Indigo Struggles to Keep up With Amazon and B&N

In an exclusive interview with the Toronto Star, Heather Reisman talks about Indigo (the company behind Chapters and Kobo) and it's struggle to compete with the world powers of book selling: Amazon and Barnes and Noble.  Here are some excerpts after the break:




First about their brick and mortar operation:

“Indigo is in the business of encouraging people to read,” Reisman explains, in a rare sit-down interview in her light and airy office in the King St. W. entertainment district. “We don’t care if people want to read digitally or physically.”

Indigo’s bookselling counterparts in the U.S. are already in deep trouble. Market leader Barnes & Noble Inc. is a takeover target.

Meanwhile, rival Borders Group Inc. is operating in bankruptcy protection, a third of its 642 stores shuttered.

Indigo has so far escaped the worst by having fewer direct competitors in the superstore category (it bought out rival Chapters in 2001) and by diversifying sooner.

Still, business is hurting. Indigo’s sales rose by 5 per cent last year, but profit fell by two-thirds to $11 million as Indigo invested more heavily in e-books and new merchandise.

Toys and gifts have taken over more space in its 97 largest stores. This fall, the stores will begin carrying home decor, some designed exclusively for it by a New York studio.

Then later about their ebook sales... 

Kobo is doing well. Sales jumped to $60.9 million for the year ended April 2, from just $800,000 a year earlier, when it launched.

But it accounts for just 6 per cent of Indigo’s total revenue so far.

And profit margins on e-books are so slim that the only way to compete is in the global market, where other players have a head start and greater brand recognition.

In the U.S., Amazon.com’s Kindle is the market leader with a 41 per cent share, followed by Barnes & Noble at 27 per cent. Kobo ranks third somewhere “in the double digits.”

Kobo has the largest digital library with 2.3 million titles and its technology is compatible with a variety of devices.

But Amazon.com was able to boost e-book sales by charging just 99 cents a copy until publishers successfully fought the deep discounting.

For the whole article go here