went bankrupt in 2011, couldn’t find a buyer, and ended up being liquidated. Now Barnes & Noble is
losing tens of millions of dollarseach quarter and seeing its stock tank. Meanwhile, Amazon has released a rapturously reviewed new Kindle and seen its stock price reach new highs.
A new NBER working paper looks at how people find and buy books in 2013. The shift to digital music has already largely happened, but we’re only in the middle of the switch for books. Based on a variety of data on search behaviour, things are looking bad for Barnes & Noble and other retailers.
First, a chart of declining sales at brick-and-mortar bookstores. Although Barnes & Noble recoups some of that loss through its website and Nook reader, these areas are dominated by Amazon.
One of the biggest differences that the researchers found is people are now much more likely to look for books internally within a website or app than to use an external search engine.
That’s where Amazon has the biggest advantage. Things like one click ordering, Amazon Prime, price competition, and the huge number of other products mean far more people are already on the site. To compare the number of searches on Amazon with other book sites, the authors needed to include another scale that was 10 times larger. Not all of those searches are book related, but many are.
The other trend the authors found was that more people are doing their searching and buying within a closed ecosystem, like a Kindle or Nook. Amazon wins this battle too since the Kindle is far more popular.
Barnes & Noble did better at managing the digital transition than many of its competitors. But it can’t compete on price, in hardware, or as an ecosystem with Amazon, and it’s difficult to see that changing any of those.
As for everybody else, the market keeps getting squeezed. Specialty stores, very large urban centres, and things of that sort probably have a future. It’s only going to get harder for everybody else.
Read the full paper here
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.
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