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Froot Loop Followup: Knowledge Products

By posted at 5:10 pm on March 18, 2008 4

Borders’ plan to display more books face-out and, as a result, to stock fewer titles has generated quite a bit of discussion. On our own post about the plan, we received several interesting comments, but I was most intrigued by what commenter Matthew had to say:

The Froot Loops example is classic thinking from retailers who enter bookselling from another retail environment.

The next time I go down to my local chain Cerealseller to choose my cereal for this week from among the 150,000 cereals on offer Mr Froot Loop can come and offer me some buying advice.

Finally, the point of facing out is to attract attention to specific titles from the larger product range. The larger product range sells fewer copies of individual titles, but sells well by total volume… it also serves to attract serious bookbuyers and lend kudos to the bookstore.

If chains chose to employ staff with knowledge (and local control) of that enormous range then they’d have a most effective sales tool. These retail gurus need to spend less time in supermarkets and more time at beauty counters and in cell phone stores. Books are a knowledge product requiring retail guidance and salesmanship… do these guys spend as long with their Wheaties as they do with a novel?

Emphasis mine. What Matthew has so deftly put into words is something I’ve mulled over since my bookselling days but never quite found the right words for. I’ve always known that knowledgeable booksellers are a huge asset to any bookstore – I was lucky to be surrounded by many when I worked at one – but I had never fully grasped what it means to sell a “knowledge product” as opposed to a “commodity product,” nor had it occured that generally products can be described as one or the other.

What’s key here is the distinction between how knowledge products are sold versus commodity products. To use Matthew’s example, when buying a cell phone or going to the beauty counter, you are confronted with many dozens of choices offering an array of specific features suited to a variety of specific needs – bluetooth or dry skin, for example. When it comes to breakfast cereal, you don’t need the guidance as much. The product is cheaper, “wrong” choices cost less, and cereal box mascots aside, one type is generally as good as another.

Viewed in this light, it’s crazy to try to sell books as a commodity product because, (and this is just a guess) out of all the retail categories out there, bookstores by far offer the widest array of products, and therefore would require the most guidance and the best systems to help customers find what they are looking for. Undoubtedly, there are many knowledgeable booksellers at chain stores, but if the chains continue to view books as commodity products, their booksellers’ efforts will be futile. It’s also clear why Amazon has been so hugely successful. The site is the ultimate resource for selling knowledge products, with a wealth of information at the ready for anyone looking for a book. It’s possible that, thanks to the internet, the costs are simply too high for chains to go the knowledge-product route, but running in the other direction, towards Froot Loops, hardly seems the answer.

For those still interested in this issue even after all this, check out these links:





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4 Responses to “Froot Loop Followup: Knowledge Products”

  1. Ann
    at 6:18 pm on March 18, 2008

    It's possible that, thanks to the internet, the costs are simply too high for chains to go the knowledge-product route, but running in the other direction, towards Froot Loops, hardly seems the answer.

    It's not just the costs that are prohibitive … the entire model of centralized buying makes it near impossible to operate on the knowledge-product system. For cell phones etc. it's possible, because of the small number of SKUs. But when the buyers are in NYC or Ann Arbor it is practically impossible for staff training to provide the knowledge required to support the large number of unique products.

    One of the smartest things I ever heard came from the buyer for an independent book store. He told me that he buys not just what his community wants, but also what he knows his booksellers can get behind and recommend. He can do this because he works with those booksellers day in and day out.

    I'd love to see some data about how many Borders customers come in for a specific book versus how many come in because they want a book. And to break it down further, of those customers who want a specific book, how many of those want something other than a book that has had recent publicity, advertising, or big marketing push? Those numbers may tell the tale whether this strategy makes sense for Borders.

  2. Poornima
    at 4:40 pm on March 19, 2008

    This has been a very fascinating discussion. As you probably know ther are dozens of retail trade magazines out there devoted to the art of selling more of just about anything and even books are unfortunately, treated as a commodity like breakfast cereal.

    I am not comfortable with the comparison to Amazon because the Internet model can't really apply to the brick-and-mortar version. Amazon does a wonderful job with the "knowledge-product" system. The Long Tail Theory also probably helps. Even individual branches of big chains can't really compete on such a scale.

  3. Poornima
    at 12:08 pm on March 20, 2008

    Not sure how many of you caught it on NPR but Borders is looking for a buyer.

    http://www.npr.org/templates/story/story.php?storyId=88651466

  4. brettduncanmail
    at 6:25 pm on March 20, 2008

    Glad I could be the dissenter, but it looks like this whole thing might've been more a shot at getting a quick spike in stock price.

    Reading through PoorNima's link, it appears Borders is going to need a lot more than a 9% hike in sales thanks to their new layout strategy.

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