Familiarity breeds success in Web retailing

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Best sellers lined along the entrance. Book purchases bagged in plastic before being sent to customers--and most packages joined by a reading group guide or thank-you note acknowledging the purchase. Customer service reps mailing reminders of new releases to regular customers. And that's just the online experience at WordsWorth Books, a Cambridge, Mass.-based bookseller.

In its effort to make the Web site mimic its three retail locations in and around Harvard Square, executives with the 23-year-old retailer have taken strides to warm up the potentially cold virtual shopping venue it's been honing since 1993, notes General Manager Sanj Kharbanda.

PRICE ISN'T EVERYTHING

"The goal for us has been and will continue to be to replicate an independent presence on the Web," he said. "Price isn't the only value you can give customers. Customer service is one of the things people value in our store, and that's one of the things I make sure we offer online," Mr. Kharbanda said of WordsWorth, whose three storefronts have 125,000 titles but whose Web site boasts more than 1 million titles.

WordsWorth has company among independent bookstores turning online to seek incremental sales. Recreating a bricks-and-mortar experience could be key for traditional retailers keen on successfully taking their commerce online, say industry executives.

Their future may depend on imitating the retail experience--and expertise--online to compete with the likes of Amazon.com and Barnes & Noble, experts say. Amazon.com can provide millions of books at deep discounts, but local retailers bring specialty niches and a sense of familiarity.

Powell's Books, a bookseller in Portland, Ore., has created a niche with used books, selling more than $3 million of books last year online alone, store executives said.

TAPPING LOYALTY"

[Independent booksellers] offer features and functionality that speak to loyal customers," said Krista Pappas, senior analyst for travel and books with Gomez Advisors. "They have developed these relationships offline with customers coming into the store. So they've carved out a unique niche that they've developed offline as a natural extension of the business and they can grow it online."

PRESSURE FROM BOTH WORLDS

To be sure, indies are under pressure, both from bricks-and-mortar giants such as Barnes & Noble and from Amazon.com on the Web. In 1997, indie stores sold 183 million books, or 17.2% of all books sold. In 1998, that number fell to 172 million, or just 16.6% of all books sold.

But independents can avoid getting Amazoned by adopting their own carefully crafted Web strategies. The ranks of independent booksellers going online will grow as e-commerce becomes more accepted, Ms. Pappas said. While executives admit they cannot compete on price alone, most customers are drawn by convenience and choice, she said. So the most pertinent question becomes whether booksellers can differentiate themselves enough online to warrant a customer ferreting them out and making a transaction, Ms. Pappas added.

The American Booksellers Association is creating BookSense. The site's home page, slated to debut this fall, promises visitors they can "Experience the world-famous personality of your locally owned, independent bookstore." This site could represent the future for independent booksellers online, Ms. Pappas predicted.

A CHANGE IN THINKING

Growing share online requires different thinking for many independents, executives said.

WordsWorth touts its Web site on its shopping bags, customer newsletters and the electronic magazine it e-mails to customers, and spends upwards of 45% of its annual marketing budget steering traffic to its Web site, which this year is expected to account for about 15% of WordsWorth's total sales.

Powell's Books spends $100,000 to market its seven Portland-area stores, but $300,000 to advertise its Web site launched in 1993, said Kanth Gopalpur, manager-online marketing. The result: Ten percent of its $37 million in sales last year came from its Web site, he said. The number should grow to 20% of $40 million by next year, he predicted.

Ads, created in-house, tout the site as mirroring Powell's focus on used, out-of-print and hard-to-find books, he said.

The result has been compelling. Used books amount to 85% of online sales as opposed to 50% of sales at the storefront locations, he said.

ONLINE COMPLEMENTS RETAIL

Not only will Web sites increasingly mimic real stores, virtual stores will provide services that complement retail locations, said Steve O'Keefe, director of Tenagra Corp.'s Internet publicity services, which promotes books and authors over the Web.

"Since they cannot offer coffee online, they need to offer sign-up for events, newsletters and other offerings independent of selling books," said Mr. O'Keefe. "They have the advantage of walking [purchases] to their customers."

From a searchable database to the eight PCs stationed throughout the store, the distinction between real and virtual shopping will continue to blur at WordsWorth, Mr. Kharbanda said.

SHARING A LOVE OF BOOKS

At Powell's, online provides ample real estate to grow sales, Mr. Gopalpur said.

"We're not trying to be an Amazon or B&N. But we've managed to replicate the experience of being in a bookstore online," Mr. Kharbanda added. "We don't believe in creating a one-to-many relationship."

"An independent store brings in some things that a chain or a database can't bring to you," he said. "I want to take that and replicate it online. Ultimately most of us who are here love books, and we want to show that love for books online. That may be a quaint idea." And it may be an idea whose time has come.

Copyright September 1999, Crain Communications Inc.

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