Online Book stores

20Dec10

I have been using Flipkart for purchasing books. They give reasonable discounts ranging from 10 to 30% on most books (and as most readers of this blog would like discounts on anything, would suggest one to give it a try).

I actually started writing this post to mention some books I have read or bought on investing. But just as I started writing, I wondered where Landmark and Crossword would end up if Flipkart becomes India’s Amazon.

I know many of my friends who  go to Landmark or Crossword to just browse books and eventually order from Flipkart, especially those who purchase books regularly. This inspired me to check how the scenario in US had panned out. Barnes and Noble is the largest book retailer with physical stores and Amazon is largest online book retailer.

Barnes and Noble has returned 1.33% to shareholders in the last 17 years  (Not annualized, Net!!). It looks like the book business as a whole has not been value accretive to shareholders.

Amazon, on the other hand has just returned 100 times (10000%) returns in roughly similar period.

This killed it:

“As of May 1, 2010, B&N operated 1,357 bookstores in 50 states, 637 bookstores on college campuses, and one a Web eCommerce sites, which includes the development of digital content products and software.”

Though the reasons are fairly obvious, when it is put in terms of hard coded return figures (1.33% vs 10000%) for investors, it kind of drives home the point on disruptive competition.

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