.

Apparently, enough small booksellers are convinced that Weltbild and Thalia have hit on the formula for success; Nordbuch, an independent bookselling syndicate in northern Germany, recently announced that it is developing a multichannel concept for interested stores to be presented at the Leipzig Book Fair in March.

SURVEY: How Can Booksellers Futureproof Their Business?

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4 Comments

  1. Posted March 9, 2011 at 7:46 am | Permalink

    The future is a blend of physical books and e-books – people may want the experience of a bookstore, but will look at cost as part of their decision.

    The savvy publisher and smart author will use both brick-and-mortar and tech delivery to reach a global audience. But what is even more key is to build the audience of readers, re-educating people why Reading is enriching, especially in the digital world of TV, games and cell phones.

  2. Posted March 9, 2011 at 2:48 pm | Permalink

    A not-to-be-underestimated difficulty of executing this strategy in the US, at least, is the pricing difference between stores and online. I sympathize with “hoping that someone who stops into a Thalia store to browse will go to Thalia.de when they need to order a book” but in a market with steep discounting online, that hope of brand loyalty isn’t much to stand on when it’s so easy for the customer to order from Amazon at home or from their device while still in the store.

  3. Posted March 9, 2011 at 10:23 pm | Permalink

    As much as we may love the idea of holding the book in your hands, the future of this business lies in e-readers. Books will be essentially what records have become. They’re still being made, but only collectors seek them out.

  4. Posted August 7, 2011 at 2:40 am | Permalink

    Hopefully paper books will always be of most popular with readers (as well as collectors after possible investments), than e-books. As to which in the end will become most popular we will see, but unlikely not for many years to come.

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