Barnes and Noble: An Omni-Channel Fumble

This morning I was looking for a reference book on Hadoop. My go-to source always starts with Amazon. I'm an Amazon Prime customer, their search is already filtered / optimized to help me find relevant books, their prices are always competitive, and usually the reviews are very useful.

However, with some spare time today, I wanted to start reading it today. My choices therefore were to download it to my Kindle or to buy at a brick and mortar retailer. I usually prefer to have a physical copy of technical reference books, so over I popped to Barnes & Noble and found the same book at a comparable price:

Given Amazon's usual lock-in, this was a golden opportunity for B&N to earn a piece of business that would 9 times out of 10 go to Amazon. The big font "Pick Me Up" told me the item was in stock at my local store. So, I was ready to buy it and head downtown right now. The problem arose, however, when I clicked through to buy it:

The price had reverted to $49.99. Now as much as I want to buy this book today, I'm not prepared to pay a 44% surcharge for that convenience, particularly when I have free two day shipping with Amazon via my Prime membership. While I can understand that B&N carries the additional real estate overhead and needs to somehow pay for those storefronts, frankly that's not the customer's problem. I'd be just as happy if they were flogging the books from the back of a flatbed off the side of the road if it meant I could avoid this levy.

So, here we have a situation where the brick and mortar retailer has done so much right to grab that sale in a way that Amazon cannot - immediate gratification. Barnes & Noble should win this head to head every single time. Instead, it's treating me differently based on where its inventory is ultimately being picked and is losing a sale in the process.

I saw a similar situation a few weeks ago when my downtown Banana Republic had a 40% off sale on everything, but didn't have my size on a particular item. When I got home, I was able to order the item online in the correct size but at a 30% discount. In that case, I went ahead with the sale even though I was a bit annoyed that they were extending different discounts across channels.

As retailers commit to omni-channel, the customer has to remain foremost in the decision-making process, particularly in a world where Amazon has done such a great job of locking-in most categories. In the case of Barnes & Noble, their business model is hobbled by the legacy costs of what's essentially a commoditized category and as much as I'd like to see them remain in business, if only to ensure that Amazon has competitors, it's hard to envision a scenario where they can compete effectively, particularly when they score own-goals with an otherwise loyal Amazon customer.

Update:

Curious to see if the in-store folks at B&N would do anything if I pointed out their online price, I went to the store and after pointing out the price discrepancy to the cashier, he said he wishes they'd raise the prices online to eliminate confusion in-store!! Upon telling him such a policy was doomed to fail, he pointed to the long line behind me (there was only one cashier on duty) and said that plenty people don't seem to mind such pricing discrepancies. Not exactly a very enlightened attitude but about what I expected.

Foster the People

Last weekend, I spent time with an old friend who's the founder of a successful and growing primarily online specialty retailer with a smaller brick & mortar footprint.

After an evening of paddle-boarding around a peaceful bay in Puget Sound, we rustled up some dinner,  cracked open a bottle of plonk, and animated conversations ensued.

With the inevitable catching up on how everyone was doing out of the way, the topic turned to retail and specifically Amazon's recent foray into outdoor sports (the same space my friend works in). When asked if he was concerned about this development, my friend responded that, in his opinion, any retailer, whether they're online or offline, that hasn't gone to the trouble of building a community around their brand will die since there is no point of differentiation.

Rather than fret about Amazon's encroachment into his space, he's betting that they'll clean it up and at one end of the spectrum, you'll have Amazon - the online behemoth vending outdoor equipment, and at the other end of the spectrum you'll have companies like his that have spent years building a brand that's 100% focused on a community of action sports enthusiasts. Everyone else who sits in the middle - neither an absolute lowest-cost provider nor a brand that people care about will be gone.

I should point out that his assertion that people care about the experiential aspect of buying products does not come at the expense of eschewing the benefit of analytics. Rather, analytical prowess for any retailer is just table stakes these days. If you don't have that competency you don't exist. Simple as that.

What we both agree though is that unless you're Walmart or Amazon, your point of differentiation has to center around your customers or users. So many retailers these days are struggling because they want to compete on price, they want to compete on local assortment, they want to compete on analytics, etc. The list goes on and on. In the end, they lose on all fronts against more disciplined competitors.

Coming back to tech - the parallels are just as relevant for us as we build the Härnu brand. That algorithms will automate more of our lives is inevitable. Their utility in helping to remove friction is tremendous. However, while the chorus of geeks imagining a fully-automated world surrounded by contextually relevant data cues grows daily, I instead imagine something a bit more nuanced - a world where dispassionate algorithms give us what they've been programmed to think we want in some situations, and in other situations we'll seek out the messy, irrational, and fun experience of human-led interactions.