Why Sales Matter Most

Thursday, April 29th, 2010
By Stephen Baker, Vice President, Industry Analysis

I admit to being biased. I work at a company that tracks actual sales results and I spent 10 years at retail. I have always lived and breathed sales results. And while shipments are a great tool (and I worked at a place that tracked those as well), the final verdict of success or failure of an item is sales. If a consumer puts down their hard earned money for a product you can be sure that they saw some spark of value or usefulness to their lives in that device. That is why it is shocking to me that many folks in this industry don’t understand the difference between sales and shipments - and often confuse them in the most basic ways. The latest example is a report this week in DigiTimes and repeated all across the web that the Barnes & Noble Nook out-shipped the Kindle in March. Note I said, and DigiTmes said as well, shipped, not sold. This has caused shock and disbelief throughout the blog community. We will now hear for a few days about how the Kindle is doomed; the iPad is killing it, and various other conspiracy theories.

As my colleague Ross Rubin discussed earlier this week, the level of distribution for e-readers has undergone a significant upheaval in the past two weeks. The Kindle is being slowly rolled out at Target and the Nook will be available at Best Buy. This is changing the way we need to view their sales opportunity and why sales now matter most and shipment data is less relevant.

Go pick up your Sunday paper and check the circulars from this past weekend. Check out the front page of the Best Buy circular. There is the Nook in all its glory being introduced to Best Buy’s customers. So let’s do the math. Approximately 1000 stores, 50-100 per store (a best guess) comes out to 50k to 100k units B&N had to ship to Best Buy. And of course some ODM in Taiwan had to build them, and it takes time to do all that so it is a pretty good bet that those 50k or so units were built in March. That is a lot of e-readers to build in one month and that is why the Nook could out-ship the Kindle in March.

Now of course this is not to imply that the Nook can’t outsell the Kindle, or that the Kindle isn’t doomed, but merely to point out it is easy to ship a lot of anything, to fill all this wonderful new distribution, but that shipments are not the same measure of success as sales. Shipments are the fuel but sales are the engine. Long-term success is best measured, as it always has been, in units out the front door, not receipts through the back. Because sales matter most.

1 Comment

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  By Patrick, April 29, 2010 @ 5:14 pm

  An excellent point. Unfortunately, the link to the DigiTimes article is for *paid* subscribes only, so what I’m about to say may/may not be accurate.

  Barnes & Noble is likely to be very well served by this report (perhaps even helping it’s creation), as it will help push consumers on the fence between the two book readers to go with the Nook as opposed to the Kindle.

  While not identical to the HD media format war (Bluray vs. HD-DVD, where those who purchased HD-DVD now have a nice paper weight), nonetheless, the consumer ultimately wants to pick the technological item that will *win*. Not only to help reinforce their choice, making them look like they made a smart purchase, but also to help ensure long-term viability.

  Can the market bear both e-readers? I suspect yes, as I would imagine the costs to produce e-content for one, and then port it to the other is minimal. But nonetheless, again, the consumer tends to want to back the winner, and if the consumer is being told the Nook has dominated “shipments”, they will likely believe that means that the Kindle is old-hat and the Nook is the new winner.

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