In March this year Time published a smart article called – E-Books: Why Barnes & Noble Avoided Borders’ Fate by Josh Sanburn. With the announcement of Barnes & Nobles’ (B&N) latest results for Q1 ending July showing the Nook business soaring 140% compared with last year, I thought it would be interesting to track the aggressive change in positioning being executed. Perhaps the business you are running can learn from B&Ns’ tactics as it struggles to deliver success within a sector changing at lightning speed.
Some Facts
Four years ago, in May 2007, B&N announced Q1 results showing sales at $1.1Bn, $1Bn from stores (increase 3.3%) and sales through their web site of $94m (increase of 8%) (Nook hadn’t been launched yet) – the company was worth around $2Bn, share price about $36.
Roll on 4 years – yesterday the company announced Q1 results to July (they changed their year-end in 09) showing sales of $1.42Bn, $1Bn from stores same as 2007, $220m from a college bookstore business (recent acquisition in 2009 bought from the chairman of B&N) and $198m from web site sales.
The most recent results included $277m of Nook hardware and book sales across all parts of the business – up 140%.
Guidance from management indicate Nook sales will be around $1.8Bn this full financial year (double last year)
The company is valued at about $750m. (an offer from Liberty at $1Bn was declined, earlier this year)
The online e-book strategy was tried and aborted in 2003 due to a lack of interest.
In March 2009 B&N acquired Fictionwise (see my post) a leader in the e-book marketplace. At the same time Borders was laying off 742 employees.
The Nook was launched in October 2009 and is now moving to a 30% market share of the e-book market.
In October 2010 the color edition of Nook was launched followed by the All New Nook™ The Simple Touch Reader™ in May of this year. In Feb of this year Borders filed for bankruptcy protection and through liquidation will have gone by September.
Lessons learned
Change comes fast and hard, courage is needed to continue to service the customer.
Just because an idea fails don’t give up on it forever, it’s always worth revisiting when the timing is better.
Small strategic acquisitions to gain knowledge can be powerful tools.
Innovation when it locks onto what your customer needs/wants can gain traction fast but the product has to be world class.
Constantly be auditing the signals coming from the market and translate them to consistent actions that stakeholders can believe in.
It’s too early to say whether B&N can transform itself quickly enough to survive the revolution sweeping through the publishing sector. However building a new digital platform to define and dominate a new market, as they did with the traditional bookstore, should be applauded.
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About the Author
Smith has been creating remarkable businesses since the early 80s with Thomson (now Thomson Reuters), creating Livingstone Guarantee an early leading investment banking boutique as the second employee, building the FTSE 100 Capita Group in the 90s and more recently turning around software businesses in Boston over the last decade. He formed The Portfolio Partnership in 2010 to help CEOs fulfill the potential of their businesses. Ian’s book, Fulfilling the Potential of Your Business, recently won the Small Biz Book Awards for Management. Still competitive, Ian is ranked #1 in the US at 400m on the track for his age.