Innovation Automation through process, products and people

Innomation

Subscribe to Innomation: eMailAlertsEmail Alerts newslettersWeekly Newsletters
Get Innomation: homepageHomepage mobileMobile rssRSS facebookFacebook twitterTwitter linkedinLinkedIn


Ulitzer Innomation Authors: Shelly Palmer, Ben Bradley, Stackify Blog, Jyoti Bansal, Hiren Y

Related Topics: Innomation

Ulitzer Innomation: Article

ContentStores: Linking Offline and Online Bookselling

The world of consumer bookselling is characterized by two polarized business models: Bricks and Clicks

Today, the world of consumer bookselling is characterized by two polarized business models: Bricks and Clicks – physical retail bookstores and virtual online webstores.

The future of consumer bookselling depends on breaking down this polarization and creating a new hybrid business model that exploits combinatorial innovation – the combination of existing concepts and technologies to deliver a business model breakthrough.

My aim here is to offer one view of the future of consumer bookselling by considering some key issues and outlining a set of synergistic technologies, then presenting a new business model based on the concept of a “Contentstore”.

Three Key Issues

There are at least three key issues that consumer bookselling grapples with on a daily basis:

  1. Browse offline – buy online. The new generation of web-savvy consumers browses books in the bookstore but buys online. Sure, impulse book buys occur in-store and plenty of people continue to order books through their local bookseller. But this habit has developed fast and is unlikely to go away.

  2. Supply chain hassle – by which I mean the need to maintain local physical inventory and deal with returns. Ordering, re-ordering and returns is a time-consuming and costly administrative hassle.

  3. Being behind the demand curve. Despite bestseller lists and publisher recommendations, it’s not easy to predict, on a day-to-day basis, “when to play and when to fold” individual books without time-consuming research – especially if you are an independent bookseller.

Undoubtedly there are more issues but these three have significant impacts: Loss of trade, added cost and reduced profit, and inability to fully exploit market demand.

Five Key Technologies

Combinatorial innovation depends on exploiting synergies between people/processes/technologies to combine them to create new deliverables. In terms of the future of consumer bookselling there are five key processes/technologies to be aware of:

  1. A digital supply chain. Most writers use computers to write their books, the content is delivered as an electronic file and printing driven from an electronic master. Digitized books are the norm.
  2. Pervasive availability of cheap digital storage and broadband connectivity to the Internet. Hard disks capable of storing thousands of books are commodities and anyone with a broadband connection can now download large content files, such as a digitized book, in minutes or even seconds.

  3. Print-on-demand (POD). Machines little bigger than the size of early office photocopiers can now print and bind books on-demand. This enables printed books to be delivered at point-of-sale and low-volume book printing to be localized in-store.

  4. Consumer-driven bestseller lists. Online booksellers with any significant level of volume, can easily produce bestseller lists across any number of “micro-categories” to get an instant picture of what is selling now and to what demographic.
  5. Web Services. This software technology makes it easier for applications to talk to discover, communicate and pass data between them automatically over the Internet using the Extensible Markup Language (XML) protocol.

Introducing the Contentstore

Let’s set up a scenario. You’re a well-established publisher, or you run a chain of retail bookstores or you are an online bookseller or even an independent that wants to run your business more efficiently. Any one of these entities, or better still, an alliance of these entities, could benefit from the business model I propose (see figure 1). In the following sections, I explain the main components of this business model diagram.

I call the retail outlet a “Contentstore” below, because books are only one of the downloadable content formats that can be made available to customers in the retail store. The ContentStore is a physical store linked in commercially to a specific content supply chain.

The Contentstore BackOffice

The foundation for the future of consumer bookselling is creating an end-to-end digital supply chain based on Web Services allowing different kinds of “eContent repository” (ECR) communicate with each other. I call it a “eContent repository” because this data store could also include digitized audio and visual content, not just books. The ECR operates as a component of what in current technology parlance is called “a service oriented architecture” (SOA), which means that each ECR is specifically designed to operate as a service node in the supply – either providing or consuming eContent.

Figure 1 illustrates this digital supply chain and its participating entities:

· The author provides digital content to the publisher.

· The publisher provides digital content to the distributor.

· The distributor aggregates different types of digital content and provides it to the ContentStore.

· The ContentStore provides digital content to a local POD printer or to other digital devices/email addresses used by consumers.

So the “BackOffice” of the Contentstore is an in-store ECR connected to the distributor’s ECR via the Internet, linked to a local POD machine and a server that manages the terminals that customers use to browse and buy books, which are located in the Contentstore’s “FrontOffice”.

Figure 1: Contentstore Supply Chain

CStore Supply Chain

The Contentstore FrontOffice

In the FrontOffice of a Contentstore, tangible product is still in evidence – books on shelves, music via headphones, video playing on a screen near you. Focusing on bookselling specifically, the top n bestsellers from one or more macro/micro-categories are always physically on display - but for handling rather than for sale. Chairs and refreshments are there to enhance the book browsing experience, surrounded by terminals used to access only the content network’s own portal for the purposes of researching a prospective purchase and ordering content online.

If you want a copy of a book, you login to the Contentstore’s portal via one of the in-store terminals – perhaps using a smartcard or mobile phone link - and order a hard or soft copy of the book. A hard copy is queued for local POD printing and can be picked up sooner or later from the store. A soft copy is downloaded either to a device you brought with you (e.g. your personal iPod or other portable storage device) or delivered electronically to your personal email address for download at your home or office.

Naturally to use the portal and order content, customers must be registered as a store customer and user of the content network. Customers can register either in-store or from home via their personal web connection to the “central” version of the same portal. Just like any sophisticated online store, customer preferences and buying history are being tracked, they are available at both at the local and centralized ECR level, and loyalty bonuses and offers accessible at any time.

A Contentstore does not have a sales counter, instead it has a helpdesk: Here for example, customers can ask questions, pick up ordered POD copies or register as a new customer. No money changes hands in a Contentstore because all payment is done electronically via an online account that is setup as part of the customer registration process. Contentstore staff no longer function as till operators or shelf fillers but primarily as content enthusiasts whose role is focused on adding value to the customer’s buying experience – more librarian than clerk.

Leveraging Bestseller Lists

A key advantage of a Contentstore is it’s ability to leverage online bestseller lists. Because the Contentstore is linked into a content network of multiple stores, all of which are “stocked” from a central ECR, it can leverage the ability of this ECR to generate bestseller lists across any number of micro-categories. These bestseller lists reflect the buying activity of individual online customers, customers ordering via a Contentstore and other third party best seller input received automatically via a web service by the distributor’s ECR.

Each individual Contentstore “subscribes” to sell from a specific set of bestseller lists. These lists are updated in real-time, literally as customers buy, so they always reflect the most current position. The latest content for each list can be downloaded from the central ECR to the local ECR on-demand – but more likely as a fixed task that takes place overnight. Naturally special/one-off book orders can be placed at any time and downloads initiated in response to individual or batches of such orders. But ensuring the latest bestselling stock is always available is essentially an automatic feature of this architecture.

The lists that underpin the downloading of content are not just based on bestsellers. For example a category of books, say biographies, could include at least three classes of list: Latest, Top 50 Bestselling and Classics (former bestsellers). This should ensure that every list contains a minimum of around 100 titles. So if a bookseller subscribes to five such lists, they are able to electronically “stock” five hundred titles. Lists may also be subject to seasonal variants.

Benefits of the Contentstore Model

There are many benefits that this business model introduces to consumer bookselling. Let’s begin by referring back to the three key issues identified above.

1. Browse offline – buy online becomes redundant, because the model simply embraces both, making it a non-issue.

2. No inventory – the “handling” inventory is printed locally on-demand and only when bestseller information changes. There is no physical inventory for sale until it has been ordered – in other words a just-in-time supply chain - and the whole concept of returns disappears.

3. Real-time knowledge of what’s bestselling. Local connectivity to a centralized ECR means that every store and store customer is automatically “in-sync” with what is bestselling right now across a given content-network.

But of course there are many other benefits, especially in terms of understanding and interacting with your customers.

1. Customers do not have to come to the store themselves. They can use their local store account to order online from home and only use the store to pick up POD copies or handle books as and when they wish to. This has the potential to channel some revenue from online purchases back to the store owner – unlike today.

2. Customers’ buying patterns are being tracked whether they buy physical POD books or ebooks, again unlike today. The analytical, personalization and targeted promotion potential from closing this data capture “loop” is clearly significant.

3. The Contentstore needs less space for inventory so it can be better developed as a promotional venue for book-signings, readings and so forth. In this way it becomes associated in the customer’s mind with “place or hangout” rather than “store”.

4. The “gather-local, aggregate-central” information management can be leveraged for many analytical benefits that may be used to the advantage of both the central content-network owner and the local bookseller.

Thematic Contentstores

Another compelling benefit is that the model facilitates the development of a network of specialized thematic Contentstores, subscribing to specific micro-categories of lists, making it easier for specialized bookstores run by enthusiasts to survive economically in the future. The availability of bestseller data by micro-category sourced from the central ECR, means that it’s more likely that a specialist Contentstore is selling the right books at the right time for its chosen niche(s) Another spin-off benefit is that this makes the business model as a whole very suitable for deployment via a franchising model to help recover what could be significant start-up and ongoing costs for the franchisor. Wholly owned Contentstores may focus on macro categories – the key fiction and non-fiction bestseller categories – while franchisees may be licensed to service specific micro categories in specific areas.

By exploiting the synergy between different types of content available from the same central ECR(s), a niche Contentstore can provide a full-service, theme-driven destination to enthusiasts. For example a “Jazz” themed Contentstore could supply downloadable:

· Jazz books

· Jazz music

· Jazz posters

· Jazz videos

This kind of Contentstore stands a good chance of becoming a regional community “destination” rather than just a store for Jazz enthusiasts: A vibrant physical community, rather than a sterile online community.

Drawback

There are however, some obvious drawbacks to this model. It will depend on a sophisticated software and hardware technology infrastructure and only large organizations may be able to afford this technology investment. The Web Services infrastructure required to manage this all-digital supply chain is not trivial. The content network and Contentstore management system will require built-in workflow, rights management and automated licensing, exceptional scalability, reliability and availability. But this is well within the capabilities of the current generation of software development tools and databases.

The need for a POD machines is a potential point of failure. The cost model to lease and supply a POD machine within every Contentstore could prove unviable. The technology may neither be as reliable nor able to deliver as high a quality product as bookstores might like. Most POD technology offers limited binding options and is only suited to the production of text-heavy trade paperbacks. But this business model could be the kick POD needs to decrease unit cost and increase deliverable quality.

Consumers may simply resist this kind of paradigm shift.

People may be put out of work because individual Contentstores should be able to run with less people than today’s stores that are dominated by physical goods. But Contentstores will require higher-paid knowledge workers, people who are comfortable not just with books but with managing technology such as POD machines, online Portals and personal digital download devices.

Yet despite these drawbacks, I predict we’ll see Contentstores within our local High/Main street within 3-5 years, maybe sooner. Instead of today’s warehouse stores, such as Borders Books, dominated by canyon-like aisles of physical inventory, tomorrow’s Contentstores will be more compact and dominated by people not product. The technology and concepts are in place, all it takes is someone to combine them together to drive the kind of innovation that the bookselling industry sorely needs.

More Stories By Stewart McKie

Stewart McKie has 25 years of IT industry experience. His education includes a MSc in Organization Consulting and a MA in Screenwriting. I was the Technology Editor of Business Finance magazine during 1995-2000 and also wrote regular features for Intelligent Enterprise magazine. I am the author of six books on accounting software and over 50 technology white papers. My current focus is my screenwriting 2.0 app called Scenepad and my supply-chain auditing app. I have managed many ERP selections and implementations of SunSystems all over the world. Currently I am engaged as the Implementation Oversight consultant for a global AX2009 rollout for a manufacturing client and as the selection consultant for pan-European ERP solution.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.