Last week the Rudd Government upheld the law which states that Australian book stores can not import any book which has been published within Australia within 30 days of its international launch. This law is in place to protect Australian publishers. The challenge to the law came from Australian book retailers who claim that it keeps their prices inflated and does not allow them to compete with the online book industry.

But what does this protection mean for consumers? Are we getting ripped off if we walk into a shopping mall book shop? Combined with increased online competition, do these restrictions mean physical book retailers no longer offer us value?

On the weekend I set off to find some answers. I compiled a list of 23 books which will be popular this Christmas. I picked a collection of 23 books which were being flogged in Christmas catalogues and appearing in various top 10 lists. There was a mix of international and Australian titles. They had to be considerably mainstream and new releases. This is the book basket:

(Don’t mock me… who doesn’t dream about waking up with Harold Mitchell, Matt Preston and Harry M Miller under their Christmas tree?)

In total there are 23 Books with a total RRP of $1,042.04.

From here, I went into Garden City Westfield to hit the department stores and book retailers to check price and availability. I recorded all prices as they would have registered at the cash register (ie. if it was a sale price, the sale price was noted). If it could not be found on the shelf it was classed as ‘not available’.

This was then compared to major online retailers. These retailers were selected for their dominance over a long period of time as well as some who are beginning to gain some ground as cheap and reliable stockists. If they were an international seller, the currency conversion was calculated at the current rate ($A1 = $US0.9345 and £0.5562). Postage was calculated at the cheapest rate by bundling the basket of goods (only the physical bookstores online and Amazon charged postage fees).

Results:

A full breakdown of items and can be found here.

Findings

- Amazon offered the greatest discount (48.3%) but had the lowest amount of books available (5/23).

- The segment which offered the greatest discount was the physical department stores. Of the two, Big W also had availability well over the average of 18 books.

- The physical book retailers who have extended their business online were the most expensive but offered 100% availability.

- The Australian online stores (The Nile and Fishpond) offered a much lower discount to the international online stores (The Book Depository and Amazon). However, in all cases the Australian online stores had more titles available.

Considerations

This research was conducted when the Australian dollar was very strong. The international online shops would not be as strong on comparison if it was conducted when the dollar was lower. These are all new release and popular titles for a mass audience. It is likely the results would be much different if the book basket included older, more obscure titles.

Learnings

Traditional book retailers can’t rely on price to compete for mass sales.

Online book stores are not even the greatest competition. The large department stores are actually significantly cheaper than both physical and online book stores for these mass titles. This represents great competition for book retailers when in most cases these department stores are located next door (or in the same shopping complex) to the book retailers. And range isn’t an issue. As Big W shows, the department stores have plenty of current and popular stock available to convert the majority of sales.

The online offering doesn’t appear to be quite as much of a threat to the survival of Australian book stores. The international book retailers are significantly cheaper but struggle when it comes to range, especially for Australian titles. The Australian online stores have a similar price offering but much lower availability.

While it may be narrow to look only at price and availability, I believe that there are two selling points physical bookstores should be aiming to hang their hats on:

1) Immediacy and convenience. There is the chance that you can not access a department store (or they don’t have the stock) and you need the book now. However, would you pay 20% more to purchase a book now or wait 5 days to get it delivered to your door? It’s not a strong argument.

2) Experience. Creating an atmosphere which encourages touching, feeling and smelling the books. Make consumers comfortable and relaxed in their surrounds. Create physical communities for book lovers. Borders and Mag Nation have figured this out and are the leaders in new school book retailing. Focus on up selling, recommendations and information. This is how physical bookstores will survive.

The picture is even grimmer for the physical book store’s online presence. They are easily the most expensive. There is no innovation to their online shopping experience, it is purely a carbon copy of the physical bookstore but without the physical experience. They too need to create an ‘experience’ for their consumers. The question is, how do you achieve this so late in the game when Amazon have established one of the largest communities on the net?

In the end, it won’t be the government protection which kills the physical book store. They are already getting eaten by their bigger physical neighbours in the form of department stores. Sure, lifting the import ban may help ease the pain a little but it ain’t going to take away the walking stick. To be truly competitive they have to focus on the customer experience and building a community to which they feel loyal and involved. It is only then that consumers will ignore the big guy next door or quick quote through their phone browser.

This is a big shift for an industry traditionally focused on retail.

Do you agree? Do you think there is a future for physical book retailers?

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