Nice article on BKS.
ecommercetimes.com
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E-Commerce Success Story:
barnesandnoble.com
Exclusive Interview
with
Ben Boyd,
Vice President of
Communications
Q What kinds of products or services do you sell on your site?
A barnesandnoble.com offers the largest selection of books, of any online bookseller.
We have over 8 million titles available to the consumer. A vast majority of those titles
are in-stock and ready for immediate shipment. We also have more than 750,000 titles
at our distribution center in central New Jersey, so that from a fulfillment standpoint, we
can get more books, to more customers, faster.
We also have over 6 million rare and out-of-print titles that are in-stock through a
dealer- distributor network called Advanced Book Exchange, which we have an
exclusive relationship with.
In addition to our book offering, we also sell magazine subscriptions, and a
comprehensive collection of more than 200 software titles. Right now, we have small
collections in both music and video, with very aggressive plans to launch more titles to
both of those product lines later this year.
Q How did barnesandnoble.com get started selling over the Internet?
A Barnes & Noble, Inc. was an existing retail operation, in addition to running a catalog
operation and 1-800-THE-BOOK. We were making books available to customers
through three different channels, so e-commerce is a natural extension of our business
growth.
The decision to go online was motivated by our desire to allow more consumers to
connect to the expertise of Barnes & Noble, Inc., a company that knows books, and
provides information and content in ways that are most convenient to the customer. We
launched the Web site on the AOL service to begin with, in March of 1997. We then
launched on the World Wide Web in May of that same year.
Q What is your company's monthly sales, and what percentage of your sales is from
your Web site?
A Total revenue for Barnes & Noble, Inc. during 1998 was over US$3 billion. During
that same period, barnesandnoble.com generated US$70.2 million in sales. In terms of
year-over-year growth, our e-commerce operation experienced a 380% increase in
1998 over the previous year. Also, we closed 1998 with more than 1.4 million unique
customers to barnesandnoble.com, and with more than 65,000 affiliate sites.
Q Can you give us a feel for the size of the company -- in terms of number of
employees?
A barnesandnoble.com has over 500 employees.
Q Which geographic areas do you see your business coming from?
A We've shipped books to more than 180 different countries, so we're clearly a global
store. However, the focus and reality of our business is that the largest percentage of
our business does come from here in the U.S.
Q Have you noticed a higher concentration of sales in rural areas, where access to a
Barnes & Noble, Inc. retail store may be limited?
A Our sales definitely come from urban populations. The reality is that online sales come
from areas where Internet connectivity is most prominent, and that's going to be in the
more urban areas.
Q Have you noticed any interesting demographics in your customer base?
A We're noticing that our customer profile changes on a daily basis. The amazing thing is
that everyday, our online customers are increasingly coming to resemble our offline
customers, as opposed to the distinction we saw earlier on where our Web site had a
much higher demographic of middle-aged, male customers. Now, we're seeing a
wellspring of growth in the number of women participating in online shopping.
Q How much traffic are you seeing to your site?
A On a monthly basis, we average about 16 million page views.
Q What do you feel has helped make barnesandnoble.com successful?
A We think that our success is a result of a combination of things, but clearly, our brand,
and the integrity it conveys, is at the top of that list. We also focus on satisfying the
customers' needs. The consumer population expects a certain quality from
barnesandnoble.com, and we've really striven to provide that in our e-commerce
venture. The longer our Web site is in operation, the cleaner our user interface gets.
Q What do you feel sets barnesandnoble.com apart from its competitors?
A We are the leading brand associated with book retail. Beyond that, we have
extended the chats that occur among book-lovers at our brick-and-mortar stores to our
Internet operation, where we feature a chat area on our site.
In addition, we're helping book lovers find some tremendous gems that are out there
and just need to be found. Our rare book offerings of more than 6 million titles include a
first-edition of Catcher in the Rye for US$8,500. We also have a used 36th-edition of
the same title for US$8.50. So, in this sense, we're exposing more titles, to more
people, on a daily basis.
Q What are some of the ways you've promoted barnesandnoble.com?
A We have a traditional approach to promotion, which consists of online as well as
offline advertising and marketing. We have relationships with partners like AOL and
MSN to extend our brand, we run various banner ads, and we work with affiliate
partners like Salon Magazine, for example, where we offer our product selection to their
online browsers.
We also take out full-page ads in major papers around the country and participate in
local market media buys in major metropolitan areas, such as a TV spot during the last
episode of Seinfeld. We look for high visibility, high saturation opportunities to get the
barnesandnoble.com brand name out in front of the consumer.
Q What challenges has barnesandnoble.com experienced in conducting e-commerce?
A One of the difficulties of having a strong brick-and-mortar heritage is that the
technology can be daunting. We addressed this by developing a great deal of
proprietary technology to build our site. We have also partnered with Microsoft often,
where we beta-test a lot of their products, and then customize them to meet our needs
and specifications. It has taken some incredibly large, scalable, and customized tools to
meet our e-commerce back end needs. By working with partners like Microsoft,
Compaq, and HP, we created an architecture and infrastructure that, from an IT
standpoint, will support a growing population of online users.
Q What has been your biggest surprise in doing business online?
A I think our biggest surprise in operating barnesandnoble.com has been the
technological demands. Making certain that customers are always the focus of our
efforts has meant that we had to make certain that the technology we employ would
facilitate meeting their needs.
I think any new, non-IT based company that moves into a technology sector is probably
quick to be wowed by some of the seemingly glamorous special effects, like streaming
video. However, that technology does not always best serve the customer.
Q After going online, was there a specific turning point when sales really began to
increase?
A Everyday is a turning point, as our business increases every single day, whether it's
the bottom line in terms of revenue, number of click-throughs, or just the traffic that
we're experiencing. So, all of those numbers are growing incredibly fast for us. In the
fourth quarter of 1998, we saw the largest customer and revenue increase that we've
ever seen. Across the board, our metrics continues to move in the right direction.
Q What type of store software products are you using on your site?
A We operate on Microsoft's Site Server package, which is their iiS4.0, Commerce
3.0, and SQL Server 6.5.
Q What type of payment processing system are you using?
A We outsource our credit card processing, and allow our customers to choose
between online, phone or fax payment processing.
Q Where do you see barnesandnoble.com one year from now?
A In the coming year, we plan to have a more exhaustive music and video collection
available on our site. We will probably also increase the number of book titles in our
inventory to more than 10 million. Overall, we will continue to develop a smoother and
cleaner user interface, as part of evolving our overall goal, which is to become
increasingly focused on our customers' needs.
Q What advice do you have for beginners who are interested in selling over the Web?
A I would advise beginners to not lose sight of their end-users. They should consider
what their customers' needs are, and not focus so much on what they themselves hope
to get out of it. Instead, online entrepreneurs should realize that maximizing what they
can draw from the online opportunity is largely based on the opportunity that they put in
front of the customer.
Also, beginners to e-commerce shouldn't underestimate the technology requirements,
the monetary requirements, and most importantly, the time commitment, that are
required to create a viable e-commerce operation.
Visit the site at www.barnesandnoble.com
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