InformationWeek

August 30, 1999

Secret CIO:
Barnes & Noble: Hit Back!

Internet success will come from leveraging bricks and mortar--not from abandoning them.

Herbert W.
Lovelace like Barnes & Noble bookstores. It's not that I have anything against Borders or those wonderful little stores so beautifully depicted in the movie You've Got Mail. It's just that I really enjoy walking into a Barnes & Noble, hearing the soothing background music, wandering around the shelves and the sale displays, stopping for a cappuccino, and browsing for a good book to read. The pressures of the world disappear, and I am happy.

If you were to ask me why I gravitate to Barnes & Noble rather than Borders, I couldn't tell you. I just do.

I also like Amazon.com. I enjoy the way its Web site is designed. I like the ability to check the reviews and reader comments. I am delighted at how easy it is to order books to give as gifts or to keep for my own reading pleasure. It's efficient and nonstressful-a great time-saver.

But purchasing from Amazon.com still doesn't take the place of pulling a book off the rack, settling down into a chair, and deciding whether I want to buy it. Wouldn't it be great if somehow I could merge the two experiences?

That's the reason I become sad thinking about Leonard Riggio, the chairman and CEO of Barnes & Noble.

Riggio is a great American success story. He was born into a working-class family in New York and attended New York University at night while employed at its bookstore during the day. He dropped out of NYU to open the Student Book Exchange in competition with his former employer and went on to build an empire--the most formidable chain of book stores one could imagine. His judgment--until Amazon came onto the scene--was unquestionable.

OK, it happens. Along comes a challenge and maybe we ignore it because we are so focused on our traditional competition that we just don't see it as important. Or maybe we're not sure how to respond so we flail around a bit. In any case, we have to respond effectively to protect what we worked so hard to build-otherwise we become an also-ran, and that's intolerable to someone who's been No. 1.

This is why I wonder why Lenny isn't hitting back as strongly as I thought he would. Barnes & Noble has sold 18% of its Web site to the public and half of the rest to Bertelsmann AG, the huge German media firm. But without getting into the logic of sharing control of the next greatest hope of your company with another firm, what bothers me is why Lenny isn't leveraging his greatest asset to win on the Web-all those wonderful brick-and-mortar stores that everyone disparages.

I'd love to see Barnes & Noble tie together those two really pleasurable experiences I have around books. I need the efficiency of buying online. I also like the opportunity to browse through a great bookstore. So here is my suggestion: How about doing something your competition at Amazon cannot do? When I order from your Web site, give me the option to ship the books to my home--I'll pay the shipping and handling as I always do. But also give me the choice to pick up my order at the Barnes & Noble store of my choice. Think about where best to place the pickup counter. Maybe it should be back near the coffee bar so I have to walk past all the sales displays. You gain a service offering your competition can't match, and the possibility I'll buy something else on impulse.

I gain the convenience of maybe getting my books faster and not having to worry about being home when they arrive.

While you're at it, install Internet kiosks in each store. I'll be able to read reviews on the Web for anything that catches my fancy and maybe even buy from bn.com something you don't have in the store or I don't want to carry home. Your objective is to differentiate yourself from Amazon. com--and you can. Turn all of those brick-and-mortar obstacles into advantages.

Just fight back, Lenny, just fight back!

Herbert W. Lovelace is the CIO at a multibillion-dollar international company. Herb practices his day job under an alias and has changed the names of colleagues to protect the guilty. Send him E-mail at lovelace@home.com. He'll provide real answers-and whimsical comments-to your questions on InformationWeek Online at www.informationweek.com.

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