Where Are Most eBook Readers Sold? Insights into Brick-and-Mortar vs Online Sales Channels

The holiday shopping season is over, and now the first retailers are beginning to reveal details about the operations and revenue of the past few months. The most prominent representative at the moment is undoubtedly the publishing group Weltbild, which ultimately slipped into insolvency due to what it claims was an overall weak Christmas business and the (apparently) withdrawn financial pledges from the dioceses. In fact, business in December even exceeded expectations.

Another provider that also had to accept a decline in sales is Buch.de. The Thalia subsidiary recorded 2.5 percent less revenue in the 2012/2013 fiscal year compared to the previous year. However, we are primarily interested in the digital transformation and thus take a look at the Tolino sales. Although Buch.de does not disclose specific sales figures for the joint eBook reader, the annual report states: “It has been shown in the past fiscal year that the successful sale of the Tolino Shine e-reader, 80 percent of which was realized in Thalia branches, has given a significant boost to online sales with e-books.”

Brick-and-Mortar Retail as a Digital Backbone?

The goal of subsidized reading devices is self-evidently to boost sales of digital books. This seems to have been achieved by Thalia and Buch.de with the Tolino Shine, as the company’s eBook sales nearly doubled in the past fiscal year.

Everything apparently is going according to plan at Thalia and Buch.de without any major surprises. Nonetheless, the note about the Tolino Shine sales in the quoted paragraph above is surprising: 80 percent of the sold Tolino Shines were sold in Thalia branches.

This is remarkable because a look at the past has revealed a very different customer purchasing behavior in brick-and-mortar bookstores. In 2013, 300 bookstores were surveyed about their eBook reader sales during the 2012 holiday season. At that time, 70 percent of the surveyed retailers stated they had sold only a maximum of five eBook readers in December 2012.

The smaller the bookstore, the fewer the eBook reader sales. With annual revenues exceeding 1 million euros, about 30 percent reported having sold more than 25 devices in December 2012 – with some notable exceptions, as was said at the time. However, that also did not seem to be much in the end, considering that 685,000 eBook readers were sold in Germany in 2012. Even though there was no comparison to online retail at that time, it seems that with such low absolute sales figures in stationary bookstores, online retail had a clear advantage.

A Structural Change in the eBook Reader Market?

The fact that 80 percent of Tolino Shine sales at Thalia and Buch.de took place in the branches can be interpreted in several ways:

• The company’s online portals have low traffic and/or the completion of sales there is relatively rare.
• The advertising by the Tolino Alliance was particularly effective and drew many interested parties to the branches, where the sale was then concluded directly.
• For the first time, the offline offering was right, so the formerly weak sales in the brick-and-mortar book trade followed the structural change of the eBook market ushered in by the Tolino Alliance.
• The shop-in-shop solutions (see below) boosted Tolino sales.

This unexpected distribution at Thalia is probably due to a combination of these (and likely some other) factors.

Tolino Shop-In-Shop Solution at Thalia

The surprising sales distribution could indicate that some competitors will face problems gaining more market share in the future. Amazon sells its Kindle devices only through its own website or through electronics retailers (such as Media Markt or Saturn), but it does not have a presence in the brick-and-mortar book trade. At least, the retail giant does not have to worry about the acceptance of online business (despite all the scandals). PocketBook has gained two important partners in recent months with the Mayersche bookstore and Osiander, so their devices (in addition to Umbreit’s distribution) are now also more visible in offline retail.

As already noted in our 2013 annual overview, a critical look at Kobo is warranted. The Canadians have very attractive eBook readers (and tablets) on the market, but are virtually invisible in the brick-and-mortar book trade. Only in Austria do they have a foothold thanks to the Libro partnership. In Germany, however, the situation remains rather bleak. Given the apparently quite important role of the brick-and-mortar book trade for the eBook business, Kobo would be wise to also seek local partners in bookstores here, as is the case in England with WHSmith.

Of course, it is difficult to give a conclusive evaluation of the market situation and development without knowing specific sales figures. However, at least there are two reference points with the distribution mentioned in the Buch.de annual report and last year’s survey to make some considerations about the potential development. The consumer electronics markets in Germany and the USA are similar in some respects, but considering the still nascent eBook market here, it is by no means certain that Amazon will ultimately manage to gain the upper hand in Germany as well. The existing network of chain bookstores in Germany could ultimately result in a completely different distribution of eBook providers. Naturally, the question now also arises as to what impact the Weltbild insolvency will have on this development.

What do you think – where will most eBook readers be sold (in the future)? Is brick-and-mortar retail the key for successful growth?