Last night at the IPG Digital Quarterly Meeting the guest speaker was James Daunt, he was there to discuss Waterstone's 'deal with the devil' and their plans for digital book selling, this is my view of what happened.
The was only one place to start, why get in bed with your biggest competitor? Clearly from a number of Daunt's comments throughout the hour in an ideal world this is not a relationship he is 100% happy about, mainly because in his own words 'in an ideal world Amazon would have gone bust.' But the reason they needed a deal was, and he blames his predecessors for this, they hadn't developed their own eReader at the start of the digital boom, instead they stocked a mish-mash of low-quality hardware (Sony excepted of course) that he got rid of as soon as he took over.
To jump into the eReader market now would take them 10's of millions just to catch-up and they don't have the time or resources to do that, so they are waiting for the type of hardware readers use to become irrelevant so they can concentrate on being a content seller. So instead, in his own words, they will be selling the very best reading devices on the market because that's what their customers expect and with this deal they are 'making themselves relevant in the digital arena'. That said it seems the space dedicated to digital in store will be limited to no more than that of a grand piano.
For a company that prides itself on service to its customers one surprising comment from Daunt was that he didn't think their customers 'would give a monkeys' that Waterstones was selling Amazon products - personally I think that's a little cavalier. As we all know Waterstones has moved further into book related products, seemingly trying to emulate B&N, I can vouch for that as there is more Lego on sale in store than in your average Toys R Us, and he sees Kindle and Kindle Fire as welcome additions to that list.
While he wouldn't be drawn on the financials of the deals he said we would be able to tell if the deal was going well based on how long the partnership continued. He also said that as yet you can't tell how many of your Kindle sales are through Amazon and how many through Waterstones. An interesting aside is that the deal isn't exclusive on either end, Waterstones can continue to sell ePubs and Amazon are able to set up the same deal with other shops - maybe there is an opportunity here for the indies.
One of the areas he was excited by, as a growing digital retailer, was the idea of print and digital bundling, though he thought that should carry a small cost to the consumer. Looking forward to Christmas Daunt sees this as another season where digital will make significant growth, and with the wealth of good, cheap tablets and eReaders out now who isn't expecting to see some level of growth on the horizon.
So how does the deal work:
- If you buy your hardware in Waterstones they 'have an interest in that' and also in any books you buy on it wherever you may be
- If you bring your hardware in store and link up to their wifi then anything you purchase in that store they 'have an interest in'
Whether you think this is a bold and creative move from a retailer unable to build its own platform or the desperate actions of a crumbling empire taking an economic bailout from its enemy we are certainly seeing a coalition none of us could have predicted.
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