Blogs

Waterstones and Kindle

25.05.12 | Neill Denny

James Daunt’s resolution of Waterstones’ e-reader problem—teaming up with Amazon to sell the Kindle and e-books—was not something many would have guessed even a week ago. The Kindle tie-up was merely the most eye-catching part of a wider story encompassing new stores and own-brand cafés which, taken as a whole, amount to a new vision for a Daunt-led Waterstones.

The idea is to create modern, attractive stores people want to visit and spend time (and money) in, with a stylish “Café W” selling coffee, cakes and, for those clutching a Kindle, e-books too. More than 100 stores are believed to be being refitted, and cafés rebranded, in an investment that can leave little change from £40m. Some have argued the money would have been better spent on a Waterstones Kindle, but clearly Daunt felt the chain had neither the time nor expertise for that—and the store refit had to be done soon anyway.

The deal with the “money-making devil” of Amazon clearly goes against Daunt’s widely-declared principles, but perhaps as the facts have changed, so has his opinion. Caught between the devil and the deep blue sea, he chose diabolism over drowning. His wider duty is to the business, and he needed an e-reader by Christmas.

The logic for Amazon is less tricksy: access to hundreds of stores and thousands of customers, an implicit endorsement from Waterstones—still worth a lot with heavy book-buyers—and permanently blocking any potential Nook/Waterstones tie-up. But of all these, the customers are the most vital. Sitting in Café W buying an e-book, these customers are shared between Waterstones and Amazon—but when they walk out the door, the likelihood is that they become solely Amazon.

Customers are the ultimate arbiters of Daunt’s vision, and from their point of view two strong brands have just done a deal to offer them an even better place to buy books in all formats.

The pressure now swings to rival players to come up with an equally strong offer. W H Smith/Kobo no longer has the field to itself, while the BA/indie deal (with Anobii, Kobo or Hive) becomes more vital.

Publishers (Hachette excepted) were kept in the dark by Waterstones, and woke up to an unpleasant new reality on Monday morning: half the retail market in an alliance. But, ultimately, if the deal is the price of a healthy Waterstones, they will learn to love it.