Sainsbury’s raised eyebrows this morning with the announcement of its acquisition of the 64% stake HMV had in etailer and social media platform Anobii.
For the latter the move follows stated strategy to sell off non-core business – HMV Group earlier this month sold Hammersmith Apollo for £32m – and focus on its retail chain. For Sainsbury’s, the acquisition raises more questions.
Firstly, who are Anobii? The etailer has built an online community around ebooks – allowing users with Facebook and other social media accounts to interact, join groups and purchase recommendations. The site takes advantage of user generated content to create groups inform what it highlights on its home page.
Although its profile is low in the UK, it has a strong following in Italy, Germany and Hong Kong. It was a catalogue of 60,000 ebooks and has 600,000 users.
So how will the Sainsbury’s partnership work? Sainsbury’s head of entertainment online Mark Bennett told Retail Week the tie-up will start out as a “light integration” with co-branding on each others’ websites and promotion of Anobii e-books in store. Ultimately Sainsbury’s will look to offer as many digital titles as it does physical – currently 400,000 – as publishers release more digital editions.
Bennett says the deal will also allow Sainsbury’s to sell to shoppers looking for both bestsellers and ebooks. “Digital means you can have access to a lot of deep catalogue and specialist books. People can discover other similarly minded users and there can be a focus on exploring and recommending,” he says.
Conlumino retail consultant Matt Piner questioned the move. He says: “The brand does not lend itself to digital in the same way as Amazon and iTunes. The grocers rapidly gained market share in CDs, books and DVDs by selling bestsellers to the impulse shoppers they already have in store.”
Bennett believes it is the 22 million shoppers Sainsbury’s boasts a week that will allow it to achieve scale in the digital market.
Piner believes that, despite a number of retail-ebook tie-ups including Waterstones and Amazon and WH Smith and the Kobo, the other grocers may not necessarily follow Sainsbury’s lead. “At the moment I think there’s still enough demand for physical books and there is a question as to whether it’s worth the investment,” he says.
The move is part of a wider strategy by Sainsbury’s to build a name in the entertainment market where market share is up for grabs following the collapse of Game into administration earlier this year. Sainsbury’s launched its entertainment microsite in November 2010. This was followed by the acquisition of online entertainment company Global Media Vault in October 2011 and the launch of its music download service last month.
Sainsbury’s has a movie streaming and download service to rival Tesco’s Blinkbox service which allows customers who buy a movie on DVD to get a streaming version for free on the way.
The grocer is clearly on a drive to make its name synonymous with good value entertainment product. In a market that has gone through significant change in the last decade, this could well mark a prove a major point in book retailing.