How Do Retail Bookstores Stay in Business?

Because I love to read, consequently I also love bookstores. However, I can say without hesitation that I rarely buy books from a retail bookstore anymore. Why would I, when I can get my books for a fraction of the price on Amazon.com, and with free shipping to boot! Sure, there are some instances where the price difference between the store and Amazon is negligible, and perhaps I’m in a hurry to read the book, but those are rare scenarios indeed. So the question stands, how do retail bookstores stay in business?

I’ve heard the arguments of convenience, the personal touch, and habit, but to me that seems a bit stupid. From what I can see, the stock market reflects my opinion. Barnes & Noble, as of today, has a market cap of just a bit over $1 billion dollars. Borders bookstore has a market cap of just over $90 million dollars. Border’s stock is trading at a little over $1.50 per share, or roughly 4% of its all-time, pre-amazon high.

Amazon.com, on the other hand, is over $118 per share, with a market cap in excess of $50 billion dollars, and experiences significant growth pretty much year after year. How on earth are bookstores staying in business, despite the overwhelming advantage of Amazon?

I think that explains why so many bookstores now have coffee shops, cafés, and tons of worthless ancillary items…books just aren’t cutting it anymore as a sole revenue stream. I would love to see a demographic chart showing what age groups buy from physical bookstores…I’m betting that boomers are keeping them in business, just barely…

Now don’t get me wrong, I still love the bookstore. Unfortunately, I love it because for me it has taken the place of the library. I go there to read new books, and if I like them, I’ll then buy them on Amazon for 1/3 or 1/2 the price of what the bookstore wants to charge, and I’m not the only one. Most of the people I see in the bookstore are sitting and reading, or sitting and chatting…not buying.

So, it appears to me that the bookstore has become the Napster of the book world. Why buy a book when you can read the latest stuff for free? Sure, you can’t take the book home, but how many people really read books over and over again? With very few exceptions, I know I don’t.

That said, if you own stock in B&N or Borders, personally I would dump it and invest elsewhere…Amazon.com, perhaps? I’ll bet it hits $200 per share within another year or two 🙂

UPDATE: So, as I expected, Borders has filed for chapter 11 as of 2/11/11. Hopefully you listened to my advice and dumped your stock last year or earlier 🙂 Looks like Amazon is also on track to meet my prediction of $200/share…score!

2 thoughts on “How Do Retail Bookstores Stay in Business?”

  1. Great comments. As both a cheapo, and someone who hates reading, I can totally relate. Funny how fast the market changes. Just a few years ago, B&N and Borders were powerhouses that were here to stay. I hope we can say that about Walmart & Gold’s Gym in the next couple years ::Crosses Fingers::

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