Nov 2 2008

Why eBook Readers Won’t Reduce Sales

Joe Esposito, a very smart mind in the publishing and epublishing world, argued a week or so ago that the Kindle and its “kin” would reduce overall book sales. I admire Esposito and his thoughts about publishing but in this case, I find his argument to be, well spotty at best.   His argument is thus:

because the architecture and business model for the Kindle support a "buy only when you need it" frame of mind, aka "just in time" inventory management. In the hardcopy world, where many books (no one knows how many) are bought "just in case," the number of books purchased exceeds the number of books read. The Kindle will remove the excess, adding to the legions of misfortunes of publishers and authors.

The gravamen of this argument is that digital purchasers are less susceptible to the impulse buy. I would argue that the nature of the instant gratification of digital books actually makes the impulse buy occur at more frequent rates.

Esposito argues that a brick and mortar shopper will browse for a specific title that brought him to the store but may also buy another book that will grab his attention. The second book is for some future time. A distraction might encourage a third purchase. With digital books, however, there is no reason to purchase a book sooner or “just in case”. Instead, a digital book is always there, ready to be purchased when the book is ready to be read.

While I don’t have any numbers (neither does Joe), I do have both anecdotal evidence and some market studies of digital buying that show impulse buying takes place on the web just as much as it takes place in brick and mortar stores.

First, the studies. According to a study done by Jared Spool, a marketability consultant, 39% of all money spent at e commerce sites are impulse purchases. Spool gave money to 30 shoppers with specific purchases in mind and studied their purchases. 34% of the purchases added other items to their cart that were not planned. This represented 39% of all the money that was given to the shoppers.   Starbucks  has partnerd with Itunes  so that a consumer in the store can immediately purchase the song that is playing.   

Businesses are using new technologies to enhance the impulse buy so consumers can purchase their temptations whenever they want, wherever they are, before the urge passes.

The Times article suggests that digital technologies are being embraced because it encourages impulse buying which is what Esposito fears will be killed with ebooks.   The way in which Apple has been able to capture music sales is its seamless, non cash method, of selling.   

  The whole "buying" aspect of it is so well hidden from the user that you can happily download songs without the "I’m spending money" part of your brain kicking in to stop you. Several people have coined the phrase "iCrack" to describe the phenomenon. iTunes brought impulse buying to the next level.  

SB Sarah  says that buying a book via the Kindle doesn’t feel like spending money. I feel that way about my Fictionwise micropay account.  Commenter Jeff on Amazon says  ”I am like you, I read the reviews and say “OMG I have to read that.” Then click that easy one click button. Before you know it I have bought 6 or 7 books. But I read alot and travel alot so can get through several books per week just sitting in airports and on planes! Love my kindle!”

Many other readers felt the same.   From the inbox, I had this response:

Jessica D:

I am significantly MORE likely to buy ahead on my iPod than in a bookstore. I can’t tell you how many times I’ve walked into my local Borders in the past few months and walked out empty handed, especially with Borders’ recent stocking issues. But on my very first trip to Fictionwise, intending to buy one book, I actually bought three AND have four more on my wishlist, so I’ll remember what caught my eye this time, unlike on my trips to Borders, where out of sight is instantly out of mind.

Keishon

I read reviews online and reader blogs and when I see a book that I think I might like, I go look for the ebook and download it for future reading. I own over 300 ebooks at Fictionwise among other places and I have not read them all. My book purchasing behavior has not changed since I became an ebook reader. I still impusively shop. I still buy more than I read (which I need to curb). I pre-order books that are coming out soon. My point is that nothing has changed since I started reading ebooks.

From Mary K

That’s crazy wrong. I’m not an ebook convert; I still prefer paper. I read from my laptop instead of owning an ereader. Yet, most of my 86 book Fictionwise bookshelf hasn’t even been downloaded yet because I bought the books on a whim or on sale and haven’t gotten around to reading them.

What I found from the emails I have received and the posts I have read and the studies that are easily obtainable, is that there are many types of purchasers. There are those who are going to find the Kindle ease of purchase to be dangerous to their pocketbooks as identified above and there will be those who will change their buying habits to conserve dollars.   

T. Billings more accurately represents Esposito’s theory of the contracting publishing market due to digital books. “Knowing that this might be a problem with me, I’ve set out some rules for my use of the Kindle. I only buy one book at a time and do not allow myself to buy anothr until I’ve finished it. I will download the samples and read them, even possibly deciding to buy it, but I don’t actually do so until I’ve finished the last paid for book. ”

It seems to me, though, that impulse buying is more likely to be curbed by dour economic times than the “just in time” stock method of digital books.   Further, the publishing market analysis that Esposito engages in is only half the story.   

Esposito presumes is that each sold book in a retail store represents an expansive market for publishers. This isn’t true. A sold book doesn’t equal a kept book. Over 40% of hardcovers ordered by a brick and mortar store is returned to the publisher. Each sold digital book is a kept book. It cannot be returned nor can the book be resold. I read one statistic (can’t find link) that said a book undergoes 9 owners in its lifetime. Xandra D made the point to me via email:

[Esposito] neglects to figure in the huge costs involved in producing dead-tree books when he laments the occasional lost impulse sale.

For every book John Doe buys “just in case” there are three that don’t get sold at all (average rate of returns on physical books is somewhere in the 35% range, so ten copies of stock on the shelf means three of them won’t get sold for whatever reason). The bookstore then returns or remainders them (or at least, the covers) for full credit, which means the publisher takes a loss on them (production, warehousing, and shipping for a non-sale that generates no income).

I think that it is hard to say at this point whether Kindle and its kin is an industry killer or an industry diminisher or perhaps an industry grower. Alot of this will depend upon the retailer and how the retailer positions itself to upsell the digital customer to take advantage of the instant gratification that digital books provide. Publishers, retailers, authors should all be thinking of how to maximize the digital platform instead of fearing it. Change can be a positive thing and publishing needs to embrace it.

Related posts:

  1. Eliminating Returns May Reduce Waste but Might Also Reduce Sales
  2. Ebook Readers for 2007
  3. What MLB Fans Can Teach eBook Readers about Kindle and Other EReading Devices
  4. Overall Book Sales Down but Ebook Sales Up
  5. A Romance Buyer’s Guide to eBook Readers

By Jane • Ebooks, Poll • 32 • Tags: , , ,