Marketing services
The UK Book Retailing Sector
The growth of the Internet especially in the 21st century has revolutionized the way business in all industries across the world. Booksellers in the United Kingdom are grappling with the growing shift from print to digital media, which has introduced significant changes in the bookselling industry (Dennis, 2004, 54). Online book retailing has been around for a long time, and is currently dominated by Amazon.com, Waterstones and WH Smith. The competition among UK’s large chain booksellers has thus grown intense in the e-reader market, both in new and used books. The major companies have focused in developing websites that offer bestseller lists, autographed first editions, online bookselling, bookstore events as well as discounts for their offerings (Maxwell & Miller, 2012, 28).
An e-book is defined as a book-length publication in digital format, consisting text, images, or both, produced on and published through, and readable through the computers or other electronic devices. As such, e-books are usually read on customized hardware devices known as e-book devices or e-readers. Personal computer and other mobile phones are used to access the contents of the e-books. At the moment, there are more than 25 varied e-book formats which differ in a number of features together with the supporting hardware.
Online book consumers respond more to advertising and website spending than to low prices. As such, advertising-to-sales ratios and market-concentration ratios are comparatively higher in the online book market as compared to traditional bookselling. Consumers also increasingly prefer the online book shopping because the relative higher efficiency brought about by faster shopbots or search engines (Maxwell & Miller, 2012, 29). As evidenced by the results of the last quarter of 2012, traditional book retailing in the UK have continued to face a tough trading landscape in the recent past, experiencing contracting sales as a result of increased surge in online book sales together with the growing popularity of e-books. The trend is projected to continue to 2017-18. The illustration below shows the online model through which book retailing in the UK is conducted:
The customer order over the Internet and the order forwarded instantly to the online book retailer chosen. The online retailer lacks a physical presences, translating that customer reviewing of product offering, placing of orders, and payment occurs on the Internet to the retailer, who often forwards to the supplying wholesaler. The received and paid for orders are usually shipped from the wholesaler directly to the customer, and in so doing away with the need for a physical inventory of books.
The Competitors
The UK online book retailing has a number of players which include: the flag retailers; publishers, wholesalers, and other mortar and brick book store chains and super stores; mail order retailers; and other indirect competitors (selling videos, CDs etc). the increasing popularity of e-books has put significant pressure on the players in the UK online book retailing are faced with constant challenging searching for and stocking titles that are on demand by consumers (Egan, 2007, 65). A number of book retailers in the UK have been successful in incorporating online retailing into their business model, while maintaining and sustaining their brick and mortar formats. The online book retailing companies in the UK are Amazon.com, Waterstones and WH Smith.
Amazon.com
As of Q4 2012, Amazon.com was the leading online book retailer both in the United Kingdom and the world. The company was incorporated in Seatle, Washington in 1994. Since the launch of its website in July 1995, Amazon.com has experienced rapid growth in the online book retailing. It was the first to market the new concept of retailing books online on a large scale.
Amazon’s Q4 2012 (ending December 31) results revealed a significant increase in sales but a considerable decrease in profits. The net profit dwindled by 45 percent to $97 million, or an equivalent of 21 cents per share. Compared to the same period the previous year, Amazon.com generated $177 million, or 38 cents a share. There was a sales growth of 22 percent to $21.27 billion while operating margins increased to 1.9 percent from 1.3 percent. In Q1 of 2013, Amazon.com expects to earn revenue of between $15 billion and $16.6 billion, a 14 percent or 26 percent increase respectively relative to Q1 of 2012. It also expects a profit of $65 million and a loss of $285 million. E-book is indeed a multi-billion dollar category for Amazon.com and growing rapidly.
The success of Amazon.com has been because of its strategies to offer its customers such compelling value as high quality content, a wide selection of products, high level personalized customer service, in addition to competitive pricing (Maxwell & Miller, 2012, 30). The leading online book seller, through use of innovative technology and the Internet, has continued to grow its catalog to in-excess of 5 million titles, personalized shopping services, user-friendly search and browse features on its website, email services, web-based credit/visas payment options, and direct shipping to customers. Amazon.com boasts of a virtually unlimited online shelf space in which it offers its customers a broad selection accessed through a highly efficient search-and-retrieval interface.
Amazon.com did to the online book retailing what Wal-mart did to the physical retail world. Its principle competitive factors are brand recognition and customer focus. Amazon.com has invested heavily in Research & Development, gaining significant understanding of the needs of the customers and striving to meet them. Amazon.com has over 9 million registered customers and over 65% of its business comes from repeat customers. The competitive advantage of Amazon.com also comes from the fact that it established its foothold in the online book retailing market long before any of its current major rivals (Dennis, 2004, 89). Amazon.com has endeared itself to the customer through its unmatched customer focus through such practices as excellent utilization of e-mail communication with the customer, both before purchase and after purchase. This has helped to increase customer lifetime value through increasing customer loyalty as well as minimizing customer defections. Furthermore, Amazon.com has been boosted by its tactical moves to enter into partnerships and acquisition of product/service providing companies on the Internet that serves its niche market (Bowman, 2007, 89). Amazon.com has worked hard to create value for the customer through one-click shopping, giving recommendations and consistent notifications for new available books. The company has a rich database containing customers’ preferences, which it uses to notify a customer by email whenever his/her preferred subject is available.
Waterstones
Waterstones is a British book retailer operating 3288 stores and having a workforce of about 4,500 in the United Kingdom and across Europe as of last quarter of 2012. In addition to the Waterstones brand, the company is the owner of the London bookseller Hatchards, as well as Irish store Hodges Figis. An average sized Waterstones store offers a range of merchandise of approximately 30,000 individual books, stationery and eBook readers. Waterstone’s culture is to make each branch a part of the local community, where buying decisions of individual branch is meant to directly reflect and respond to demands of the local customer. Since venturing in the e-book market in September 2008, Waterstone has sold in excess of 100,000 e-books as well as 90,000 e-book readers by Q4 2012. The company increased the quality of e-books offering in the last 12 months. During the year, Waterstone connected with Amazon’s Kindle, selling the device and experiencing significant growth in sales of e-books. Customer’s are able to browse for books digitally besides searching Waterstone’s online special offers. The company expects its online book category to account for 8% of the entire market by 2013.
WH Smith
WH Smith plc is a British retailer, with headquarters in Swindon, Wiltshire, England. WH Smith undertook its first major move into the highly competitive electronic books market by signing a distribution deal with a Canadian group, Kobo. The move meant to complement Smith’s traditional print books model, enabled the company to sell electronic readers via its stores and website. Customers are able to access a broad e-book catalogue of more than 2.2 million titles as well as 1 million free books.
During the Q4 2012 (ended January 20, 2013), WH Smith experienced a decline in sales but posted improved margin. The group’s total sales dropped 4 percent and a 5% decline in like-for-like sales. However, WH Smith’s gross margin improved rather strongly because of the company’s strategy to exert tight cost control that helped in underpinning its profits.
The greatest challenge faced by consumers accessing and purchasing online books offered by the different e-book retailers in the UK is the lack of central entity that gathers information in an organized manner.
External Marketing
The need to build a market and generate revenue from the vast consumer demographic has made online book retailing to employ a variety of long-tail marketing strategies, which make use of internet technologies to a larger extent. Many of the major players in the industry have adopted self-publishing as an effective marketing channel. Amazon, for example, has used its Encore and Kindle platforms to radically transform its traditional sales and marketing techniques. Such revolutionary external marketing strategies – not possible in the traditional print format – have the potential to turn a small retailer into a force to reckon with in the competitive dynamic e-book retailing market.
The online book retailers have increasingly taken advantage of new media marketing, by developing and managing social networks as well as online or virtual communities so as to diversify their reach (Spector, 2012, 56). As such, the companies are able to tap into the low-intensity, low-frequency consumer in more cost effective manner through such tools as blogs, podcasts, and RSS feeds. There is also intense use of buzz marketing among the competitors. This involves the strategic utilization of word of mouth together with transmission of valuable commercial information from one person to another, both in an real-world and online environment.
Viral marketing is also another element of external marketing that book retailers have taken great advantage of. This is the characteristic intentional passing on of marketing messages using such means as preexisting social networks, where emphasis is greatly on the casual, non-intentional and low cost sites such as YouTube, viral messages, as well as standalone microsites (Experian, 2011, 9). Finally, the book retailing sector has increasingly taken on the Pay per click strategy and search engine optimization. They use marketing websites offered by such established search engines as Google, Bling and Yahoo, where the focus is on long-tail keywords that lack much competition.
Internal Marketing
Internal Marketing is prominent in the UK book retailing sector. Internal marketing entails marketing skills, tools, techniques and methods employed in the internal market i.e. within the company, to achieve synergistic effect of its employees in line with corporate objectives, the mission as well as strategies of the company. There is a concerted effort among the competitors to have their employees knowledgeable about their companies, build confidence in it and its product/service offerings so as to execute their duties in an optimal way (Experian, 2011, 13). The major book stores in the UK have realized the important role of their workforce and their relation to the organization in affecting the overall quality, service rendered to buyers, and ultimately, the overall sale of e-books and e-readers. Internal marketing also serve to bring about faster appreciation of all activities of the external marketing activities of the book retailing companies (Spector, 2012, 33). The book retailers have embraced internal marketing as a tool for motivating and empowering their employees, who in turn create a positive experience for the customers.
Conclsusion
Online book retailers in the UK, as is the case elsewhere in the world, play the role of supplying digital books to the end users. The retailers are categorized into commercial booksellers and e-book websites who merchandise the content for specific devices. In addition, the retailers often publish free-to-access content or archive out-of-copyright copies of works. The retailers also engage in sale of e-readers devices, thus offering a variety of complement products. Online consumers are more concerned with unobservable quality which makes online book retailers to characteristically depend heavily on advertising as opposed to store location as is the case of traditional retailers. There is therefore need for online book retailers to reevaluate their marketing strategies so as to remain relevant in the increasingly competitive sector.
Bibliography:
Maxwell, R., & Miller, T. 2012. Greening the media. New York, Oxford University Press.
Dennis, E., C., & Fenech, T., & Merrilees, B. 2004. E-Retailing. London: Routledge.
BOWMAN, J. H. 2007. British librarianship and information work, 2001-2005. Aldershot, England, Ashgate.
EGAN, J. 2007. Marketing communications. London, Thomson.
SPECTOR, R. 2012. Amazon.com get big fast ; inside the revolutionary business model that changed the world. [S.l.], Must Read Summaries. [Online] available at< http://www.contentreserve.com/TitleInfo.asp?ID={9DB29A83-E5E6-4141-BE3B-9D5EFD4C447C}&Format=410. > [Accessed 19th March, 2013].
Experian 2011. The Changing Face of UK Retail in Today’s Multi-channel World. [Online] available at< http://www.experian.co.uk/assets/business-strategies/white-papers/RWC-whitepaper2.pdf > [Accessed 19th March, 2013].
