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Brick and mortar book retailers revamping strategies to take on online book stores

Swarnpreet Kaur Tuli, The Economic Times
New Delhi, 6 April 2015

Brick-and-mortar book stores are rethinking their strategy to take on competition from online market places, which lure book lovers with attractive discounts.

Owing to the ease of shopping on the internet, higher discounts and availability of books, Indians are increasingly turning to online stores for their book purchases. The trend portends trouble for traditional brick-and-mortar book stores where storage space and margins are less.

"We have lost our customers to e-tailers, mainly because of the high and irrational discounts offered by them. Also, we have witnessed 7-10% decline in our sales," said Ajay Mago, CEO of book store cum publishing house, Om Book Stores.

Crossword, too, is unhappy about the high discounts offered by e-commerce websites. "Slashing prices to more than 50% entices a customer to buy the book online. We, as book stores, cannot offer such high discounts due to higher rentals, manpower and other expenses incurred in opening a book store," said Kinjal Shah, CEO of Crossword.

Anuj Malhotra, who owns a book store in upmarket Khan Market in New Delhi, said that retail is all about services; offering high discounts on online stores cannot replace the services provided in physical book stores.

The book stores, nevertheless, are trying to beat this competition.

Om Book stores is trying to revive sales through activities such as book launches, introduction of special stationary and special discounts on both its offline and online stores, according to Mago.

"We are not afraid of online. We have expansion plans and are going to open stores in more cities like Chennai, Bangalore and Mumbai. We are going to compete and beat e-commerce. Also, we expect 20% increase in sales this year," he said.

Shah shared some strategies adopted by his store to ward off competition from online stores and to sustain profitability.

"At our store we keep a 60-40 mix of books and other categories to sustain profitability. We do various promotions during the year at which we provide some great offers and discounts, organize 10-15 events a month for customers to meet their favourite authors, provide special offers to customers on their special occasions like birthdays, arrange workshops and competitions for children, we do promos focused on certain age groups also during the year such as Children’s Fest (April and May), Annual sale (August) entire store is on sale, and many more," Shah said.

Malhotra said, "Either accept the change or step out of it."

On Flipkart’s books section, Ankit Nagori, SVP – marketplace, Flipkart, said the category is a high-volume driver for the online store. "We have been witnessing a healthy month-on-month growth in terms of sales and traffic. We have over 30 different categories and thousands of interesting titles," he said.

Further he added, "We believe that physical and online book stores will continue to co-exist and grow. The unique book browsing and navigation experience offered by a book store is what appeals to a reader/shopper. The success of a book store is defined by quality of experience and the variety of books that a customer can choose from."

According to Flipkart, the new reach offered by e-commerce marketplaces has encouraged physical book sellers to reinvent themselves and offer a wider range of books to cater to a larger audience base.

On how Amazon offers high discounts, even at the cost of bearing losses, Samir Kumar, director, category management, Amazon India, said, "Prices for products on our marketplace are determined by the sellers. We offer services such as FBA (fulfilment by Amazon) and Easy Ship to sellers on our platform, which enables them to significantly lower their cost of selling and reducing defects as they sell to a nationwide customer base. Sellers pass on these savings as lower prices on the platform."

We launched Amazon.in with books, movies & TV shows back in June 2013, and since then these departments have been growing exponentially, Kumar further said.

NEED FOR GOVERNMENT TO REPLICATE FRENCH RETAIL LAW

French government passed a law last year which prohibits online merchants in France to offer free shipments of discounted books. Also, the government allowed for up to 5% discounting on books. Offline book retailers in India are seeking a similar law to maintain equilibrium in the retail (online and offline) market.

According to Mago, a healthy competition between e-tailers and retailers must exist, but online stores like Amazon and Flipkart should not be allowed to offer such high discounts. The government should set an upper limit for discounts on both online and offline book stores.

He added that people visit his store to scan books and later order it online through e-commerce companies for higher discounts and free delivery.

If online sites offer nominal discounts, both book stores and e-commerce sites can function properly and sell more books to customers, said Shah.

According to Malhotra, 60% of online buyers are from tier I cities, 30% from tier II and 10% from tier III, whereas it should have been 50% in tier III and 25% in both tier I and tier II.

A NEUTRAL VISION

Devangshu Dutta, chief executive, Third Eyesight, gave a neutral insight into the current state of the books market in both e-commerce and physical stores.

According to him, the major factors impacting footfall and sales at brick-and-mortar book retailers are variety offered to the consumer in terms of search and width of choice, convenience in terms of a zero-commute purchase, significant improvements in payment and logistics over the last 2-3 years, and aggressive wooing of customers through discounts.

However, he said, offline retailers still remain the main channel for book sales in India. E-tailers are reducing the discounts offered on books, so the negative impact on physical retailers is now felt most acutely when a specific promotion is carried out by the major websites at any time, rather than through the year.

Landmark book store did not respond to calls and e-mail queries to share the impact of e-commerce on their store.

(Published in The Economic Times.)

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