Waterstone's decision to end its e-commerce partnership with Amazon.com could turn out to be incredibly astute or incredibly ill-advised. But whatever the outcome, it's certainly a brave move.
The HMV-owned bookseller signed a deal with Amazon in 2001, under which the online giant provided the web site, ordering and delivery processes for Waterstone's, which in turn carried Amazon's branding on its pages.
Now Waterstone's has decided to launch its own web site this autumn. Aside from promising the "best in e-commerce", the retailer plans to differentiate itself by offering streamed book signings, try-before-you-buy and personal shopping. The aim is to trade on the Waterstone's brand and its reputation for passionate bookselling to attract book-lovers.
Looking at the current Waterstone's site, it's clear there's room for change. At present, the look and feel of the site is all about Amazon, from the search tabs at the top, through to the layout of the content and the choice of text colour, size and font.
The argument for outsourcing suggests firms should focus on their core competencies – in Waterstone's case, selling books – while leaving the outsourcer to provide the commodity element – here, the e-commerce operation. But perhaps in this instance the services provider seized too much dominance.
Waterstone's has a mammoth task in building its own e-commerce platform from scratch. One option is to use current elements of HMV UK's web operations, but the bookseller doesn't want to take on the appearance of another existing web site – even if it does belong to the same owner.
Research firm Ovum does not see the value in Waterstone's decision. It said the bookseller will not differentiate itself by building its own e-commerce platform and should have renegotiated the contract with Amazon, to push for more brand recognition and a greater cut of sales.
But though it faces a difficult task, Waterstone's may prove its doubters wrong. Many early forays into web retailing by other high-street stores fell at the first hurdle, because firms rushed into unknown territory in reaction to the new threat posed by online stores such as Amazon. Waterstone's took a different approach – and it might turn out to be a shrewd move – relying on the services of an expert in the field to build up an online presence, before going it alone.
Waterstone's can learn from other retailers that have already tested various internet shopping features and web systems, and it is in a good position to deploy the latest features and technologies such as Ajax, which promise more personalisation for customers.
And Waterstone's decision might be a good move for online shopping on a broader level, if it encourages other web retailers to start developing these next-generation systems now.
