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.