Walmart has been in the news a lot lately. The stock has been moving steadily down since it’s 2015 high of almost $90 a share. It recently closed over a 100 U.S. stores and announced it will be placing more money into it’s online operations to compete with Amazon.com. Walmart is now a big hiring company in Silicon Valley.
At first glance it may seem unrealistic that buying Barnes & Noble would help Walmart compete, but the company needs something to desperately draw people to it’s ecommerce website. That something could and should be ebooks. Business Insider points out that B&N has extremely loyal Nook users, however the companies ebook reader the Nook is bleeding the company of cash.
If Walmart owned the Nook it could push other Walmart.com ads to inexpensive Nook readers just as Amazon.com does with it’s Kindle.
Walmart wants developers for it’s website, imagine that it could fold barnesandnoble.com into Walmart.com and expand it’s media library along with all of barnesandnoble.com content and reviews and retain those developers as well. Think about when you go to Amazon.com. What keeps you on the site is content and being able to explore new items that you did not know existed. B&N has the content, they have customer reviews along with “Customers Who Bought This Item Also Bought…”
What about all the book stores? B&N is currently in the process of closing it’s non-profitable stores as sales are down. Can Walmart turn them around? I’m not suggesting that Walmart can change the trend of brick and mortar books stores, but I believe the companies experience and leverage may be able to help manage it’s current operations and reduce costs. The overall strategy of the buyout would not be for the stores, but for the website catalog and the Nook device, the stores would be a bonus as I believe they could be continued to be operated profitably.
Isn’t this all just playing catchup?
Yes. It is. That is the reality. Walmart needs to catchup in one major aspect. Digital content. Right now Walmart is trying to also attract affiliate members just like Amazon’s affiliate program, but Walmart will continue to have issues unless they get that content so that visitors want to hang out longer on their site.
B&N has a market cap of just over $600 million. Walmart pulled in $15 billion of cashflow just in 2015. Even if they paid a premium for B&N it would barely put a dent in their annual cash flow.
The next step after the Nook? Streaming movies programs to draw in more customers. I bet Walmart could pick up the Blockbuster brand name for a song. 🙂 It may be possible that Walmart using it’s stores can come up with a program more desirable than Amazon prime. Time will tell.by