Retailing E-books and E-readers--Welcome to the Revolution

E-book readers are becoming the trendy gadget du jour. Remember when hotels furnished iPods along with hiply-decorated suites? Now Fairmont Hotels offer Kobo e-readers to their best guests. Plus, when guests check out, they receive coupons for discounts on Random House titles.

Welcome to the revolution. The rapid rise of popular e-book readers such as Amazon's Kindle and multifunction devices such as Apple's iPad, accompanied by a sharp increase in e-book sales volume, has publishers and retailers thinking hard about the future. The price war in e-book readers such as the Barnes & Noble Nook (above) is helping to drive sales volume higher and faster. Which products and retailers will reinvent themselves and thrive--and which will dive?

Barnes & Noble, the largest US book retailer, tells the New York Times: "The growth in our e-books business is about nine months ahead of our plan." To cope with the unexpected timing of this shift in consumer buying patterns, the retailer is retooling its merchandise mix by adding games and other non-book products. Remember, Barnes & Noble stores have lots of shelves to fill, and the peak holiday buying season is just ahead.

Holiday buying brings up one more revolution spreading across the retail world: Gift cards. Lance Ulanoff, writing in PC Mag, suggests that Amazon create a mechanism for people to gift specific Kindle e-books. He also wants Barnes & Noble to create a similar card for Nook users. With consumers changing their buying habits and Black Friday still 15 weeks away, the retailers have time to follow up on Ulanoff's idea.