Tuesday, December 6, 2011

Online Sales Hit Bookstores Hard

Vidya Virkar, owner of 60-year-old bookstore chain Strand Book Stall, is worried . Strand, which has a base of loyal customers in Mumbai and Bangalore, has seen sales dipping over the past few months and Virkar feels this is directly related to more and more people buying books online through e-commerce websites. 
"Strand thrives on a high-discount model and we routinely offer great discounts , both in our stores and through our website. But there's no way we can match the kind of discounts being offered by online booksellers," says Virkar. 
Industry experts believe online booksellers offer books at prices lower than the cost price. Typically, retailers buy books at prices that are 30%-40 % lower than the list price (the maximum retail price) and within this margin, they can fix prices at their own discretion keeping in mind their overhead costs and profitability. 
Virkar's fears are echoed by Mayi Gowda of the 10-year-old Blossom Book House. "We have seen sales dipping by almost 20% -25 % in the past few months, and this is most apparent in bestsellers and new books. At the same time, rents and other operating costs have gone up. Yes, I am worried," says Gowda, explaining that online operators don't have these issues as they procure books from distributors only after receiving orders and don't have to maintain large inventories. 
Sivaraman Balakrishnan, deputy manager (marketing), Crossword, strikes a different note when he says the market is big enough to accommodate both online and offline retailers. "Most brick-and-mortar bookstores have concentrated on the metros and Tier-I cities, whereas e-commerce sites can reach out to smaller cities," he says. 
He claims the two categories that account for almost 50% of sales - fiction and children's books - will not be affected by online buying. "Bestsellers priced at less than Rs 200 are affordable anyway . Even with a discount, the price differential isn't big enough to lure away customers from offline stores. Children's books have never done well online," he says.

Read the entire article here

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