MUMBAI: Tanupam Akuli used to regularly visit the Landmark bookstore near his house in Mumbai’s Lower Parel, till it closed for renovation a year ago. Landmark is a major bookstore chain in India. Now, Akuli orders
books online. “I was forced to look at the online option. Eventually, I discovered I get a better deal shopping online,” he said. So while Akuli’s Landmark store will re-open in September this year, he says he will window shop there but will probably still buy online.
Buying books online is gaining traction, especially with younger consumers. The online bookstores have
organised themselves efficiently, offering a large number of titles, discounts and efficient services. Tier 2 and 3 city consumers are ordering far more books online, getting a variety and deals that their local brick and mortar
bookstores cannot match.
“For e-commerce companies like ours, a lean cost model and low overheads allow us to pass on discounts to
customers. But what brings them back is the shopping experience and service. We believe that our 70% repeat purchase rate can be attributed to the way we serve each customer,” said Ankit Nagori, VP - categories, Flipkart, currently the largest online bookstore in India.
While online book sites such as Flipkart, Indiaplaza and Infibeam are expanding their sales, brick and mortar store numbers are either staying flat or growing conservatively. Some chains have also shut some outlets. Major brick and mortar chains include Crossword, Odyssey, Oxford, Reliance Time Out, Landmark and Om Book Shop.
“Books are among the first categories to get impacted by the online channel, since this category has high
product standardisation, low ticket value and low risk associated with product damage/obsolescence,” said Pragya Singh, associate director, retail, Technopak Advisors.
The online impact on brick and mortar bookstores is being felt globally. “As per the UK Booksellers Association, independent bookshop numbers in the UK has dropped from 1,500 to 1,100 between 2006 and 2011, largely due to the online impact. Similarly, in India, the books category has seen the emergence of many online retailers,
which has negatively affected several traditional booksellers’ sales,” said Singh, adding: “Retailers like Landmark, Crossword and Om Book Shop have ventured into online portals and will focus on scaling up through them.”
Tata-owned Landmark, with 18 large stores, is revisiting its strategy of expanding through company-owned stores. “We are now looking at the franchisee model,” said Ashutosh Pandey, COO, Landmark. Expansion to 25 stores to include Nashik, Kanpur, Vishakhapatnam and the south will now ride on the franchise option. Oxford Bookstore has 28 stores – owned and franchised. “We will be ramping up our presence in the metros. We
have also moved to tier 2 cities and state capitals,” said Abhishek Kumar, COO, Apeejay Oxford Bookstores. Oxford has shut five-six franchisee stores in the past.
Small, mostly single-store booksellers are definitely under pressure. M Venkatesh, co-founder of the Delhibased children’s bookstore, Eureka, admits that brick-and-mortar bookstores are gravely threatened by Flipkart and other online-only retailers. “Overall, retail sales are pretty flat. Consumers are visiting the bookstores,checking out the prices and then going online to make purchases on better discounts.”
Strand, a 64-year-old ‘landmark’ bookstore in south-mumbai, is also facing tougher times. “It has become
exceedingly challenging to run a lucrative bookstore in India. It’s a low margin business with too many players and you don’t make profits by selling books alone,” said Vidya Virkar, Strand’s managing partner and daughter of its founder, Padmashree TN Shanbhag. Strand has a branch in Bangalore and also runs book kiosks at the Infosys and Wipro corporate campuses. Looking at where the book sales business is heading, Flipkart’s Nagori said: “Given the large size of the market, there is immense scope for all kinds of players in book retail.”
However, Pandey said, “You will see consolidation next. But it all depends on the valuations. Some chains are
certainly up for sale.”
Source | Hindustan Times | 21 May 2012
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