Friday, March 4, 2011

Barns & Noble: searching for an answer

The year 2011 should be a good one for Barnes & Noble. As Best Buy was with Circuit City, B&N should be the primary beneficiary of the Borders bankruptcy and closure of another 200 Borders stores.

It also has a promising tablet computer in the nookColor, which is being developed by a team of Silicon Valley veterans in its Palo Alto R&D facility. It is distributing and supporting the devices in its 700 physical stores, including free Wi-Fi and free book browsing for nook owners.

It’s also leveraging Amazon’s sales tax disputes with the states to attract potential marketing partners. States can’t legally tax out-of-state sales under Quill v. North Dakota unless there’s a physical presence. If the states want to argue that website affiliates are a physical preference that makes it liable for tax — a point Amazon disputes — then Amazon will shed those affiliates. Since it’s already stuck paying California taxes, B&N is now soliciting those soon-to-be-former Amazon affiliates to promote its own site.

For many years, B&N was a successful fast follower in its rivalry with Amazon. When I taught my first MBA course in 1998, I wrote a caselet to show how Barnes & Noble moved aggressively to respond to the Amazon threat with a “clicks and mortar” (aka “bricks & clicks”) strategy. That strategy held up pretty well for a decade, except that it found its physical stores made it futile to fight state sales tax levies, leaving it at a cost disadvantage in high tax states..

Competitive Strategy: Techniques for Analyzing Industries and CompetitorsWhen it comes to e-books, Barnes & Noble seems to have tried its best to match Amazon’s Kindle AZW content with its own supply of (proprietary DRM) epub files. In a spot check, both had Michael Porter’s two most popular strategy books at the same price, while neither store had anything by J.K. Rowling — a search for “Harry Potter” instead produced books about Rowling and her billion-dollar manchild (68 on the B&N site).

However, the search algorithms for finding the B&N content seem primitive, particularly when on B&N’s own tablet — where navigation is inherently slower and more frustrating than on a keyboard-equipped laptop. I noticed the problems Thursday after I took my nookColor to my local B&N store.

Nook owners can browse books inside the shopping app, or use a web browser like everyone else. When you go to the website on a nook, it has the same tiny text hyperlinks that work great on a PC and terribly on a 7" tablet. One would presume that the website would know that a nook version of the WebKit browser suggests interest in nook content.

Known and Unknown: A MemoirBut the worst thing is the search algorithm. In some ways, it’s a prisoner of a literalism stuck in the 1990s. Unlike on Amazon, at the BN website and the nook shopping app when I searched for “Don Rumsfeld,” it found nothing. If I put “Donald Rumsfeld” into either one, it found the New York Times bestseller. (Amazon and of course Google will even suggest the correct option if I type “Donalf Rumsfeld”).

Harry Potter and the Deathly Hallows (Book 7)Conversely, the search options within the nook shopping application are nearly useless for popular topics. Like Amazon, has an “advanced” search option for specific fields, but on the nook app there’s just one free-form text search field, and no “advanced” option. So if I’m only interested in books with “Harry Potter” in the title and “Rowling” in the author field, the nook shopping app won’t let you do that.

Let’s take a more ambiguous case: the word “Bible” brings up 259,000 entries under “books” at, 79,000 books at and 10,000 in the nook shopping app. Entering "Bible" and “New International Version” produces 2,000 hits on and 118 in the nook app. In the former case, all of the first 100 hits are NIV Bibles, but only one of the top 10 hits in the nook store is correct — the other 9 have nothing to do with the NIV.

It’s hard to imagine a more strategic priority for B&N than making it easy for customers to find and buy books. Thus, it’s long past time for B&N to update its search and discovery algorithms., Bing, Excite, Google, Yahoo and even Baidu know who Don Rumsfeld is, evne if does not. Perhaps if it searches hard enough, Barnes & Noble can find a way to leverage external technology (we call it “open innovation”) to catch up to its #1 rival.

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