Great Expectations

On a sunny afternoon in late May, customers line up at a customer service counter at Barnes & Noble’s sprawling superstore in Manhattan’s spiffed up Union Square. "Powered by Barnesandnoble.com" is emblazoned above the counter in shiny chrome letters. At the counter, salespeople stare intently at computer screens, checking to see if books are available online and in some cases, ordering books for customers. Shoppers can also apply to join the "Reader’s Advantage" program, in which they’ll receive online and in-store discounts for a yearly fee of $25.

The customer service counters, which will be installed in all of Barnes & Noble’s more than 500 stores by the end of the year, are symbolic of the new integration between the physical bookstores and the e-commerce site. Four years after its launch, Barnesandnoble.com is mining its biggest potential competitive advantage over its dotcom competitor: well-frequented stores. Since August 2000, online shoppers have been able to return purchases at Barnes & Noble stores. Later this year, the bookseller will issue a universal gift card that can be used for purchases online or in the stores, says Stephen Riggio. "Our customers see us as one company, and increasingly as more Americans go online they will go to brands that they know and trust," he says.

So why did it take so long to see the light? Stephen Riggio, a fiercely loyal man who bristles at comparisons between his company and Amazon.com, dodges this question, asserting that it was always part of Barnes & Noble’s long-term plan to integrate the website with the brick-and-mortar operations. Early on, however, in addition to the question of online sales tax, "it was important to establish experience on [Barnesandnoble.com’s] own, especially since no retailer had ventured aggressively into e-commerce," he adds.

Barnes & Noble is also in the midst of introducing new systems into its stores, which would allow employees to check the availability of titles in real-time; the installation of these systems have made it easier in recent months to unite the retailer’s IT with the e-commerce infrastructure, King says.

Despite the recent upbeat mood, Barnesandnoble.com is far from declaring Web victory. Amazon.com still has three to four times the audience of Barnesandnoble.com, according to Nielsen/NetRatings from April. Visitors to the site also spend less time there than those to Amazon.com, Buy.com and Cdnow. "I think Barnesandnoble.com is barking up the right tree, they’re just not far enough up it," Booz, Allen & Hamilton’s Katz says.