'The model now resembles the iTunes offering'
Enthrill lies very near the Santa Zone. The forecast for Calgary calls for a low tonight of -16C. (That's 4 degrees, for readers in the Fahrenheit States of America.) But Kevin Franco is brimming with toasty tidings for the holiday season in Alberta, inspired in part by what appears to be a potentially important pivot in his Enthrill startup's ongoing efforts to bring ebooks and physical retail settings together.
As anyone in books can tell you, this is a particularly pressing topic each year during the holidays, as even digital enthusiasts find it hard to sort out how to give ebooks as gifts. As my Bookseller colleague Natasha Onwuemezi published the news that Nielsen was seeing one in six UK respondents say they were more likely to give books this year, literary translator and Author Day speaker Louise Rogers Lalaurie was asking a question many ask each holiday season:
Franco's answer hasn't changed since the inception of Enthrill Distribution in 2011: yes, he'll tell you, giving ebooks is doable. And this year, with a twist.
Everything Enthrill does comes down to a physical card. The company creates that card as two things: (1) an in-store ebook sales medium and (2) an ebook-gifting vehicle. You buy the card in a bookshop or at another point-of-purchase, and you then can present it as a gift. That card carries a code that allows the recipient to download an ebook in the format of his or her choice.
"Last Christmas," Franco tells The FutureBook, "Enthrill did a quiet launch of the Walmart ebook store and have been iterating and testing different approaches on the product ever since."
Until now, Franco's team has focused on title-specific card. The book's cover art and blurb copy was the usual graphical theme and information on the card. You bought the card and presented it as a way for the recipient to get exactly the title you'd chosen for him or her.
But "based on our initial findings," Franco says, "we learned that although customers told us they wanted title specific gift cards in stores, when presented the option of a title specific card or a C$25 (£12) or $50 (£24) stored value gift card, they chose the latter. This wasn't even a close call, customers were purchasing the stored value gift cards at a rate of nine to one, and when you realise that stored-value cards are redeemed for multiple ebooks at a time, this was a no brainer to pursue. From an individual-titles standpoint it worked out to around 35 to one.
"Selling one title card in a store meant selling one ebook. Selling one stored-value card meant selling multiple titles each time."
Win-win and cha-ching. From all appearances, a new key to Enthrill-ing success has been discovered.
Yes, Virginia, you can gift ebooks now
"We refocused our consumer offering to these ebook gift cards," Franco says, "and experimented with different art and offers throughout the spring and have now released a new line of stored-value gift cards this autumn. So, the model now resembles the iTunes offering, except it's book-centric and works on all reading devices—no limitation on who you can buy for.
We are now promoting these cards, a big difference from last year when we launched. We grew the programme organically, without drawing a lot of attention to it, allowing us to iterate and make it better as we expanded over the year. We're now very confident with the offering and consumers are loving it too. This holiday shopping season, we're making a little more noise, letting people know what a great gift ebook gift cards make, and it's working.
Enthrill's footprint has expanded dramatically across Canada, too.
"Enthrill kicked off 2015," Franco says, "in about 280 Walmart stores and a handful of others, and worked with retailers across Canada to expand into over 3200 locations for this Christmas."
This year, consumers are encountering Enthrill's offers in some of the biggest retail chains in Canada, starting with Walmart and including Safeway, Shoppers Drug Mart, Home Outfitters, Toys R Us, Giant Tiger, Visions, Sears, and more. What's more, Enthrill offers the ability to send an ebook or e-gift card online through enthrillbooks.com and the Walmart ebooks store site. And when buying online for e-delivery, you can select the date in which the recipient receives the ebook or e-gift card, Franco says, so you can target your gift to the holidays, a birthday, etc.
'A $50 card gets redeemed for 7.7 ebooks'
We asked Franco if it's possible to know how many ebooks are being shifted by Enthrill.
"This is a hard number to pin down," he says, "because of our gift card model—gift card sale, then redemption, then ebook sale—and it's our first foray into many of these stores. People may purchase gift cards on a specific date, but the actual sale of ebooks happens only when the card is redeemed, this can take months.
"We do know that a $50 card gets redeemed for 7.7 ebooks," he says, "and we anticipate selling thousands of $50 cards this holiday season. Most gift cards are redeemed within 90 days of purchase. We have almost 200,000 cards ($15, $25 and $50 denominations) in Canadian stores this holiday season. Our goal is to make this a significant sales channel for publishers and we are getting there."
In 30,000 stores, the change 'may have been catastrophic'
As any Canadian can tell you, the question from the south is always, "Why just in Canada?"
Franco is ready for that one, and for an interesting insight into the dangers that startups can encounter in premature expansion.
"The limitations on our expansion have been mostly self imposed," Franco says. "We really wanted to get our consumer offering nailed down. We have many US retailers ready to go with us. When we launched last December in Walmart, consumers purchased the stored-value cards at a much higher rate than that of the title cards. This was the opposite of what our focus groups told us. Learning this through 300 or so stores gave us enough market data to iterate, test, and re-release because it was still manageable.
"If we had done this in 30,000 stores, it may have been catastrophic. For sure it would have been very difficult to manage. We now plan to expand confidently into the US in 2016 with a market-tested retail programme."
Can independent bookstores work with Enthrill?
Here, the answer is, basically, hang on—we're coming back to you.
"In our formative stages," Franco says, "we were excited to help out independent bookstores and we experimented. Some did well, others did not. We really didn't have our product nailed down at that time.
"Having said that, our goal, right from Day One, was to develop a retail programme with mass merchants and in doing so, build the infrastructure that would support a programme for independent bookstores, as well. We'd like all retailers to participate in our programme and hope to bring independent booksellers a terrific programme in the near future."
'Moving customers away from new releases'
"We are working with publishers from Canada, the UK, and the US," Franco says, "including some of the large publishers. We also have a catalog of French-language titles and are selling in many French-speaking communities including Quebec through Walmart, Shoppers Drug Mart and Jean Coutu.
"There are many big publishers working with Enthrill including Harlequin, Kensington, HarperCollins, Simon & Schuster, Scholastic and many others. Of course there are some that are not participating in our programme.
"But we have come to realise that our dependency on having the biggest publishers on board is less relevant to us than to other online booksellers. We have a very different model, we're a gifting platform, and we're not competing for the direct purchase of ebooks the way that the existing channels do.
Franco clarifies this subtle match of the stored-value card to the overall Enthrill offer:
As consumers come to us to redeem cards, we have found that curating good content is more effective in satisfying the customer than having the latest release. It's like the model Netflix uses to help their customers find content. Netflix doesn't have many of the top studios participating in their programme, yet they displaced Blockbuster by offering a completely different value proposition, moving customers away from new releases almost entirely.
Curation is playing a key role here:
This approach by our content team, in providing the consumer with galleries of content that are hand-selected based on interests, has proven to be a very effective discovery tool for the consumer. We are seeing that our customers' selections are very different from what you'd see in existing direct sales channels and that diversity in purchasing is good for publishers.
And while Enthrill's racks of gift cards may not be showing up in US stores this season, US publishers have caught on to Franco's operation as a channel into the Canadian market.
"We have many US publishers working with Enthrill," he says. "In fact, the majority of our publishers are out of the US."
Independent publishers are particularly useful in the Enthrill model, Franco says. "We are trying to get a more robust catalog of unique genres into our system, and a lot of these come from independents that specialise in certain topics."
Already working in French and English in the online platforms, Franco says, the programme is built to handle multi-lingual offerings.
In creating what he terms "an alternate sales channel for publishers," Enthrill has invested some C$5 million to date, Franco says. That's about £2.4 million or US$3.6 million.
"Next year," he says, "we plan to expand the retail programme into the US and other markets. In addition, we'll be introducing audiobooks to our service. I think Barnes and Noble would be a great retail partner for Enthrill—remember, we deliver ebooks into the reading platform of the customers choice, so we aren't diverting customers from any platform."
And that being the case, one wonders—mischievously—if that Seattle bricks-and-mortar emporium called Amazon Books might someday have a rack of Enthrill gift cards on the counter by the cash register?
"I'm watching them, for sure," Franco says. And laughs.
Main image - Calgary, Brent Charlton, iStockphoto