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Disintermediation Finds Books

August 9, 2010 10:12:05.069

With the drop in price of e-readers down to $139 (and I'm guessing we'll see $99 by Christmas), the era of the big box book store is ending. The high end will be owned by the iPad and whatever Android based devices come out - the low and mid tier will be owned by the Kindle and it's competitors. The losers will be printed books, which will end up being a niche product. Just witness what's happening to B&N:

Perhaps the most symbolic event this week was Barnes & Noble “exploring strategic alternatives,” including putting itself on the block. When America’s most iconic bookstore is struggling to make it, this is not a good sign. As I say in my analysis, over the next few years we’ll see the “hammer of low-priced e-books steadily nail coffins shut across the book-retailing landscape.”

A decade ago, my entire family looked forward to a trip to Borders or B&N. We'd easily drop a ton of money on books, and spend a happy hour or two browsing the aisles. We just don't do that anymore. Why? Well, the Amazon store is the primary reason.

Even before my wife and i got iPads, we were browsing the virtual bookstore more often. The selection is better, and between recommendations (based on past purchases), and "people who bought X also bought Y", we've both found things we would never have found in a physical store. Now add in the instant gratification offered by an e-book, and you've got full disruption. Finished book one of a trilogy at 11 PM, and can't wait for book 2? With an e-reader, it's a few seconds (and dollars) away. With a physical store (or even an Amazon shipment), it's at least a day. Doesn't sound like much, but eliminating the wait makes purchasing a whole lot easier.

It's beyond books though. Every so often I need a new A/V cable of some kind, or a new USB drive, or a replacement router. Once upon a time, that meant a trip to best Buy. Now? I hit Amazon, and either take the two day shipment that I have via Prime, or pay a little extra to have it tomorrow. Saves me a trip, and I usually don't need the item this very second. Outside of things like clothing, where you want to try it on, I think a lot of the big box retail is going to start running into a huge buzzsaw. Even groceries, which I thought were secure from virtualization aren't - we now order from Peapod as often as we go to the store, and that percentage is rising. It wouldn't surprise me much if the trend towards mega grocery stores reversed, with mega warehouses replacing them, along with smaller shops for trips you need to make.

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posted by James Robertson

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