Case Analysis ● 3 Pages Each ● Executive Level Analysis o Summary o What do you agree with? – 2 points o What you not agree with? – 2 points o What w

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● 3 Pages Each 

● Executive Level Analysis 

o Summary 

o What do you agree with? – 2 points o What you not agree with? – 2 points o What would you change – 2 points 

o Why would you make the change? – 2 points 

34 SPRING 2015 | BOOK BUSINESS34 SPRING 2015 | BOOK BUSINESS

T
echnology has not only
changed what we offer to
the marketplace—it has
also infl uenced how those
offerings are sold. The abil-

ity to sell things online has had a pro-
found impact on our economy as a whole.
Research and consulting fi rm Forrester
projected U.S. online retail sales during the
2014 holiday season to reach $89 billion, a
13% increase from the same time period
in 2013. Mobile commerce is only fueling
this growth.

Curiously, many publishing organi-
zations do not have the capability to take
orders and execute payment transactions
online from their website. To those out-
side the industry, this lack of ecommerce
seems preposterous—proof positive that
book publishers are incorrigible Luddites,
ostriches with heads fi rmly in sand.
However, those with a deeper knowledge
of publishing’s distribution ecosystem and
publishers’ economic realities know that
there are some valid reasons why publish-
ers have not made ecommerce a priority,
and consequently why many in the indus-
try do not have that capability today. Many
publishers made well-reasoned business
decisions not to invest in online storefronts
based on the facts and a rough calculation
of a return on such an investment.

Existing Channels Are
Suffi cient
For many, the principal reason for not cre-
ating an online storefront was that online
selling was not consistent with the pub-
lisher’s channel strategy and would not

bring in enough additional rev-
enue to warrant the investment.
Existing channels, they reasoned,
appropriately handled current sales
opportunities.

For trade publishers, online market-
places such as Amazon most appropriately
serve consumers. Trade customers don’t
conduct a search for books by going to a
publisher’s websites, but rather to a com-
prehensive marketplace where all publish-
ers are represented.

Institutional librarians have expressed
a preference to purchase through inter-
mediaries that aggregate titles from mul-
tiple publishers. For both print and digital
titles, librarians prefer the effi ciency of buy-
ing through a third party channel, such as
Overdrive, as opposed to buying from indi-
vidual publishers.

Educational publishers that serve mar-
kets at the primary, secondary, or higher
education level must conform to estab-
lished high-touch adoption sales processes,
typically with a direct sales force.

While the specifi cs may vary from mar-
ket segment to market segment, publishers
concluded that online storefronts would
not yield signifi cant additional revenue.
Worse, online sales might disrupt existing
distribution relationships through channel
confl icts, threatening existing revenue.

The Money Pit
The second fundamental reason publish-
ers have questioned whether to create their
own storefronts is cost. Businesses have
been creating ecommerce sites in earnest
for around fi fteen years. In the early years

of ecommerce, creating an ecommerce site
represented a signifi cant capital technol-
ogy investment. A high level of technology
integration was required, if not outright
software development, to create the desired
shopping experience for the customer and
fulfi llment processes. Ecommerce initiatives
in the early days were risky, complex, and
became a career Waterloo for many exec-
utives for whom the initiative got out of
control. Without a clear projection of the
new revenue ecommerce channel would
generate, it was diffi cult for publishers to
justify the investment of an ecommerce site.

A Need for Reassessment
The time has come for many of those pub-
lishers who earlier decided not to develop
or acquire ecommerce capability to reas-
sess their decisions. Many will fi nd that
after fi ve to ten years, previous assumptions
about ecommerce are no longer true.

The cost and complexity of imple-
menting online transaction capability have
been lowered substantially for publishers
over the past ten years, driven by a num-
ber of factors:

Vendor-Hosted Ecom: A wide-range
of ecommerce software-as-a-service (SaaS)
providers can now offer a hosted ecom-
merce capability to publishers effi ciently
and economically. SaaS providers enable a

Ecommerce
Reconsidered

Andrew Brenneman
D I R E C T I O N S

You Might Need a Shopping Cart After All

Follow Andrew
@andrewbrenneman

(continued on page 33) �

BookBusinessMag.com | SPRING 2015 33

publisher to have its own branded store-
front without building it themselves.

Existing Infrastructure: Compared to
ten years ago, today publishers have gen-
erally put in place the other systems that
ecommerce requires, such as a market-
ing website, CRM systems, and electronic
catalogs. Ten years ago, publishers did not
always have these components in place,
which significantly increased the cost of
an ecommerce project.

Easier Payments: To provide complete
transaction capabilities, ecommerce sites
connect to a payment gateway that allows
the publisher to connect to the banking
system to complete the sale. Payment gate-
way providers, such as authorize.net, have
significantly expanded the services they
provide, such as securely managing custom-
ers credit card information and supporting
recurring payment plans. This means there
is less functionality that publishers need to
implement to provide a full-featured ecom-
merce site. The payment gateway providers
do a lot of the heavy lifting.

Evolving Consumer Behavior
Equals Greater Revenue
Potential
For many customers, publishers are in fact
the preferred point of sale, and ecommerce
a preferred method of transaction. Many
trade publishers have developed brand
equity that has led to customer engage-
ment and loyalty. Based on the brand rela-

tionship, customers often wish to engage
directly with publishers to buy. Publishers
such as Scholastic and Harlequin have
shown that a strong brand and an edito-
rial focus enable publishers to engage with
and sell to their customers directly, and the
customers prefer doing so.

Trade marketplace and aggregation
channels are not a fit for many profes-
sional publishing segments. Professionals
in such fields as law, healthcare, and engi-
neering, do not buy authoritative profes-
sional content through consumer market-
places. Professionals have focused interests
and have little motivation to buy omnibus
offerings from aggregation channels that
serve institutional librarians. Professionals
and corporate librarians already know the
publishers that are authoritative in their
fields, and do in fact start their product
search with these authoritative publishers.
Ecommerce is the most relevant approach
for publishers who wish to pursue non-
academic enterprise and professional mar-
ket opportunities.

Customers of educational publishers
are grumbling for change. Educators and
educational institutions have expressed a
desire for greater flexibility in what and
how they buy. They seem to feel locked
in by the traditional adoption of a single
comprehensive text, and have communi-
cated a desire for acquiring publisher con-
tent in smaller chunks, sometimes referred
to as learning objects. In order to fulfill the
vision of modular content offerings, edu-
cational publishers need to not only create

content in a more flexible fashion, but to
be able to sell it in a more dynamic, nimble
fashion: just-in-time sales and just-in-time
delivery. The long-cycle textbook adop-
tion sales model is incompatible with the
learning object product vision.

For all customer types, an ecommerce
site is not just a place to buy, but also a
place to check on order status, to see what
is new from the publisher, and to admin-
ister their customer profile information.
A company that provides a well-designed
commerce experience is seen as provid-
ing a higher level of service to customers.

How Much Ecommerce
Revenue Are You NOT Getting?
With significantly lowered implementa-
tion and operating costs, and increasing
evidence that suggests higher revenue can
be expected from ecommerce, it is critical
that all publishers reassess decisions they
have made in the area of ecommerce, as
some key assumptions may have changed.

There is a Catch-22 here: Publishers
feel they can’t afford ecommerce since his-
torically they have not generated ecom-
merce revenue, which is only because they
did not have a viable storefront to begin
with! And that is the key point: Without
true ecommerce capability how does one
know how much revenue is currently
being lost? With lowered implementation
costs, publishers can now find out. x

Andrew Brenneman is founder and president
of Finitiv (www.finitiv.com).

ECOMMERCE RECONsidEREd
(continued from page 33)

offerings such as iLit, a comprehensive
digital reading intervention solution with
a research-proven instructional model for
grade 4-10 learners. It is specially designed
to help readers who may be as much as
2-4 grade levels behind master essential
skills and get back on track. Our educators
who are using the software in the class-
room rave about the results they are seeing
and have let us know that our software is
key to their student gains. x

T H E C O R N E R O f f i C E
(continued from page 15)

that restrict content to a single retailer.
Advances and adoption of ebook formats
like EPUB 3 will open new opportunities
for publishers and authors.

Print-on-demand creates new oppor-
tunities for us to deliver printed books as
well, especially as machines that can pro-
duce one-at-a-time, beautiful books evolve.

I love great beer, and great books, and
great authors. I am passionate about the
topics I read, I know the publishers that

publish for me, and I know the authors
that share their wisdom. I want to listen to
their authentic voices, connect with them,
support them, buy from them, and read
with them. I am not alone. x

Doug Lessing is president at Firebrand
Technologies, a provider of publishing systems
and technologies.

G u E s T C O l u M N
(continued from page 9)

Reproduced with permission of the copyright owner. Further reproduction prohibited without
permission.

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