While sales at its physical retail locations declined by 4.8% over the previous year, online sales have increased by 24%. Most notably, Barnes & Noble has gained 20% of the e-book market in just the last year, CEO William Lynch revealed in an investor conference this morning.
The Nook is primarily responsible for driving those e-book sales, he added. In a statement yesterday, Chairman Leonard Riggio claimed that customers who have purchased the Nook have increased their overall spending with the company by 17%.
Barnes & Noble's share of the digital market now exceeds its share of the retail book market, Lynch announced. This news is less promising than it appears, however, given that it has only really had to compete against Amazon and Sony this year. Borders and Apple have only entered the market very recently; we expect Apple will prove itself a formidable competitor. Google's e-bookstore is also expected to appear soon.
Given its success in the digital market, the company plans "to redirect a significant portion of [its] financial resources towards investments in technology, sales and marketing" for 2011, it announced in a statement. We expect that those resources will go primarily into creating an improved second-generation e-reading device and enhancing its mobile apps; just recently, Amazon added video and audio support to its already-robust Kindle app. Given that the Nook is not the most sophisticated e-reading device on the market, we trust the company will focus on selling e-books on as many platforms as possible, not just its own device.
Barnes & Noble has published an aggressive forecast for fiscal 2011. It expects sales on its website alone to increase by 75% to $1 billion, while sales at its brick and mortar locations should remain relatively flat. It also anticipates to capture roughly a quarter of the e-book market by 2013 -- optimistic, we think, given the competitors it's up against.