Sorry, the Barnes & Noble and Google Partnership Won't Beat Amazon
There's no denying Amazon.com 's dominance in online retail and bookselling, but that's not stopping Barnes & Noble from doing everything it can to match its rival's shipping prowess. That's why last week the company teamed up with Google to offer same-day delivery of its books.
While it's hardly a bad idea to have Google your side, it's doubtful the new partnership will invigorate B&N's business.
New delivery option, same business model
Barnes & Noble is tapping Google Shopping Express, a same-day delivery service that uses people to physically shop for customers' orders at retailers such as Costco , Target , and Walgreen , and then delivers the goods to the buyers' homes.Google Shopping Express is a new initiative that is only available in five cities right now, but Barnes & Noble's deal with Google is limited to Manhattan, West Los Angeles, and the San Francisco Bay area.
While this may seem like a great idea for B&N to tackle Amazon head-on, the potential upside is very limited.
For starters, B&N members already have free express shipping for their orders. In New York City, even customers who are not B&N members already had a same-day shipping option before Google came into the picture.So the new partnership, at best, benefits nonmembers of Barnes & Noble who happen to be located in West L.A. and the San Francisco Bay area -- not nearly enough cities to make significant sales gains. Then again, Barnes & Noble toldThe New York Times that the partnership is a test, so it appears the program could expand into more cities in the future if things go well.
Right now, Google Shopping Express offers free, unlimited same-day delivery for members, and comes with a free six-month trial membership. The company hasn't said how much the membership will cost once the trial expires, but non-members pay about $5 per delivery, per store.
Why even try?
It's hard to fault B&N for trying to gain new retail customers. Over the past five years the company has closed about 63 stores, leaving it with a total of 660 retail stores (not to mention about 700 college bookstores).Despite the closures, in its fiscal fourth-quarter Barnes & Noble increased year over year revenue by just 3.5 %. But for the full fiscal year, revenue was down 6.7%, and its Nook division plummeted 35.2 %.
Samsung Galaxy Tab 4 Nook. Source: Barnes & Noble.
In June, B&N said it would spin off Nook as a separate company. It announced that Samsung will take over future hardware designs for the Nook, while Barnes & Noble focuses on the software. The two companies have an event planned for later this month to give more details on the co-branded Samsung Galaxy Tab 4 Nook.
This is all part of Barnes & Noble's attempt to earn more revenue from book sales, but it's hard to see how the Google partnership will actually make that happen.
The problem here is that any customers who use Google Shopping Express to buy Barnes & Noble books become Google's customers, not B&N's. The delivery service isn't available on Barnes & Noble's website, which means all the books delivered under the partnership come from sales on Google's website.
With B&N desperately needing to increase sales, perhaps it doesn't care where the book sales are originating. But it seems odd to hand over any type of customer acquisition to another company while Barnes & Noble struggles to retain customers from Amazon.
Google, on the other hand, has the incentive to acquire additional customers for its new service, as it tries to lure people away from Amazon's website. Google makes about 90% of its annual revenue from search advertising, but it doesn't make a dime if users go straight to Amazon.com to buy products instead of doing a Web search first.
Kindle Fire tablet. Source: Amazon.
Why Amazon still wins
Amazon has two superior delivery services Google and B&N can't match. The first is Amazon's digital Kindle sales, which are a delivery system in their own right. Millions of books are available for instant download to Kindle devices, Android phones and tablets, Apple devices, and more. B&N's Nook titles can be downloaded to mobile devices as well, but the Kindle's pervasiveness easily outpaces the Nook.
In the fiscal fourth quarter, B&N sold just $25 million worth of Nook devices and accessories. Amazon doesn't break out sales of its books (or anything, really), but research from Morgan Stanley estimates the Kindle brand brought in $4.5 billion in revenue in 2013 and could reach more than $5 billion this year.
Aside from digital downloads, Amazon's two-day Prime shipping and experimental same-day shipping are a better bet for consumers than anything Google and B&N offer. Amazon has millions of titles at its disposal, while any one B&N location has 163,000 titles at most. And just last week, Amazon expanded its same-day shipping from four cities to 10.
So not only does Amazon have free two-day shipping options for its members -- and paid two-day options for nonmembers -- but it can also ship books to a customer's door the same day in 10 cities, compared to Google and B&N's three. Between Amazon's shipping options and its powerhouse Kindle brand, it appears B&N and Google's latest partnership is nothing more than a public relations campaign.
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The article Sorry, the Barnes & Noble and Google Partnership Won't Beat Amazon originally appeared on Fool.com.
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Costco Wholesale, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Barnes & Noble, Costco Wholesale, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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