We Stand United

By SmallBusinessComputing Staff | Posted July 01, 2001
by David G. Propson

"Do you have any idea Beleaguered the independent book industry is?" Cass Franks asks. The American Booksellers Association has seen its national membership reduced from more than 5,000 to slightly more than 3,000 in five years. Though the ABA recently negotiated a $4 million settlement of a lawsuit against Barnes and Noble and Borders, the chains continue to open up store after hangar-size store. In the three years between 1994 and 1997, the four largest chains increased their market share from just over 34 percent to more than 45 percent. And then came Amazon.

Independent booksellers, like many other independent businesses, have been fighting a seemingly futile battle against international conglomerates, "big box" chain stores, and new Internet-based competitors. "The entire business is under stress," Franks says. In July of 1999, the ABA announced a plan to help independents fight back. The ABA's national marketing program, called Book Sense, includes an advertising campaign, in-store displays, and an online initiative. Through Booksense.com, more than 200 stores share a single database and common order-fulfillment and drop-shipping services.

Businesses have always banded together to work toward common goals, joined chambers of commerce, and signed up with trade associations. The Internet lets them work together in entirely new ways. But since no two businesses want the same thing from the Internet, it's hard to imagine a system that can satisfy several thousand. Booksense.com is an experiment that suggests the potential -- and potential problems -- of such partnerships.

Some ABA members feel that participating in such a sweeping partnership means sacrificing the very independence they're fighting to maintain, and have opted out. Most that signed on consider it a success, but Cass Franks, for one, says even the ABA's ambitious plan isn't enough.

Barnes & Noble and Borders and Amazon, Oh My!
Franks, 63, co-owns a Livonia, Mich. bookstore with his wife, Pat. Twenty-six years ago, he says, they spent two long nights discussing "what to do with the next couple decades." The Books Connection was born from that discussion. "We decided one of us would work for somebody else, and one would work for ourselves," Cass says. After a career as a journalist and press rep, Cass joined Pat full-time. Like many booksellers, they are battling to survive.

"We've reinvented ourselves four times in 21 years," Franks says. The store started out selling used books, then added new ones, then rentals. It expanded to six locations -- then shrunk back to one when, according to Franks, Borders opened its first two stores within a half-mile of theirs. After a few days spent observing at one of the new superstores, he was convinced their opponents had a better model.

Superstores like Barnes and Noble and Borders, who can offer wide selections and deep discounts, are the main reason independent bookstores. But the past decade saw a proliferation of new venues for book sales, including the Internet. In fact, the Frankses are now using the Internet to acquire and sell an increasing number of collectible books.

"It's a completely new business," Franks says. "The market changeth and we changeth with it." Franks hopes the Internet can help him bring in new business, but says he doesn't believe many of his current customers have embraced buying books through the Internet. Other parts of the country, however, saw the effect of the Internet years ago.

"Amazon.com changed everything," says Karen Pennington, president of the Northern California Independent Booksellers Association (NCIBA) and inventory manager for Kepler's Books in Menlo Park, Calif. Suddenly every bookworm on the planet had access to a database containing information about every book in print on every obscure topic that could possibly capture their interest. "Our customers started coming in with printouts, page after page of books we couldn't get," Pennington says. "For the first year, we got a bloody nose every time we opened the door."

declaration on Independents
Independent booksellers had mixed feelings about the emergence of Amazon.com and the prospect of Internet bookselling, according to Pennington. "Booksellers were cheered and horrified," she says. Amazon was yet another large company that threatened to shrink independents' already dwindling market share.

"Our jobs got a lot harder," she says. "They changed customer expectations. This was a company so aggressive they were willing to lose money to fulfill an order in two days. Two days? We couldn't compete." She knew that Amazon's estimates were unrealistic -- "publishers are not built for speed," she says -- but just try telling customers that.

But Amazon showed that it might be possible to break the big chain stores' hold on the industry, and provided the impetus for booksellers to start something that had long been discussed but never implemented: A national marketing campaign. Like so many innovative ideas in the past few decades, this one came out of Northern California. Book Sense began as an initiative of Pennington's group, the NCIBA, under the leadership of Hut Landon.

"What really got us going was Amazon," Landon says. "We realized we were being left out of the marketing game. Amazon showed us by branding themselves." Landon enlisted the aid of two ad execs from the Addison Advertising Agency in San Francisco, who agreed to develop the campaign free of charge ("part of some sort of cosmic penance," Pennington speculates). The NCIBA began printing up posters and window decals and asking local booksellers to sign on. When the ABA soon decided to extend the program nationwide. they first customer-tested it and then set about improving it. Their major innovations were the monthly list of recommended titles, the gift certificate program, and the online initiative. "When we created Book Sense, we thought about a national gift certificate program and a dot-com initiative, but we couldn't afford to do that," Landon says.

An Amazon for Independents
Associations exist for ever industry and profession under the sun, but the ABA's online initiative is distinctive among large national trade associations, according to Chris Mahaffey, president of the Association Forum of Chicagoland, an association for (who else?) association executives. "It's not a terribly common service for associations to help host Web sites," Mahaffey says. "But it's a very logical step."

Bookstores who pay to participate in Booksense.com get a basic online storefront, which they create from a series of templates, and ordering capabilities that are tied into the ABA's books-in-print database. Potential customers can browse through hundreds of thousands of books. The ABA uses www.booksense.com to direct buyers to stores in their area, but stores can purchase their own URLs and point them to their Book Sense sites.

Most important for the harried bookseller is the way customers' orders are fulfilled. Ordered books are packed at the warehouse of one of the ABA's distribution partners, and immediately drop-shipped to the customer. The local bookstore gets the proceeds from the sale of the book, but no one at the bookstore ever touches it. "It's in essence what Amazon does," explains NCIBA's Landon.

Indeed, on the back-end there are many similarities between Amazon and Booksense.com. Both use the same distributors, Baker & Taylor and Ingram, who ship books directly to the customers. "I suspect what happens at Baker & Taylor is essentially the same," Landon says. But if the back-end process is almost identical, what's the difference between buying online from Amazon or from an independent bookstore?

Booksense.com's director, Len Vlahos, and the ABA faced this problem when they set out to create the online element of the program. He points out several differences. Only about half of the books sold through Booksense.com end up being fulfilled centrally. Customers can also pick up books in a physical store, return them there, and talk to a human being when they need customer service.

"They didn't want to create just an order-taking situation," Landon says. Booksense.com, whose launch was initially delayed more than a year, has now been up and running for just as long, and the ABA continues to add to it. The current versions give stores the ability to create and communicate their own identities, Landon says.

The Identity of an Independent
Stores that sign on with Book Sense sign onto five attributes that define its mission and underscore the importance of independent booksellers, according to Vlahos. These principles are: Knowledge, passion, personality, character, and commitment to the community. Landon and the NCIBA developed these principles as part of the original Book Sense campaign by listening to booksellers describe what they do.

"It's a job, but it's also a vocation," Pennington says of her profession. "We're a beleaguered lot that work very hard for our dollars -- and there aren't many."

"We're usually well-educated, but we're not necessarily the best business people," Landon says. "We do this because we love it. When the big book stores come in talking about stuff like product mix, that drives us nuts."

"We're sort of grass roots, coalitional, political people," says Ann Christopherson, co-owner of Women and Children First in Chicago and the vice president of the ABA's board. "Like many bookstores, we're a community spot." Christopherson and business partner Linda Bubon opened the store 21 years ago. They were graduate students who became involved in the feminist movement but discovered that many books they sought were hard to find. Now they're experienced businesspeople, and though feminist bookstores have been battered especially badly recently, theirs has become a mainstay of the Chicago's Andersonville neighborhood.

Decorated in purple, its shelves feature sections of books on gay, lesbian, and bisexual topics, and a "Violence Against Women" section. A dog named Jordan scurries across the floor, and a man with black curly hair and Airwalk sneakers examines a display of candles underneath a sign that reads, "Welcome a Goddess Into Your House."

"The goal is to translate the personality of the store itself into an online presence," Christophersen says. Still, some aspects of what makes a store's identity can never be communicated online. One is selection. Christophersen's store carries both bestsellers and extremely obscure books; for every few copies of a bestseller they sell, they can keep a few more obscure titles in stock. Those books give the store its character. "You can't translate the feeling of seeing 40,000 books on feminist topics surrounding you," she says.

Because the selection from womenandchildrenfirst.com is nearly unlimited, the personality of the store must be communicated through special sections and staff selections. Christophersen says she hopes to have time to add more of these. "It's not just what you carry or what you say about what you carry; there's a whole dimension of human experience that you can't convey through writing and graphics," she says. Like many other booksellers, she would like to use the site as a way to draw people into the actual store for book readings, author signings, or other events. "The sharing of each other's company is not possible on line," she says.

Still, she has high hopes for the store's site. "The ABA design is really quite brilliant," she says. "We could never have afforded to set up and maintain a sit that has an extensive database, shopping cart technology, and a lot of content."

Too Close For Comfort?
Some ABA members believe that the association's national branding campaign and Amazon-like online initiative will make maintaining their independent identity even harder. "There are a lot of stores who say, 'We don't want to be part of Book Sense,'" Landon says. "When you talk about creating a group of stores, they think, 'My God, they're going to be a Barnes and Noble.'"

Perry Haberman, the owner of the Madison Avenue Bookshop in Manhattan, initially resigned his ABA membership because of Book Sense, but later rejoined. He maintains a site for his store (www.madisonavenuebookshop.com), but does not sell books through it. "I think it's a good thing for the number of stores that are participating, but I don't think it's right for every bookstore," he says. "It became incorporated into the organization of the ABA, and I would have preferred that they had stayed two different entities."

In addition, the ABA now finds itself in the position of providing a service that bookstores can also obtain from for-profit competitors, some of whom are ABA members. Dick Harte, a bookseller in Deleware, Ohio, has offered independent booksellers a Web storefront since 1996, when he founded Booksite.com. "The ABA decided to copy me and, in effect, divide the channel rather than try to work together," Harte says. "That's the real shame of it to me."

Harte says his customers tend to be early adopters who got on line before Booksense.com's launch. They receive orders through Booksite.com and fulfill those orders themselves. "The people who signed on to Booksense.com are either people who were hostile to us from day one or people who weren't willing to add the Internet until the ABA did it for them," he says.

"A Necessary Evil"
The ABA probably never could devise an online strategy that satisfied all its members. Some simply want to make their online sites extensions of their stores and provide a few additional services to current customers. But many, like Cass and Pat Franks of The Books Connection, are looking to the Internet as a way to extend their business into new areas and find new customers. Booksense.com has helped, Cass says, but he's given up depending on it as his sole source of online revenue. "Right now it's not a success by any means," Franks says. "I'm very involved in the national organization. I think they've done a fantastic job putting the site together. I just can't wait."

Vlahos and the ABA are still working to make Booksense.com as useful as possible to as many booksellers as possible. Many would like a system that can integrate with their current inventory systems, and Vlahos says his team is looking into this. The NCIBA's Landon likes the Booksense.com feature that allow booksellers the option of having orders delivered directly to their store. Customers then must pick up their books, and stores' sites can help turn online browsers into offline business. Other booksellers, no doubt, could devise their own wish lists.

But integrating inventory will be a technological undertaking more complex even than the current one, and that complexity is part of the reason the ABA didn't attempt it earlier. Booksite's Harte also believes that Book Sense may not prove to be well-suited to some of the more ambitious independent booksellers. "The larger, more marketing-minded businesses aren't really excited about handing over their customers to the ABA," he says.

Early evidence suggests that the Book Sense campaign may be working. According to research firm Ipsos-NPD, last year marked the first year that independent bookstores managed to keep from losing market share. Their 15 percent matched what they had achieved the year before, though it's half of what it was 10 years ago.

"These are hard times, but Book Sense is making a difference," says the ABA's Vlahos. He says Booksense.com will remain an important but voluntary element of the ABA's strategy, just as the Internet is an important part of its members' businesses.

"The Internet may be a necessary evil, but selling books on the Web is not what we want to do with our lives," says Hut Landon. "If we wanted to be Internet booksellers, we'd close our doors and be Internet booksellers."

Closing doors, remember, are what Book Sense is supposed to prevent.

The Online Association
Most trade associations now maintain Web sites to deliver news, announce conferences, and discuss issues with their members. The Internet has spawned new debates over technological standards and competition, and industry associations will be key in resolving these. But most associations don't provide Internet services directly to their members.

A few associations, like the ABA and National Automobile Dealers Association, are ambitiously attempting to give their members direct support in using the Internet to reach their customers. "For small businesses, if they can share the technology of their association, it's a tremendous service," says Chris Mahaffey of the Association Forum of Chicagoland.

An initiative like Booksense.com wouldn't be possible in every industry. John Kunz of Waterloo Records in Austin, Tex., for instance, maintains his membership in the National Association of Record Merchandisers, which has both independent and chain store members, to have a say in industry-wide issues such as standards. He turns to his colleagues in the Coalition of Independent Music Stores for business advice and cooperative marketing efforts. For his online store, Kunz relies on a service called Buy Music Here, run by Bob Lee, whose Face the Music store is based in Eugene, Ore.

Like Dick Harte's Booksite, Buy Music Here is a modest operation that partners with independent stores and offers online support and services designed specifically for a certain type of retail outlet. Such partnerships, whether or not they are associated with an association, are reflective of a similar spirit: Banding together to fight a common foe.

"The enemy," Harte says, "is a do-nothing attitude."

Cooperation or Competition?
Book sense stores aren't obligated to sign up with Booksense.com, and Harte tells his customers that they aren't betraying the ABA by maintaining a store through Booksite. "Should a member of the ABA feel guilty about being on Booksite?" he says. "No. They should do what's best for their business."

Karen Pennington of Kepler's and the NCIBA says her store plans to switch from Booksite to Booksense.com as soon as it has a chance. "We're dying to switch over," she says. "We're committed to Book Sense, but we haven't found the time." But many stores, including Steve Bercu's Book People in Austin, Tex., signed up with Booksite before Booksense.com got up and running and are sticking with it.

"In the industry, people think there's something wrong with competition," Harte says. "I think competition is a good thing. There are a number of things we can learn from our competitors."

According to Burton Weisbrod, professor of economics at Northwestern University and author of To Profit or Not to Profit: The Commercial Transformation of the Nonprofit Sector (Cambridge University Press), associations can accomplish the most when members look to cooperate, not compete. "All a trade association can do is pursue common interests," Weisbrod says. "The more they are competing with one another, the harder it is to come to agreements."

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