Sales, Losses Soar at Online Bookstores
Jim Milliot -- Publishers Weekly, 6/28/1999
While the exact size and growth rate of the online bookselling market are much-discussed topics, a Publishers Weekly analysis of four e-retailers that report their results show that online book sales rose 322% in 1998 to $687.1 million. The largest online bookseller, of course, was Amazon.com, with total sales of $610 million, a small percentage of which came from nonbook items, particularly music, which generated sales of about $33 million last year. The fastest-growing site, however, was Barnesandnoble.com where sales jumped 419% to $61.8 million. The company reported that 98% of its revenue in 1998 was generated by books; like Amazon, however, bn.com is adding other products, albeit not as many as the Seattle-based e-retailer. The third fastest-growing online bookseller tracked by PW was Fatbrain.com, formerly known as Computer Literacy. The company's sales rose 256% to $10.7 million; approximately 83% of its sales came from computer books. Borders.com was in fourth place, with sales of $4.6 million. As impressive as the sales numbers for the online booksellers are, the rate of growth trails that of the companies' losses. The four e-retailers reported a combined net loss of $227.5 million in 1998, a 370% increase over 1997. Losses at bn.com increased 511% in 1998, while Amazon had a 384% increase. Fatbrain was the only service to report a faster increase in sales (256%) than losses (209%). Borders.com reported a 75% increase in its net loss last year, to $10.5 million. The four online bookstores had accumulated losses of $275.9 million for 1997 and 1998. One reason for the losses posted by the online bookstores is the large amount of money they are investing in developing their infrastructures and in brand awareness campaigns. Amazon, for example, invested 22% of its total revenues on sales and marketing in 1998, while bn.com spent more money on its sales and marketing efforts, $70.4 million, than it earned in total revenues.
