Quarterly sales of Barnes & Noble's e-reader Nook declined 30 percent compared with the second quarter of 2012, the company reported on Tuesday, highlighting the efforts of traditional brick-and-mortar stores to adapt to digital disruption from online portals like Amazon.
The company's latest quarterly report shows the bookseller's overall revenue fell 8 percent to $1.73 billion in the second quarter ending in October, compared with $1.88 billion during that same quarter in 2012. Barnes & Noble cut costs to adapt to this shrinking revenue, which boosted its net profit to $13.2 million from $501,000 during that same period in 2012.
No matter how warmly consumers say they feel toward the printed word, Barnes & Noble struggles with the same decline of the printed book that drove Borders bookstores to become defunct in 2011.
Barnes & Noble faces an even bigger obstacle with the Nook, which the company launched in 2009 in an attempt to move its book content online and profit from the e-book market. The company's device has been unable to compete with the Kindle e-reader designed by Amazon and with the boom in tablets designed by other companies, such as Apple's iPad, in recent years. Barnes & Noble made the mistake of trying to design hardware instead of designing an application to make books available on the wide range of tablets designed in recent years, says Ryan Reith, program director of mobile device research at International Data Corporation market research firm.
"It's not easy to go from what Barnes & Noble did in the past to become a hardware company," Reith says. "The tablet boom has even hurt Amazon's Kindle sales."
The bookseller previously considered splitting its Nook business off from the retail side of the company before abandoning that possibility in August. Microsoft bought an approximately 18 percent stake of the Nook in 2012, but it appears there is no significant strategy that could improve the fortune of the product, Reith predicts.
"In terms of content consumption the e-reader started out as an e-book store; now books are just part of a puzzle with many pieces," Reith says. "But if you are a company losing revenue it's a lot tougher to make content deals going forward."
Increasing availability of books online has made Barnes & Noble a popular place for "showrooming," a practice during which consumers look at a book in the store to see whether they like it before they go buy it online, possibly for a cheaper price. That gives bookstores a shot at survival in the e-commerce generation despite Barnes & Noble's woes, Reith says.
"Physical bookstores have a better chance of surviving than some other retail stories, like technology stores, where you don't need to physically see the product before you buy it," Reith predicts.