January 25, 2012

∴ Despicable Me

I thought I did something mildly despicable yesterday. It won’t send me to hell, at least not immediately, but it got me thinking more about storefront business in the age of Amazon.

I was killing a little time browsing the computer programming section at the Barnes & Noble in Charlottesville. Having recently begun an iOS programming course through iTunes U I wanted a good reference book for the Objective-C language.

There, in front of me, was exactly what I was looking for, written by a well-regarded author. It was even marked 20%-off.

I hadn’t planned to buy anything; I was browsing for ideas. Of course my mind went to Amazon. Having a handy little Internet-connected computer in my pocket all the time, I learned that the world’s largest book seller had what was in my hands for about half the discounted storefront price.

But wait, I have an iPad, too, and I use it to read books. Of course there’s a Kindle version of the programming book, and it sells for about a third of the full in-store price.

And then I did the mildly despicable thing by tapping the one-click purchase button. In a blink the book was mine, while I stood in a physical book store whose industry is seeing significant contraction, using the book store’s free WiFi to transact the sale. Ah, well.

I felt a little guilty about the purchase, co-owning a small business as I do. The more I thought about it, though, the more I saw it less as cheating a storefront out of my business and more as the evolution of the book selling industry.

When it’s assumed that consumers have a net-connected device in their pocket all the time, online shops become a direct competitor to storefronts. Storefronts have to find a way to compete on something other than price. Maybe I’m justifying my purchase as a way to assuage my guilt over it, but my realization is valid.

A businessman who competes item-for-item while carrying greater overhead has only customer service and location to set himself apart from online retailers, because he must charge a higher price to make his necessary profit margin. If the customer wants a widget, cheap, and doesn’t require a smile to go with it, then the only defense left to the local businessman is to carry what the online seller does not, or cannot.

It’s really the same thing small businesses learned when Walmart first came to their towns. Going head-to-head against the big boxer lead to ruin. The little guys survived by differentiating on product in addition to customer service.

That doesn’t help Barnes & Noble. They’re selling the exact same items as Amazon, and books no longer require a storefront for browsing. Customer service doesn’t enter into book sales all that much when you can find what you want on your own. Location isn’t an issue if the customer has a tablet device. That leaves price.

B&N also sells an ebook version of the programming book, not that I checked at the time. That version sells for about 50% more than the Kindle edition. Apples to apples, B&N would have lost my sale anyway.