UK bookseller Waterstone's is taking on the awesome Amazon with its
online bookstore. But will it really beat its arch-rival hands
down? Lindsay Nicolle reports
Amazon may think it's got the world of book sales sewn up, but
the £1bn HMV Media Group, which owns high-street book chain
Waterstone's, is determined to give the mighty Internet upstart a
run for its money. At first glance, it's hard to see how a
high-street chain can compete against the prices and convenience of
buying books online 24 hours a day, but Waterstone's believes that
its physical store chain is a powerful weapon in the online book
sales war.
The company's Internet bookshop, Waterstone's Online, went live
in 1996 as a separate business to its parent, based on an existing
mail order service. The site was revamped last year to make it more
flexible, scalable, and interactive, and to support more aggressive
marketing against some 400 online book-selling rivals, including
Amazon.co.uk, Bertelsmann and WHSmith.
Today, Waterstone's Online is among the top five sites in its
market.
Waterstone's strategy is to use its e-commerce site to
strengthen rather than replace its 208 stores, providing a more
rounded service to specialist book buyers.
"The online business is about ordering and sending books on
demand, while the retail business is about informed staff helping
people find the right book, select similar works by other authors,
or return books when the wrong choice has been made. The two
services are complementary," says Jonathan Wilson, Internet
business manager for Waterstone's Online. "Our retail outlets are
invaluable because they are, in effect, customer service
centres."
Wilson adds: "I think online businesses will try to emulate that
kind of personal help and assistance, but I don't think you can do
that effectively without a high street presence. There's a lot more
to selling books than just price."
Waterstone's clearly intends to fight its corner even though
it's up against more competitors than can fit into the ring. Its
long-term business strategy is to box clever by playing to its high
street strengths while taking on the aggressors at their own game,
and adding value.
As Waterstone's consolidates its recent merger with the Dillons
book chain, and counts down the days to its imminent flotation, the
company oozes confidence. It asserts that its goal is still to
become the most profitable bookstore in the world without losing
its identity and heritage: a commitment to offer the widest range
of books on demand, backed up by informed and enthusiastic sales
staff.
When set against the huge success of Amazon, and the rapid
invasion of the book market by supermarkets and music stores, which
has sparking off a discount war, that seems a vain hope. But
Waterstone's has several aces up its sleeve. It is the most
successful specialist bookseller in the UK and Ireland with an 18%
terrestrial market share, beating WHSmith and Ottakar's among
others, on sales.
Waterstone's is also one of the largest decentralised businesses
in Europe, employing 5,000 staff in local business units that serve
local markets. This recognition that book lovers come in all shapes
and sizes is a customer service proposition that the company
believes distinguishes it from its pure online competitors.
Waterstone's also has a strong brand image established over 17
years and it is determined to capitalise on this in its revamped
Web site.
The redevelopment of the site took just 16 weeks. The systems
cost £750,000 without counting the significant sums spent on new
premises and the hiring of Web-savvy customer service personnel.
Hosting was outsourced and custom programming was kept to a
minimum. The successful result earned Waterstone's the accolade of
finalist in two categories of the 1999 BT eBusiness Innovation
Awards.
The star suppliers were e-commerce partners Intershop and
Nvision - hired by Siemens to evaluate the system requirements, and
design, implement and deliver the fully tested e-commerce solution
on time, and manage all transactions thereafter.
The key requirements were that the site should support a minimum
of 20,000 page impressions per day, over one million titles in the
product database, and five full text searches per second. Searching
for book titles is made easier by the use of the Alta Vista search
engine, fuzzy logic, and phonetic matching.
For those customers nostalgic for their local shop, there are
hyperlinked branch pages to inform customers about in-store events.
Conversely, shoppers in the branches who need to do complex book
title searches can use an in-store kiosk linked to the site.
Future enhancements include plans to incorporate the knowledge
of the company's high-street staff into the Web site to enhance the
quality of the Internet sales service, and to support personalised
one-to-one marketing and e-mail.
So, is the new-look Waterstone's Online, backed up by its
high-street presence, a good enough proposition to hold off
Amazon?
"I think it's more than enough," says Wilson. "Amazon's business
is limited to sending books by post, whereas we can have a far
richer relationship with the customer - through the branches,
online, or by phone. What Amazon has done is build a brand for
buying things online, but the winner in online bookselling will be
the business that can offer specialist advice."
He adds: "I can see a future where Amazon will establish
physical premises to get closer to their customers, whereas we've
already got them. It's far easier to create a Web site than to
create real estate penetration."
Meanwhile, Waterstone's is evaluating strategies for selling
books through mobile phones and digital TV, and is keeping an eye
on the progress of e-book technology.
"We want to build a single book sales business that you can
contact in any way that suits you," says Wilson. "I think that one
day soon, people may start to wonder why they can't physically
visit Amazon for an even better service, and such pure page
specialists will begin to appear a little remote. I hope so!"
Online technology
Siemens project-managed the new-look web site, working with
system developer NVision.
The heart of the e-commerce solution is Intershop software. This
runs on a Sun E450 box along with an Oracle 8.0 database, and the
whole is hosted on a second Sun E450 box. The Oracle database holds
the details of one million books.
The search engine is Alta Vista running on a Siemens Primergy
870. Internet connectivity is provided by BT's dedicated Web World
platform with a two megabit line.
Siemens project-managed the new-look web site, working with
system developer NVision.
The heart of the e-commerce solution is Intershop software. This
runs on a Sun E450 box along with an Oracle 8.0 database, and the
whole is hosted on a second Sun E450 box. The Oracle database holds
the details of one million books.
The search engine is Alta Vista running on a Siemens Primergy
870. Internet connectivity is provided by BT's dedicated Web World
platform with a two megabit line.
Waterstone's strategy
UK specialist bookseller Waterstone's Online is among the top five
sites in its market in the UK, but the leader,
Amazon.com is way out in front of the rest on
sales. To rise to this challenge, Waterstone's is integrating
its online and high street business services to provide a richer
customer service to book buyers.
The company is positioning its shops as customer service centres
that complement and back up Waterstone's online presence with their
in-store Internet kiosks and knowledgeable staff. Despite its
awesome competition, Waterstone's believes that its strategy will
eventually enable it to become the most profitable bookstore in the
world.