Barnes & Noble’s Nook Sold Out for Christmas
By Tom Ryan
Barnes & Noble
said on Friday that its new Nook e-reader, introduced last month, is
sold out and new orders won’t ship until after Christmas. Orders placed
after Nov. 19 will now ship the week of Jan. 4.
A message
at the top of barnesandnoble.com’s page reads, “The hottest holiday
gift is out of stock. Order the Nook today to be first in line for the
new year.” Buyers who want to give the product as a gift can have a holiday
certificate shipped to the recipient.
The retailer
said last month when it introduced the $259 device, its first e-reader,
that it would ship its first pre-orders by Nov. 30.
B&N’s
news came after Sony earlier in the week said it could not guarantee
that its new Daily Edition Reader would reach online buyers in time for
Christmas, although it has two other e-readers on the market. Amazon
controls about 45 percent of e-reader sales in the U.S. with Sony at 30 percent,
according to ISuppli Corp.
Amazon had
similar out-of-stock issues on its Kindle last year but is expected to
benefit since it promises to be in stock this year.
Sarah Rotman
Epps, an analyst at Forrester Research, believes both Sony and Barnes & Noble
rushed their product launches and neither was prepared to meet demand
for the holiday.
“Even without
specific problems in the supply chain, the manufacturing process takes
time for new products — it could be three months from the time they
place the orders with their factories until they actually ship," Ms.
Rotman Epps told The New York Times.
"Sony and B&N wanted to show the market they could compete with
Amazon for the holiday season. Consumers responded enthusiastically,
but unfortunately these companies are struggling to deliver on their
promise. Now they have to face disappointed consumers with empty packages
under the tree."
Discussion
Questions: Was it worth launching the Nook if B&N knew it wouldn’t
be able to meet holiday demand?
B&N made two mistakes: First, it introduced a product that it wasn’t prepared to ship until November 30th anyway, according to Tom’s article. Second, it failed to forecast demand and will leave thousands of orders unfilled (and probably canceled) for the critical holiday season. These miscalculations play right into Amazon’s hands: There are probably plenty of Kindles available for sale, and e-readers are the “gift that keeps on giving” for any company selling books on its own devices.
Amazon took an added aggressive step over the weekend: It sent e-mails to its members (including this writer) offering a free download of Kindle software onto any computer. I now have a Kindle reader as well as a netbook with e-reader capability thanks to the software that I installed. So Barnes & Noble looks doubly foolish trying to rush a product to market, where its two biggest competitors already control 75% of the share.
There is the old saying “be careful what you ask for, in case you get it.” The buzz generated by the Nook was great and really opened up the door for examining the option of getting an “electronic reader.” I admit that after hearing so much about the Kindle and Nook, I have it on my Christmas list and have been asking people who I see with one, how they like it, and a million other questions since it seems to exciting.
Not having the Nook now as an option, and since both are so new and either one would more than likely fulfill my needs, this becomes a major loss for Barnes and Noble. It does not seem like an item I will buy on a yearly or every other year basis…so a lot of potential customers are out of the Nook for a very long time.
For some items, scarcity increase value–diamonds are a classic example. The flow of diamonds is carefully controlled to ensure they retain their marketplace value. However, e-readers are not diamonds.
I don’t think B&N’s running out of them (especially so early in the holiday season, which doesn’t start until Black Friday) will increase their value. In fact, it may have an unintended benefit for Amazon which indicates it will have sufficient stock to meet demand. B&N’s efforts have raised awareness of the product and I am sure the news stories will carry the fact that a similar product is available through Amazon.
By rushing to get the product into distribution prior to the Holiday Season, B&M did gain surety of a sell-through. The questions will be, will the short-term gain be worth the long-term pain they may have created for themselves?
The “reader” tools should prove to be a hot gift item for the season. And, being thrust into the position of not being able to deliver the gift at Christmas will is a snag that doesn’t help put a bright star at the top of the tree for Barnes & Nobel. However, if they handle it effectively, with messaging, and some added value (short-term subscription, “gift book” for a prosperous New Year, discount for an added Nook for family members, etc.), they can still make lemonade out of lemons.
As the Accenture ads, using Tiger Woods and an errant golf shot in a bad lie point out, “What counts is what you do next.”
It was worth it. Both companies needed to make a statement. And did. Rather than leave the e-reader category to Amazon, they joined the fray. This holiday season is going to be messy. Many desired items may go out of stock as retailers cut back their orders and consumers hesitate to spend.
Will some consumers be disappointed? Yes. Will it hurt either Sony or B&N in the long run? Probably not.
I completely agree with Max Goldberg’s comments.
Even if a sellout was highly likely, it was important for Barnes & Noble to make consumers aware that they have an alternative to the Kindle and the Sony Reader.
It’s important to distinguish between those who are purchasing this thing as a gift and those who are purchasing a reader for their own personal use. Gift givers may not be thrilled about the idea of leaving a Nook certificate under the tree, with the promise of delivery in early January. Many will opt to buy the Kindle. Those who are buying for their own use, on the other hand, will probably be more inclined to wait a little and get the reader they really want.
Ahh, nothing like annoyed customers that can’t get hot, trendy products. Is B&N the only game in town? And isn’t this a device that will make more money for them? Shouldn’t they try to get as many of these out as they can? I know, more questions than answers but I’m not convinced a bricks and mortar bookseller should be marketing a product that drives traffic away from the bricks and mortar (unless they are intending on abandoning their physical operations and going online only).
These e-readers are not as scarce as one might think and I think customers are smart enough to move onto the next one. By the time B&N is back to selling these, I’m sure a bunch of cheaper Chinese models will be readily available in the marketplace.
I think it is always great to have a shortage. This means that the demand (therefore creating more demand) is great and that the interest will continue. B&N has an opportunity to use this in a manner that Amazon cannot. We do not know the specifics. Say they have 1,000,000 readers and sold out, then the demand is amazing and they will have spill over. To get to the market in time for Christmas is important, but to completely miss the Christmas holiday would have been a bigger issue.
Inventory is already being widely reported as problematic in many retail channels, not just at B&N. Heck, we can’t even manage the inventory of H1N1 flu vaccine. It’s a sign of the times. Classically, Apple knowingly introduced the iPhone with insufficient inventory. And like the Nook, there were plenty of established alternatives to the iPhone at about the same price point. But that didn’t matter, and the resulting case history is a fascinating marketing study.
While B&N may lose some sales to Amazon and Sony due to the inventory shortage, I think the bigger revenue risk for B&N is that the money will get spent elsewhere. Given conservative spending budgets and a desire to have a gift ON the holiday, shoppers who would have chosen B&N over the readers may now choose to spend their money on other items and not jump on the reader bandwagon.
B&N did the right thing at introducing a hot product at a hot time. Many people get holiday cards, and this product is no different when out of stock. The sales on e-readers are so hot that even a redemption card for an e-reader after the holidays is still great! The key here is to not only sell the reader but also to tie-in some book sales along with it. Sell it now and stock it later still works in the technology (and the book) worlds!
I actually believe that the launch of the Nook this year was a success, even if the company knew that it would be unlikely to be able to meet demand for the holidays. While this approach tends to run counter to traditional customer-centric practices (which I espouse), B&N had to move now for several reasons:
1. e-book readers are the hot product of THIS holiday season. In a season where few other products have any “buzz,” B&N had to act now to capture share of voice, if not share of market. Who knows what products will capture consumer imagination 12 months from now?
2. Participating in the e-book market will give B&N additional clout with book publishers, and hinder Amazon’s attempt to gain market control.
3. Experience from this holiday season will help the company deal with high-demand for other proprietary products in the future. B&N has now opened the door for additional products they can develop and launch, and the experience will be valuable if not pleasant.