Waterstones, Amazon, and synergies.

There’s been some news coverage this week of the decision by Waterstones, who operate ‘brick’ bookshops, ranging from their huge store in Piccadilly – a 1930s modernist building which was previously a rather up-market clothing shop –  to smaller outlets on university campuses, to sell Amazon’s Kindle in their stores.

This isn’t the first time that Waterstones and Amazon have collaborated.  For much of the 2000s, Waterstones had a web site which promoted its branches, but which also offered customers the opportunity to buy books through a Waterstones-branded version of Amazon’s online shop.  The strategic logic behind this was fairly straightforward.  Waterstones’s strengths were in their locations so they saw their core business as being about creating a sense of place in their bookshops.  For customers who really wanted to buy online, the reasoning was that Waterstones couldn’t compete with Amazon for the logistics and reach necessary to achieve a really good online service, so they would be better to pass customers on to the biggest player in the business.  From Amazon’s viewpoint Waterstones was just another source of referrals of business, and Amazon has always worked very effectively alongside partners.

So in the past there have been synergies between Waterstones and Amazon and the reasoning behind the current move is to find if such synergies exist today.  And part of the reasoning is to ensure that as E-books increase in importance, Waterstones does gain some benefit from being in that market.

Incidentally, if you are a bibliophile Londoner you may well find the name of Waterstones’s current managing director, James Daunt, familiar.  Daunt Books is a chain of just six shops, all based in prosperous areas of London, with a traditional feel and with enough of an emphasis on travel literature to justify a ‘browse by continent’ sidebar on their website.  Its cotton bags have acquired a level of popularity out of all proportion to the size of the chain, perhaps because somebody carrying one of the bags is neatly defined as somebody who would spend time in a bookshop.  James Daunt left the world of banking in the 1980s to start up Daunt Books, and only last year was recruited to take over Waterstones.  On the evidence of his previous enterprise, he does have a strong sense of place and some ideas about how to make this work for a bookshop.

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