Digital Transformation Project Team 37; The Spotify for Books
Dear readers of the Blog,
The focus of our ‘Technology of the Week Project on Digital Transformation and Business Models’ lies on De Slegte and Spotify.
De Slegte is an independent chain of bookstores founded by Jan de Slegte in Rotterdam during the 20th century. Whilst the chain initiated in the Netherlands, it currently solely operates a total of eight stores across Belgium. The firm offers a wide selection of literature; it specializes in offering antique and second hand books often sold during book fairs. However, with the rapid advancement of the Internet and thus also of online competitors, such a service has failed to prove sufficient. The traditional store was struggling to stay ahead with their business model at that state in time.
Thus, De Slegte has decisively launched its primary website in 2010 in efforts to stay ahead of the competition. Despite the chain’s attempt at digitalization, and further efforts to remain in business, the firm has eventually claimed bankruptcy in the Netherlands. The company intends to remain with its preliminary aim of offering second-hand books, textbooks and cut-price editions as its main base product. With such financial inconsistency endured by De Slegte, it seems to require a new innovative, technical business model if it wishes to operate in the long-run and keep up to par with fierce competitors, especially in the growing online industry. As previously mentioned, the sole digital mechanism utilized by the company is in the form of an online web shop: http://www.deslegte.be. Despite the website possessing a growing online traffic from 500 visits in March versus 40,000 views in August, it still suffers from a bounce rate of 30% and a mere 4 minute page view on average.
Although this is a promising first step, it now faces competition not only from renowned brick-and-mortar stores such as Barnes & Noble, but also from major digital platforms such as Bol.com and Scribd. In order to compete, it must differentiate. In purpose of innovating De Slegte’s business model, a streaming Freemium strategy such as that implemented by Spotify would be highly recommended.
This implies offering free services, yet incorporating means such as ads or limited usage with respect to time, in order to firstly still earn a small income through the free model on the advertisers side, and secondly, catalyse the desire for customer subscriptions. Thereafter, there is also an unlimited and premium model that offers upgraded versions with additional features which greatly enhance customer satisfaction when active on the website or application. Spotify’s revenue rose immensely within even the first year of public operation, representing a 458% in growth. Such success is attributed to a large user base, a low marginal cost to serve each subscriber as well as a product that increases in value to the user over time. De Slegte could strive to achieve similar growth its user base through offering a more advanced digital model. As opposed to the current technical utilization, the system should be enabled across all platforms including PCs, tablets and mobile devices. Furthermore, it would require offering a much larger range of books that would be streamed on a free basis reading time constraints and possibly a limitation of the number of pages per day limitations. The revenue would thereafter mostly be generated through subscriptions to more unique features.