The Bertelsmann, the world's fourth largest media group, recently announced that it would close 36 book retail chain stores in 18 large and medium-sized cities in China before July 31, 2008. Why did this old-media group which had been struggling in China for nearly 13 years fail when electronic commerce was being well received in China?
The direct cause of the failure of Bertelsmann's book business in China is precisely the increasingly warming tide of electronic commerce. In China, Bertelsmann once tried to build an online bookstore similar to Amazon. However, in 2002, Bertelsmann changed its market strategy and slowed down the construction of BOL Online Mall which had already gained momentum. The drawbacks of directly copying the successful experience of flagship stores in France soon became apparent.
Books are relatively expensive in France, and in terms of purchasing habits, European readers regard the book club as a semi-leisurely place, so they are willing to spend time in bookstores. However, Chinese readers are easily influenced by book prices, so Dangdang.com and Amazon.cn with relatively higher discount rates naturally become the preferred choices.
Whether in the domestic market of China or in the American book market, Amazon has become the world's largest bookstore thanks to the rise of the Internet. Online book purchasing platforms reduce inventory pressure, are not restricted by physical stores, and always have hundreds of thousands of books available for selection, offering more choices and lower discounts. From a business model perspective, the Internet, with its characteristics of transcending space, quick access, and massive data, has long covered all the advantages of catalog sales without the costs of recruiting and maintaining members for book clubs. At that point, the seeds of failure were sown for Bertelsmann's book club model.
In 1995, the Bertelsmann Group began to enter the Chinese market, and online sales were once Bertelsmann's most proud sales model. Between 2003 and 2004, Bertelsmann invested huge amounts of money on the Internet and established a complete online bookstore.
It even had its own postal code. When payment was received, Bertelsmann could stamp and attach its own shipping label, thus shortening the logistics cycle by three to four days. This undoubtedly gave it a huge competitive advantage in the online sales market where channels were king.
However, after laying out such a grand strategic framework, Bertelsmann did not achieve the anticipated victory—it ultimately ended in failure in the Chinese market.