Friday, October 19, 2007

Learning online book retailing from the success of Amazon.com


If you like reading books but have no time to drop into a bookshop, not even the one closest to your office or house, don't worry. These days the bookshop is just a click away and you can shop from your desk at the office or at home.

Just connect to the internet and find book-selling website. You can order all the books you want to buy and also read a brief synopsis of each. Most virtual bookshops have a good selection of stock.

Online book retailing is an emerging trend in Indonesia. Following the success of global book-selling giant Amazon.com, virtual book stores are setting up shop here.

Amazon, which was set up in the summer of 1995 by MSNBC Online, owned by Microsoft and NBC, is now an Internet legend. The company has a remarkable story of success, failure and redemption. Within a year of its establishment, the turnover of Amazon.com increased 31-fold. In 1995, its sales volume was only around US$511,000 a year, but in 1996 the amount had jumped to $15.7 million. Up to late 1996, it served about 180,000 buyers from 100 countries and 33 percent of its transactions were conducted with buyers from outside the US.

Today Amazon.com has developed to be not only an online bookshop but also a shop that sells video cassettes and children's toys. The success of Amazon.com has become an icon for the success of a virtual book business. Just by selling books through the Internet, Amazon.com with a turnover of US$5.2 billion in 2003, has put itself on a par with Wall Mart, a US retail giant.

However, the price of Amazon shares is not much higher than those of Barnes and Nobel shares, the largest physical bookshop chain in the U.S. with a turnover of only US$25 million. This reflects the fact that despite the initial investment and high business turnover, the company did not break even until 2003.

At present, Amazon.com offers over 2.5 million titles of books from its database. About 1.5 million titles refer to books still found in bookshops and another 1 million titles are those of out-of-print books.

A search engine can help you find the book you want. Just put in the name of the author, the subject or the book's title and the engine will find it for you. You can also ask this website to notify you by e-mail when there are new titles about certain subjects or by certain authors. Another advantage is that many books are offered at substantial discounts. Even books on the best-seller lists are often discounted by up to 40 percent.

What about the virtual book business in Indonesia? As was touched upon earlier, virtual bookshops have also emerged in this country. Large bookshops, like Gramedia, have an on-line sales division -- gramediaonline.com. Another publisher, Mizan, has set up a subsidiary, Ekuator, which used to take virtual orders, and there are also BearBooks.com, ClickBookShop.com and ketoko.com among others.

None have the success of Amazon.com, however, and many are struggling to survive in a market where access to the internet is limited and people still prefer to shop physically as a means of recreation. Data compiled by the Indonesian Association of Internet Providers (APJII) shows that up to the first half of 2004 there were only 10 million Internet users in Indonesia. It is not known how many of them like to surf online bookshop websites and buy books there.

That life is tough for online book retailers is born out by Ekuator.com. After five years of operations, Ekuator.com stopped taking book orders through the internet last year. For Indonesia, Ekuator.com could be said to have had the most complete and most up-to-date website as it used to offer 5,000 tiles from more than 25 domestic publishers.

Most conventional bookshops, use online marketing services to complement their conventional marketing systems. When bookshop assistants are asleep at home, the shop can still take orders. Online shops can also be a useful promotional means for buyers who usually go to bookshops. As internet use increases many people now window shop first on the internet, which is becoming a kind of virtual yellow pages.

It is expected that bookselling in the virtual world will increase in frequency the coming years, following an increase in the number of internet users in Indonesia. This year, a local internet research institute estimates the number of internet users in Indonesia will increase by 100 percent to 20 million for 2005. If 5 percent of them are book-lovers that will buy books online, this means there would be one million loyal buyers. Not a bad number. It might be time again for online book sellers to start studying the sucesses of Amazon.com. (Hartono Iggi Putro)

The Jakarta Post, March 15, 2005

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