Barnes & Noble Looks to Challenge Kindle’s e-Book Dominance

In July, BarnesandNoble.com launched the e-books section of their online bookstore with the intention of capitalizing on the growing market. Consumers have increasingly been turning to e-books that equip a reader with added conveniences and often a chic electronic device. Although Barnes & Noble lacks, at least for the time being, an e-reader similar to Sony’s e-reader or Kindle, Amazon.com’s industry leading e-reader, digital bookworms welcomed the new e-bookstore with open arms.

The e-books section of BarnesandNoble.com was visited by more than four times as many people as Amazon.com’s Kindle Store (and over 75x Sony’s eBookstore) in its first week. However, their successful launch cooled rather quickly after a few weeks.

One possible reason why BarnesandNoble.com’s e-books section couldn’t maintain their initial momentum was due to the lack of an official e-reader. Unlike Sony and Amazon, BarnesandNoble.com presently only offers an application a person can download to their PC, Mac, iPhone/iTouch, or Blackberry. While the free download is nice, the e-book experience isn’t the same without an e-reader like Kindle. Given this shortcoming, how was BarnesandNoble.com able to entice so many shoppers to visit their e-books section?

A highly effective email campaign helped to lure book lovers to BarnesandNoble.com’s new e-books department. When looking at the role of Webmail in driving traffic to the various e-books stores last month, BarnesandNoble.com stood out with 17% of its traffic coming from webmail.

Who did BarnesandNoble.com target when marketing their new e-books: consumers of rival e-bookstores or the untapped market of paper-book readers? An important commonality among the three e-book competitors to keep in mind is the lack of cross-platform compatibility. Since an e-book purchased from one retailer will not read on an e-reader associated with a different retailer, cross-shopping becomes a strong indicator of consumer churn.

BarnesandNoble.com’s e-book shoppers were the least likely to cross-shop at one of its two main rivals. Since their e-book section was just launched, this indicates that their customers are new to the market rather than converts from either Sony or Kindle.

BarnesandNoble.com’s appeal to the common reader will gain even more traction when the Plastic Logic Reader hits the market sometime early 2010. The Plastic Logic Reader will be exclusive to BarnesandNoble.com’s e-books and will turn the battle against Kindle into a fair fight. A large part of Kindle’s appeal is the convenience and function of the e-reader itself. Although still in Kindle’s giant shadow, BarnesandNoble.com’s e-books may be poised to rise out of it soon. Having already proven the ability to draw interest from consumers new to the market, Barnes & Noble needs to sustain and further develop that interest. The Plastic Logic Reader may be the final piece to the puzzle in BarnesandNoble.com’s efforts towards supplanting Kindle from the top of e-books industry.