Were you planning to buy books from Landmark during the winter sale?
Wait. Landmark’s online store might deliver the same at your doorstep while you are sipping your early morning coffee.
There is no delivery cost, you can pay cash on delivery, and at times the online discount is surprisingly 10 to 15 per cent more than the annual retail discount. Better still, some of the titles that you are eagerly waiting to read might not be available on discount in the bookstores. But online stores are likely to provide you at least a 10 per cent discount throughout the year. In fact, the ‘add to cart’ option has emerged one of the most popular website features these days.
So why are books cheaper on home delivery than in a store?
The recent merger between two publishing giants – Random House and Penguin – speaks volumes for the nascent competition between the publishing houses. Bookstore chains like Landmark and Oxford have revamped their on ine services to increase sales. Even one of the country’s oldest publication houses based in Chennai – Higginbothams which currently operates from a majestic, century-old building on Anna Salai – plans to go online from March 2013.
Landmark’s India Deputy Chief Operating Officer, Peter Newbould, says, “Landmark is both a clicks and bricks business – we are building Landmarkonthenet’s product offer and we have plans to aggressively market the offer in the near future.” But when questioned about the discrepancy in the price policies he says, “Bookstores have a higher cost base than online with expensive rents and staff.”
This is true for major bookstores are mostly located in prime locations like Connaught Place in Delhi, Park Street in Kolkata, Churchgate in Mumbai and Mylapore in Chennai. Many of them have franchises in major shopping malls in the metros, where rents are exorbitant.
When asked if Flipkart is an important competitor, Newbould exclaims,“Yes, and they are a big enough target to shoot at!”
Oxford’s iconic Cha Bar still attracts a section of urban customers who prefer scanning a few pages of a book over a chat. But recently the Director of Oxford Bookstore, Priti Paul, declared in a report in Business Line that there is a possibility that Cha Bar will be a standalone brand in future. On the other hand, industry experts feel that it is not a wise decision because book reading is already under threat and it will be difficult for the two firms to succeed independently.
The question that now arises is why Landmark, which is a Tata enterprise, and Oxford, which is run by the Apeejay Surrendra Group, are afraid of small start-ups like Flipkart?
Flipkart.com was launched in 2007 by two Indian Institute of Technology (IIT-D) graduates Sachin Bansal and Binny Bansal who were in their early thirties then. By 2011, i.e. four years after they began operations, their annual expenditure on advertising was nearly Rs 100 crore.
One of the main reasons why this was possible was that the world’s 12th largest private equity firm, General Atlantic, had invested in a strategic start-up like Flipkart and thereby pumped in money for early growth. Now Flipkart runs its own vans across the metros, has a well networked courier service, offers a 30-day return option, and a 24x7 customer care service.
Private equity firms, though demonised as the ‘vulture capitalist’ by the Republican rivals of the defeated US presidential candidate Mitt Romney, have emerged as the most effective investment option for high net worth investors (HNIs). Investing in private equity involves high risk but the plan of investing in start-ups, non-listed and loss-making companies with proper strategies from consulting firms might reap unimaginable levels of profit like in various cases.
Interestingly the most lucrative jobs for B-school, IIT and economics graduates in India have now started diverting from major investment banking firms like Deutsche Bank, Goldman Sachs, Barclays and McKinsey to one big name –Bain Capital. Based in the US, it is currently one of the world’s largest private equity firms.
Most of the start-ups which have emerged with the help of private equity investors and have made goods cheaper for online consumer, have thereby put the retail sector under serious threat. Following in the footsteps of Flipkart, Myntra, Jabong and other online megastores might initiate similar online versus retail tussle in other sectors.
Unfortunately, all of these facilities are targeted exclusively at urban customers and the rural population still lives in the dark, with a section unable even to consume what they themselves produce. In fact, the time taken by various school textbooks published by the NCERT to reach small, suburban markets (and sometimes crucially before the CBSE board exams) even today is much more than the time taken by the New York Times bestseller to reach net-savvy urban customers.
In future, if proper planning is done to cater to the diversified demand, online megastores can bring in more inclusive growth.
(Shubhranka studied economics at Lady Shri Ram College, Delhi, before coming to Asian College of Journalism, Chennai.)