Bertelsmann rethinks e-commerce strategy

German media group Bertelsmann is to withdraw from standalone e-commerce and concentrate on its offline book and music club...

German media group Bertelsmann is to withdraw from standalone e-commerce and concentrate on its offline book and music club businesses. It will retain its Web-based book and music clubs in the UK.

DirectGroup Bertelsmann, the division responsible for Bertelsmann's global direct-to-customer businesses, will now look at withdrawing from online book sales in Germany, Switzerland and the Netherlands, where it uses the BOL.com brand, and in Sweden, where it trades as Bokus.

These businesses may, however, be adapted to follow the business model of BOL.com in the UK, which runs as an online book club and is very successful, Gerd Koslowski, vice-president of corporate communications for DirectGroup, said.

Book clubs send regular magazines to their members, offering a range of books at a reduced price with members committing to buy a certain number of books per year. The BOL.com e-commerce Web sites outside the UK impose no membership or minimum purchase requirements.

BOL ventures in Italy and China will be retained because these businesses are already fully integrated into local book and music clubs, Koslowski said.

"The Italian BOL is part of a joint venture and our partner wanted us to keep BOL going. It is totally folded into the club, with functions and back-end services tied together. The same is true in China," Koslowski said.

DirectGroup is currently in deficit and so has decided to focus on the business models that work, Koslowski said.

"If you look at the revenue streams, BOL only accounts for 3.5% [of DirectGroup revenue] and it's not profitable," he said. BOL only makes money in the UK, he added.

"That's one of our strategic options - to change all the businesses to the UK model, to sell them, or to do a management buyout. We announced the basic decision [to pull out of e-commerce] in response to rumours but now we need to look at the options, talk to partners and figure out what we can do."

Bertelsmann's US online music Web site BeMusic is integrated with the BMG Music Service music club and will not be affected, while Bertelsmann's 36.2% share in the barnesandnoble.com online bookstore will also be retained.

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