The Bookseller.com

18th May 2008

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All to play for

01.05.08 Sarah Butler

Just four years ago, few in the book trade would have taken much notice of Play.com. The online retailer, founded in 1998, focused on selling CDs and DVDs mainly to young, tech-savvy men. That changed in 2004 when the Jersey-based business started selling books. It has since quietly built itself into the UK’s second-biggest online books player, and is planning dramatic expansion over the next few years.

The goal, says Stuart Rowe, Play.com’s managing director, is to ­double or treble Play’s book sales over the next 18 months. “We see books as a massive opportunity. We have achieved number two in the market and yet there are so many more things we want to do.”

It is understood that Play has between 2% and 4% of the UK online book trade, just ahead of Waterstone’s. This, of course, lags far behind market behemoth Amazon, which is thought to control a staggering 85% share of web-based book sales through its US and UK sites.

Despite ­Amazon’s domination, the imminent launch of Borders’ ­transactional site and the recent relaunch of Waterstone’s, Rowe believes Play can tap into a different market: “Over the next 18 months, we see books as a key part of our offering. We think we have the demographic that really suits introducing books to people not noted for going into Waterstone’s and that kind of serious, dry, and I could say stuffy, kind of store. We can also bring cross-marketing between products such as books and films. Cross-merchandising across dif­ferent ­categories really works for us, and we can do a hell of a lot more on that.”

Retail analysts say that there is no reason why Play can’t seriously step up its position in the books market, but stress it has more chance with younger shoppers who are already using its site to buy music and film than the wider public. However, one analyst says: “They have now got to the size where they can afford to market themselves and extend their footprint.”

Expanding the range

With its core DVD and CD markets under pressure from cheap, or even free, downloads, it is no surprise that Play is looking to stretch into new categories. There is also concern that the government may eventually clamp down on the EU tax loophole that allows items under £18, such as CDs and DVDs, to be exported into the UK VAT-free from Play’s Jersey base.

Play recently introduced categories such as computing, electronics and mobile phones, and is set to expand further next year as it tries to diversify away from the entertainment world.

“We would never move into garden furniture,” Rowe insists, “but DVDs and music are intrinsically linked to electronics and are a natural fit with books, which are often using the same ideas or stories as our DVDs. It is a very attractive market and almost the missing link in pulling those ­categories together. We see the whole business benefiting from having a strong, growing and attractive books business.”

As Play increases its ranges, it is seeing an expansion in its customer base, which now stands at just over seven million registered users and includes equal numbers of men and women. Rowe says that over Christmas the site sold “a ton” of Disney DVDs, suggesting Play is reaching out to the family market. The core demographic, however, remains 18 to 35-year-olds.

The site now has one million book titles on sale and is already achieving some punchy market shares in some of its top categories. The His Dark Materials box set and Borat: Touristic Guidings to Glorious Nation of Kazakhstan are examples of particularly strong titles in recent times, with Play saying it captured 23% and 10% of total UK sales respectively.

Play is aiming to get that kind of market share out of a wider range of titles by doubling or trebling its marketing budget for books this year and building closer ties with publishers. Rowe says he wants to work with authors and publishers to create “far more innovative, fresh marketing”, tapping into ideas such as the short-film trailers produced for The Book­seller’s Book Video Awards, which Play supported.

With 75% of the site’s book sales generated by titles outside its top 200 sellers, Rowe’s aim is to improve the browsing and marketing facilities on the site to expand that even further.

Play wants to grow out of its book heartland in celebrity biographies and titles linked to television, film, sport or music into new areas such as academic titles. “We see our links with students and student unions as a great opportunity,” Rowe says.

At present, about 16% of Play’s book sales are what it classes as academic, but Rowe believes this is an area where no other retailer has seriously challenged Amazon.
He says Play is in a good position to do so: “We are definitely a long-tail retailer. Our CD and DVD browse structures go very deep, and that’s our real strength and differentiator against the high street. We have got limitless floor space—it is like having a store on a business park where you can keep knocking the walls down and making it bigger.”

A relaunch of the whole site later this year is also expected to drive book sales. The idea is to give each kind of product Play offers a website that is more tailored to its needs. For books, that is likely to include enriching the browsing experience using tools such as Look Inside, which enables shoppers to browse a few pages of the book they are con­sidering.
The site is also expected to offer elements of social networking. Rowe says customer interaction with the site will be at its most “practical” level, with features such as consumer­ reviews and recommendations.

Gearing up for e-books

Play is also well set up to take advantage of the potential of e-books should such technology ever seriously take off. The site launched an unrestricted music download facility in February, and Rowe says this is “exceeding expectations” and the company is “excited” by the idea of offering e-book downloads in the future. But such a move is not likely to come until Play has first negotiated a full range of partnerships with all the major music labels for its download site.

In all these areas, Play faces increasing competition from the newly revamped online offerings from Borders  and Waterstone’s, as well as the mighty Amazon and the supermarkets.

Rowe says that Play hasn’t noticed any impact from the Waterstone’s relaunch and argues that the online story will be positive for all in the next few years.

“The book market is pretty ­stable, but within that we expect to see ­consistent medium to long-term online growth. Broadband is still not as optimised as it is could be—it’s not as fast as it is going to get, and still not in as many houses as it is going to be in.”

Book sales are already rising ­faster than the 21% experienced by Play.com as a whole, although not as fast as electronics, the site’s top category at present. Book sales rose by 50% in February compared to the same month last year and Rowe believes that could be increased still further.

But will Play drive sales by going for “slash-and-burn” discounts?

“Price is important but we are not discounters,” Rowe says. “We are a value retailer and we try to be as competitive as we can. We don’t try to bring the market down by any means, but the books market, like ­virtually all of our markets, is extremely competitive from a pricing point of view.”

Book trade analysts believe that Play might partly want to build closer ties with publishers in a bid to have more pricing flexibility by reducing its reliance on distributors such as Bertrams and Gardners. However, Rowe insists that there will be room for Play to increase its dealings with both distributors and publishers as the business grows.

He cites other online retailers, such as fashion store ASOS, the current retail darling of the City, as proof that e-tailing is one of the most ­stimulating places to work: “It is a very exciting time. Being profitable and growing fast in the online area is a great place to be in retail right now.”

Play has already been described  by the Times as “Britain’s Amazon”s and is certainly gunning to catch up with the US giant in the UK. Rowe says: “Of course Amazon is not un­assailable, no business is over a long period of time.”

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